Despite Revenue Growth and Record Productivity, Postal Service Loses $5 Billion in 2013 Fiscal Year

Despite Revenue Growth and Record Productivity, Postal Service Loses $5 Billion in 2013 Fiscal Year

i Nov 21st No Comments by

Despite Revenue Growth and Record Productivity, Postal Service Loses

$5 Billion in 2013 Fiscal Year


·Revenue Increase Driven by 8 Percent Growth in Shipping and Packages, 3 Percent Growth in 
Standard Mail; First-Class Mail Continues to Decline

·     Nearly $1 Billion in Savings Driven by Work Hours Reduction of 12 Million Hours and Optimizing Workforce Flexibility

·Substantial Deficit Liabilities of $61 Billion Exceed Assets by Approximately $40 Billion 



WASHINGTON — The U.S. Postal Service ended the 2013 fiscal year (Oct. 1, 2012 – Sept. 30, 2013) with a net loss of $5 billion. This marks the 7th consecutive year in which the Postal Service incurred a net loss, highlighting the need to continue to capitalize on growth opportunities, reduce costs, and enact comprehensive legislation to provide a long-term solution to the agency’s financial challenges.

Even though the Postal Service has implemented a number of strategies that resulted in $15 billion in annual expense reductions since the Postal Accountability and Enhancement Act was passed in 2006, the combination of onerous mandates in existing law and continued First-Class Mail volume declines threatens the Postal Service’s financial viability. 

“We’ve achieved some excellent results for the year in terms of innovations, revenue gains and cost reductions, but without major legislative changes we cannot overcome the limitations of our inflexible business model,” said Patrick Donahoe, Postmaster General and Chief Executive Officer. “Congress is moving forward with legislation that has the potential to give us greater flexibility and put us back on a firm financial footing, and we strongly encourage that they continue moving forward.” 

The legislative requirements put forward by the Postal Service, as outlined in the Five-Year Business Planinclude :

·        Restructure the Postal Service health care plan.

·        Refund Federal Employees Retirement System (FERS) overpayment and lower future FERS payment amounts to those required.

·        Adjust delivery frequency to six-day packages/five-day mail.

·        Streamline the governance model (eliminate duplicative oversight).

·        Provide authority to expand products and services.

·        Require defined contribution retirement system for future Postal Service employees.

·        Require arbitrators to consider the financial condition of the Postal Service.

·        Reform Workers’ Compensation. 

Results of Operations

Highlights of yearly results compared to the same period last year include :

·        Total mail volume was 158.4 billion pieces compared to 159.8 billion pieces a year ago. Package and Standard Mail volumes grew by 210 million pieces and 1.4 billion pieces, respectively, while the most profitable product, First-Class Mail, fell by 2.8 billion pieces, led by single-piece volume decline. 

·        Operating revenue, excluding a $1.3 billion non-cash change in an accounting estimate, was $66 billion compared to $65.2 billion in 2012. While this is the first growth in revenue since 2008, declining First-Class Mail revenue continues to negatively impact financial results. 

·        Operating expenses were $72.1 billion in 2013 compared to $81 billion in 2012. Approximately $8.2 billion of this decrease resulted from higher, legally mandated retiree health care benefit expenses and higher non-cash Workers’ Compensation expense in 2012.  Expenses in 2013 include a required $5.6 billion contribution to retiree health care benefits that the Postal Service was unable to make. Continued lack of legislation will likely force the Postal Service to continue to default on these payments. Savings from plant consolidations, restructuring hours at Post Offices, reductions in delivery units, and workforce optimization resulted in approximately $1 billion of savings in 2013. 

·        The net loss for the year, which was decreased by a $1.3 billion non-cash change in estimate, was $5 billion. However, this change in accounting estimate has no impact on the Postal Service’s receipt of cash, or cash on hand, nor does it lessen the severity of its current liquidity situation. For more information regarding the non-cash adjustment, refer to the Form 10-K, available online. 

The Postal Service continues to grow its Package Services business. From fiscal year 2012 to fiscal year 2013, revenue from Package Services increased by $923 million, or 8 percent, on a volume increase of 210 million pieces (6 percent). By developing innovative services to appeal to the growing parcel delivery market, Shipping and Package Services grew to $12.5 billion, representing approximately 19 percent of revenues. Standard Mail revenue grew by $487 million, or 3 percent, on a volume increase of 1.8 percent.

The growth in revenue from these products is not enough to offset the long-term loss in revenue and volume of our most profitable service, First-Class Mail. First-Class Mail revenue, which peaked in 2007, dropped $704 million or 2.4 percent in 2013. First-Class Mail volume declined 2.8 billion pieces or 4.1 percent.

