News

U.S. Postal Service Reports Fiscal Year 2016 Results

i Nov 16th No Comments by

November 15, 2016

 

U.S. Postal Service Reports Fiscal Year 2016 Results

 

  • Net loss of $5.6 billion, driven by mandated retiree health benefits expenses
    • Controllable income of $610 million
    • Continued double-digit growth in revenue and volume in the Shipping and Packages business
    • Enactment of postal reform legislation remains urgently needed

 

WASHINGTON–After accounting for a $5.8 billion retiree health benefit prefunding obligation, the U.S. Postal Service posted a net loss of approximately $5.6 billion for fiscal year 2016 (October 1, 2015 -September30, 2016), as compared to a $5.1 billion net loss for the year ended September 30, 2015.Excluding this prefunding obligation, the Postal Service would have recorded net income of approximately $200 million in 2016.

 

“To drive growth in revenue and better serve our customers, we continue to invest in the future of the Postal Service by leveraging technology, improving processes and adjusting our network,” said Postmaster General and CEO Megan J. Brennan. “In 2016, we invested $1.4 billion, an increase of $206 million over 2015, to fund some of our much-needed building improvements, vehicles, equipment and other capital projects.”

 

The Shipping and Packages business continued its strong performance with revenue growth of $2.4 billion, or 15.8 percent. This was offset by a decline in First-Class Mail revenue of $925 million, or 3.3 percent, due largely to the exigent surcharge expiration and continuing electronic migration. These two trends, together with steady standard or advertising mail revenues, and a slight increase in other revenues account for the $1.6 billion growth in operating revenue.

 

“The Postal Service continues to win e-commerce customers and grow our package delivery business. We deliver more e-commerce packages to the home than any other shipper because of our predictable service, enhanced visibility and competitive pricing,” said Brennan.

 

Overall, the Postal Service reported operating revenue of $70.4 billion for 2016, excluding a $1.1 billion change in accounting estimate recorded during the year. This equates to an increase of $1.6 billion, or 2.3 percent, over last year (See Selected 2016 Results of Operations table below). Revenue growth was achieved despite the April 2016 expiration of the exigent surcharge mandated by the Postal Regulatory Commission. As a result of this expiration, revenue for 2016 was lower by approximately $1 billion than what it otherwise would have been. Going forward, without the surcharge, the Postal Service expects its revenue to decline from what it otherwise would be by almost $2 billion per year.

 

Despite the positive trends in some aspects of its business, the net loss suffered by the Postal Service this year cannot be ignored. Even with continued proactive and aggressive management, such losses are likely to persist for the foreseeable future because of mandated costs such as an unaffordable retiree health benefits program that is not fully integrated with Medicare, and an ineffective pricing system.

 

“This is why legislative and regulatory reforms remain critical for us to meet the needs of the American public now and well into the future,” said Brennan.

 

Operating expenses increased in 2016 compared to last year. In addition to a $922 million increase in workers’ compensation expense, compensation and benefits expenses increased by approximately $1.2 billion and transportation costs increased by$413 million. The growth in labor and transportation costs is largely due to the increase in Shipping and Packages volumes, which are more labor-intensive to process and require greater transportation capacity than mail. Transportation expense also increased to significantly improve service levels in 2016.

 

Controllable income for 2016 was $610 million compared to $1.2 billion for last year. In the day-to-day operation of its business, the Postal Service focuses on controllable income, which takes into account the impact of operational expenses including compensation and benefits; but does not reflect factors such as the legally-mandated expense to prefund retiree health benefits or the change in accounting estimate noted above (see Controllable Income below for a full description).

FY 2016 Revenue and Volume by Service Category Compared to Last Year
The following presents revenue and volume by category for the years ended September 30, 2016, and 2015:

Revenue Volume
(revenue in $ millions; volume in millions of pieces) 2016 2015 2016 2015
Service Category
First-Class Mail $ 27,281 $ 28,206 60,922 62,353
Standard Mail 17,982 17,992 80,885 80,030
Shipping and Packages 17,307 14,942 5,134 4,510
International 2,695 2,702 1,006 913
Periodicals 1,507 1,589 5,544 5,838
Other 3,596 3,359 450 391
Total before change in accounting estimate $ 70,368 $ 68,790 153,941 154,035
Change in accounting estimate 1,061
Total revenue and volume $ 71,429 $ 68,790 153,941 154,035

 

Selected FY 2016 Results of Operations and Change in Accounting Estimate
During the three months ended June 30, 2016, the Postal Service revised the estimation technique utilized to determine its Deferred revenue-prepaid postage liability for a series of postage stamps. The change resulted from new information regarding customers’ retention and usage habits of Forever Stamps, and enabled the Postal Service to update its estimate of usage and “breakage” (representing stamps that will never be used for mailing due to loss, damage or stamp collection).

