The USPS reported that revenue for the period ended Feb. 1 dropped 3.5% over the same period last year, or 5.1% below plan.
Expenses for the period came in 3.9% below plan, and 1.7% below last year, reflecting variable costs related to reduced volume, said Richard Strasser, CFO and executive vice president of the USPS, speaking yesterday at the Mailers Technical Advisory Committee meeting in Washington.
In general, 58% of USPS costs are volume variable, with 42% fixed.
Standard mail volume is down 8.3% for the fiscal year. Parcel volume is down 3.5%, but parcel revenue is up 4.9%, due to the rates implemented last summer. Postal revenue has dropped $56 million, $1.31 billion short of plan.
Expenses, forecast to increase $678 million for the first five accounting periods, were cut by $32 million. Work hours decreased by 33 million hours over last year as a result of volume declines. Overtime hours were reduced 25% over last year in mail processing, delivery service, and customer service work hours.
Strasser declined to comment on the timing of the filing of the next postal rate increase. “The key is what’s going on in the economy, and how it affects the mailing industry,” he said. “Most economists I’ve consulted with say there won’t be a boom when we come out of this recession–not anywhere near the boom of the ’90s.”
Ashley Lyons, the rate case architect for the USPS, said he is confident that the rate case will process on schedule once the lone protester to the rate case settlement agreement, the American Postal Workers Union (APWU), delivers its protest over discounts for bulk first class mail to the Postal Rate Commission on Feb. 14. A decision is expected from the PRC on March 25, and a final USPS Board of Governors decision on April 2.
USPS rate case attorney Dan Foucheaux said he doubts the PRC will tinker with the rate case as proposed because “that would break the agreement. We don’t expect that to happen.”
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