“Our productivity reached an all-time high in 2013, increasing 1.9 percent, compared to 2012,” said Chief Financial Officer and Executive Vice President Joseph Corbett. “This marks our fourth consecutive year of positive total factor productivity growth since the depths of the recession in 2009.” 

Work hours in 2013 decreased by 12 million or 1.1 percent, despite an increase of approximately 774,000 delivery points during 2013. 

“The reduction in work hours and the optimization of work force flexibility that we have available to us contributed to a savings of nearly $1 billion in compensation and benefits costs,” said Corbett, “a reflection of our efforts to improve productivity and to respond to the decline in mail volume.” Since 2000, the Postal Service has reduced work hours by a cumulative total of 516 million work hours, equivalent to 293,000 employees, or $22 billion in annual expense savings.” 

At the end of the 2012 fiscal year, the Postal Service reached its statutory debt ceiling of $15 billion for the first time, and it remains at the limit at the end of the 2013 fiscal year. “Our liquidity continues to be dangerously low and our liabilities exceed our assets by approximately $40 billion,” said Corbett. “This underscores the need for Congress to pass legislation that improves our financial position and that gives the Postal Service a more flexible business model to improve its cash flow. Despite reaching the debt limit, Postal Service mail operations and delivery continue as usual and employees and suppliers continue to be paid on time.” 

Complete financial results are available in the Form 10-K, available after 11 a.m. ET today at

Postal Facts 2013

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Facts and figures about your Postal Service 

Both literally and figuratively, the U.S. Postal Service delivers for America.  Even in an increasingly digital world, the Postal Service remains part of the bedrock infrastructure of this nation’s economy, serving its people and businesses and binding the nation together.  Below and attached you will find interesting information about your Postal Service. 

Size and Scope

The Postal Service delivers more mail to more addresses in a larger geographical area than any other post in the world.  The Postal Service also delivers to more than152 million homes, businesses and Post Office boxes in every state, city, town and borough in this country.  Everyone living in the United States and its territories has access to postal products and services and pays the same postage regardless of their location. 

By the Numbers *

65 billion — 2012 revenue, in dollars 
160 billion — number of mailpieces processed 
40 — percent of the world’s mail volume handled by the Postal Service 
1.8 billion — dollar amount paid every two weeks in salaries and benefits 
522,144** — number of career employees 
108,000** — number of military veteran career employees 
31,272 — number of Postal Service-managed retail offices 
212,530 — number of vehicles — one of the largest civilian fleets in the world 
1.3 billion — number of miles driven each year by letter carriers and truck drivers 
39.7 million — number of address changes processed 
39 — percent of retail revenue from alternative access channels 
423 million — total number of visits to
67.5 million — number of inquiries handled by the Postal Service Contact Center 
246 million — dollar amount of online stamp and retail sales at
44.1 million — number of Click-N-Ship labels printed 
483 million — total revenue, in dollars, from Click-N-Ship label purchases 
83.8 million — number of packages picked up using Free Package Pickup 
5.7 million — number of passport applications accepted 
109 million — number of money orders issued 
497 million — amount in revenue from 2,500 Self-Service Kiosks 
70,000 — number of stores, banks and Self-Service Kiosks that sell stamps 
654,560 — number of new delivery points added to the network 
0 — tax dollars received for operating the Postal Service

* all information based on 2012 data, unless otherwise noted 
** as of January 16, 2013

U.S. Postal Service Announces Shipping Prices for 2014

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WASHINGTON — When new Postal Service Shipping Services prices take effect in January, customers will see an overall price increase of 2.4 percent.

In addition, Postal Service customers will have a new delivery choice for domestic Priority Mail Express in 2014. The new delivery service option will allow customers to send domestic Priority Mail Express packages to most locations in the U.S. by 10:30 a.m. for an extra $5.00 fee. Domestic Priority Mail Express is a fast, reliable service which offers day-specific delivery information, up to $100 free insurance and free package tracking.

Highlights of the new retail pricing for domestic Priority Mail Express products include :

· Retail Flat Rate, Padded Flat Rate and Legal Flat Rate envelopes — $19.99

· Flat Rate Boxes — $44.95

Domestic pricing for Priority Mail Flat Rate products will remain affordable in 2014, with retail prices starting as low as $5.60.

Most domestic Priority Mail products qualify for free insurance up to $50 or $100, and one, two or three date-specific delivery is based on destination ZIP Code. Improved USPS Tracking makes it easier to see packages at pick up, confirmed final delivery and many points in between.

“The Postal Service remains the best in value in the shipping business,” said Nagisa Manabe, Chief Marketing and Sales Officer. “We continue to offer excellent domestic Flat Rate shipping with a price that doesn’t vary by destination.”

The Postal Regulatory Commission (PRC) will review the prices before they become effective on January 26, 2014. Today’s Shipping Services price filing will be available on the PRC website at