As a result of this change in estimate, the Postal Service recorded a decrease in its Deferred revenue-prepaid postage liability as of June 30, 2016, which caused an increase in revenue and decrease in net loss of $1.1 billion for the three months ended June 30, 2016, and for the year ended September 30, 2016. This change in accounting estimate resulted in a non-cash adjustment that does not impact the Postal Service’s liquidity or access to cash and does not affect its controllable income.

This news release references operating revenue before the change in accounting estimate and operating revenue before the temporary exigent surcharge, which are not calculated and presented in accordance with accounting principles generally accepted in the United States (GAAP).

The following reconciles these non-GAAP operating revenue calculations with GAAP net loss for the years ended September 30, 2016, and 2015:

(results in $ millions) 2016 2015
Operating revenue
Operating revenue before temporary exigent surcharge $ 69,232 $ 66,672
Temporary exigent surcharge* 1,136 2,118
Operating revenue after exigent surcharge before change in accounting estimate $ 70,368 $ 68,790
Change in accounting estimate 1,061
Total operating revenue $ 71,429 $ 68,790
Other revenue 69 138
Total revenue $ 71,498 $ 68,928
Operating expenses $ 76,899 $ 73,826
Other interest (income) expense, net 190 162
Total expenses $ 77,089 $ 73,988
Net loss $ (5,591 ) $ (5,060 )
* The temporary exigent surcharge expired on April 10, 2016.

 

Controllable Income
This news release references controllable income, which is not calculated and presented in accordance with GAAP. Controllable income is a non-GAAP financial measure defined as net income (loss) adjusted for items outside of management’s control and non-recurring items. These adjustments include the mandated prefunding of retirement health benefits, actuarial revaluation of retirement liabilities, non-cash workers’ compensation adjustments and the change in accounting estimate.

The following reconciles GAAP net loss to controllable income and illustrates the income from ongoing business activities without the impact of non-controllable and non-recurring items for the years ended September 30, 2016, and 2015:

(in $ millions) 2016 2015
Net loss $ (5,591 ) $ (5,060 )
PSRHBF prefunding expense 5,800 5,700
Change in workers’ compensation liability due to fluctuations in discount rates 1,026 809
Other change in workers’ compensation liability1 188 (502 )
Actuarial revaluation of retirement liability2 248 241
Change in accounting estimate (1,061 )
Controllable income $ 610 $ 1,188
1 This is a net amount that includes changes in assumptions, as well as the valuation of new claims and revaluation of existing claims, less claim payments for the applicable periods.
2 Determined by OPM in 2015 to amortize the $3.6 billion unfunded FERS retirement obligation based on actuarial valuations and assumptions. The payments are to be made in equal installments over the next 30 years.

Complete financial results are available in the Form 10-K, available at http://about.usps.com/who-we-are/financials/welcome.htm.

PCC Alert: Making Changes: Marketing, DPMG Groups Re-aligned

i Oct 21st No Comments by

Making Changes

Marketing, DPMG Groups Re-aligned

 

USPS is making changes within its Marketing and Deputy Postmaster General organizations to better serve customers.

“Although the entire organization is responsible for delivering excellent service and customer experiences, the following changes will sharpen our focus to more effectively reach and engage our customers, and bring their voices and rising expectations more prominently into our strategy development,” PMG Megan J. Brennan wrote in an Oct. 20 memo.

Highlights:

  • Jim Cochrane, who previously served as chief marketing and sales officer, will now lead his organization as chief customer and marketing officer.
  • Within this group, Cliff Rucker, who previously served as sales vice president, will become sales and customer relations senior vice president. He will continue to oversee Sales, while taking on added responsibility for the Business Service Network and Customer Care Centers.
  • Steve Monteith, who previously served as executive director of product management for mailing products and shipping services, will now serve as marketing vice president. He will oversee Brand Marketing, Customer Engagement and Strategic Alignment, Customer and Market Insights, Industry Engagement, Product Management — Mailing Products and Services, Product Management — Shipping Products, and Stamp Services.
  • The vice president position that oversees Consumer and Industry Affairs has been eliminated and the Consumer Advocate function will report to the chief customer and marketing officer. This is designed to elevate the voice of residential customers throughout the organization.
  • The vice president position that oversees Global Business will also be eliminated and the organization is being modified to better align with core business units.
  • Gary Reblin will continue to report to Cochrane as vice president overseeing Product Innovation.

Additionally, within the DPMG organization, DPMG Ron Stroman will continue to oversee Government Relations, Sustainability and Office of the Judicial Officer. He also will lead international efforts that involve public policy and oversee International Postal Affairs, a new function within his group.

The changes take effect Oct. 20.

 

 

 

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Please visit us on the USPS Industry Outreach website.

Thank you for your support of the United States Postal Service.

Consumer and Industry Affairs

 

To subscribe or unsubscribe to PCC Alerts, please hit reply and send us your request.

 

Privacy Notice: For information regarding our privacy policies, visit www.usps.com/privacypolicy.

PCC Alert: Postal Service Announces 2017 Shipping Prices

i Oct 19th No Comments by

Postal Service Announces 2017 Shipping Prices

Pricing Unchanged for Priority Mail International, First-Class Package

International and Priority Mail Express International Service

 

 

 

WASHINGTON — The U.S. Postal Service today filed notice with the Postal Regulatory Commission (PRC) of price changes for Shipping Services products to take effect next year, following the end of the holiday mailing season. The filing does not include any price increase for First-Class Package International Service, Priority Mail Express International and Priority Mail International.

 

The Postal Service continues to provide excellent value and reliability for the shipping industry, along with convenient choices for consumers. The average Shipping Services price change is 3.9 percent, which results in an average shipping price of less than $5 per shipment across all shipping products.

 

The new prices, if approved, represent a modest price increase in Priority Mail by 3.9 percent and an average of 3.3 percent in Priority Mail Retail prices.

 

The Priority Mail Flat Rate Box and Priority Mail Flat Rate Envelope prices for these products are:

 

 

Current New
Small flat-rate box $6.80 $7.15
Medium flat-rate box 13.45 13.60
Large flat-rate box 18.75 18.85
Large APO/FPO flat-rate box 16.75 17.35
Regular flat-rate envelope 6.45 6.65
Legal flat-rate envelope 6.45 6.95
Padded flat-rate envelope 6.80 7.20

 

The PRC will review the prices before they are scheduled to take effect Jan. 22, 2017. The complete Postal Service price filing with the new prices for all Shipping Services products can be found on the PRC site under the Daily Listings section: http://www.prc.gov/dockets/daily.

 

The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.

 

 

 

 

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Please visit us on the USPS Industry Outreach website.

Thank you for your support of the United States Postal Service.

Consumer and Industry Affairs

 

To subscribe or unsubscribe to PCC Alerts, please hit reply and send us your request.

 

Privacy Notice: For information regarding our privacy policies, visit www.usps.com/privacypolicy.

2016 PCC Day – September 22, 2016

i Sep 10th No Comments by

Central MO Postal Customer Council

Please join us for National Postal Customer Council Day

Thursday, September 22, 2016

*Our keynote speaker will be Jeffrey Williamson, Chief Human Resources Officer and Executive Vice President, USPS Headquarters.

Date: Thursday, September 22, 2016

Time: 11:00 a.m. to 1:00 p.m.

Where: Ashland MO Optimist Club 

511 Optimist Drive

Ashland MO  65010

Lunch will be served.  Cost is $15.00 per person.  Pay at the door or watch for our emailed Eventbrite invitation.  RSVP by 9/15/16

Questions?   Email Glendia.s.ayers@usps.gov or MMS@socket.net  

Special Guest Speaker:

Jeffrey Williamson

 Chief Human Resources Officer and

Executive Vice President       

United States Postal Service

Please join us for the 2016 National Postal Customer Council Day, Thursday, September 22, 2016.  Jeffrey Williamson, Chief Human Resources Officer and Executive Vice President, USPS Headquarters will be our key note speaker.

 Join us as we hear from Mr. Williamson and learn more about the “Value of Central MO PCC”.

****The PCC program is a valuable resource for business mailers, large and small.  Local PCCs serve as an open channel for USPS-to-business communication, providing information and best practices for achieving cost-effective and profitable mailing, education and training, as well as solving local challenges.  Through regular meetings, educational programs, mailer clinics, and seminars, PCC members learn about the latest postal products and services that may help them grow their business.

Central MO PCC offers the following benefits:

      Knowledge – Gain knowledge about postal products, services, and tools to improve mail quality

      Innovative Ideas – Learn about promotions and incentives that raise awareness of innovative mail uses

      Expert Advice – Hear about how to integrate and expand your marketing through the mail

      New Sources – Find new sources for acquiring mailing lists

      Networking – Network with other mailers, business mail service providers, and USPS staff and hear first-hand from others about how they use mail to be more efficient and profitable, as well as face the same challenges you face

      Best Practices – Leverage best practices to improve mailing effectiveness, efficiency, and profitability

 

USPS Forced Price Reduction

i Feb 29th No Comments by

Forced Price Reduction to Worsen USPS Financial Condition by $2 Billion Per Year

Postal Service Exigent Surcharge Pricing to End April 10 

WASHINGTON — Absent Congressional or court action to extend or make permanent an existing exigent surcharge for mailing products and services – including the Forever stamp — the Postal Service will be required to reduce certain prices on Sunday, April 10, 2016. This mandatory action will worsen the Postal Service’s financial condition by reducing revenue and increasing its net losses by approximately $2 billion per year.

“The exigent surcharge granted to the Postal Service last year only partially alleviated our extreme multi-year revenue declines resulting from the Great Recession, which exceeded $7 billion in 2009 alone,” said Postmaster General and CEO Megan J. Brennan. “Removing the surcharge and reducing our prices is an irrational outcome considering the Postal Service’s precarious financial condition.”

(more…)

National Postal Forum

i Nov 25th No Comments by

National Postal Forum is right around the corner!  Mark your calendars and start making plans to attend now.

Where:  Nashville, TN

When: March 20-23, 2016

More Information at www.npf.org

Need help getting approval to attend? Click here!

Meeting – January 7th, 2014

i Dec 22nd No Comments by

The Central MO PCC will be conducting an educational seminar on January 7, 2014.

LOCATION: MFA Oil, 1 Ray Young Drive, Columbia MO 65201.

START TIME: 10:30 a.m. – 12:00 p.m. and will include lunch. The price per person is $10.00.

TOPIC / DISCUSSION: Our topic for this meeting will focus on the 2014 Rates and discussion regarding the Intelligent Mail Barcode and what the updates are on the implementation.

The Postal Customer Council invites you to become a member

i Dec 20th No Comments by

How can you benefit from the Postal Customer Council?

The Postal Customer Council® (PCC®) program is a valuable resource for business mailers, large and small. Local PCCs serve as an open channel for USPS-to-business communication, providing information and best practices for cost-effective and profitable mailing, education and training, and solving local challenges. Though most PCC members include large business mailers, government agencies, and business mail service providers, small businesses can benefit from PCC membership, too.

Your local PCC offers these benefits…

  • Learn from postal experts about marketing through the mail. Find new sources for mailing lists. Printing, database management, and more.
  • Get discounts to major mailing industry events.
  • Network with other mailers, business mail service providers, and USPS executives to discover new ways to make your mailings more efficient and profitable.
  • Hear first-hand from other decision-makers on how they deal with the same challenges you face.
  • Leverage best practices to improve mailing effectiveness, efficiency, and profitability.
  • Gain knowledge about postal products, services, and tools to improve mail quality through workshops and events—and earn a professional certificate to boot.

2016 Fall Mailer’s Conference “We are the Champions!”

i Aug 3rd No Comments by

 

Online Registration:

https://www.eventbrite.com/e/2016-central-mo-pcc-mailers-conference-we-are-the-champions-tickets-25985753087?aff=aff0eventful#tickets

Wednesday, October 5, 2016 to Friday, October 7, 2016

Tan Tar A Resort
Tan Tar A Estates Boulevard
Osage Beach, MO 65065

 Wednesday will be the first ever PCC Biathlon. Join us for a competitive afternoon of mini golf and bowling. All these activities followed by the Wednesday night social hour will be held on the grounds of Tan Tar A.

Thursday’s classes are some of the best of the best. Mark Fallon has created a brand new session “It All Starts With the Address.” We have recruited two gentlemen from Kansas City to conduct an Active Shooter class as well as a new session devoted to retirement. After the business sessions we invite you to join us in the vendor hall for personal consultation on the material that was covered in those sessions. Following dinner Thursday we will be inviting our guests to join us for an evening of entertainment and dessert aboard our Tropic Island Cruise. Paul Larimore and Will Wooten from Shelter Insurance have graciously agreed to serve as our entertainers on the boat.
Friday our special guest will be Vice President of Sales for the United States Postal Service, Cliff Rucker.

We hope you can make it!

Cheers,
Central Missouri PCC

The Rollback Rates are Here!

i Feb 22nd No Comments by

A great article on the rollback rates is provided by Mark Fallon at The Berkshire Company:

On Friday, February 5, The United States Postal Service (“USPS”) released the draft postage rates for the rollback of the Exigent Rate Increase in April. While there remains some uncertainty around the implementation date, this is good news for mailers.

Most commercial mailers will see rates drop around 4.1%, depending upon class of mail and level of sortation. For First-Class Mail, the new rates for one-ounce letters are:

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