The U.S. Postal Service expects to end its current fiscal year with a $300 million loss instead of a projected $100 million surplus, according to Postmaster General William J. Henderson.
It would be the first since 1994, when the USPS posted its biggest deficit ever, $1.8 billion. A year later, however, it posted a $1.8 billion surplus, which in turn led to subsequent surpluses totaling more than $5 billion.
He did not address what impact this finding might have on the rate case pending before the Postal Rate Commission in which the USPS is seeking its support for a rate increase next January averaging 6.4%.
Henderson, who made the disclosure shortly after meeting with the postal service’s Board of Governors, said he doubted there would be much of a change in postal finances by Sept. 30 when the fiscal year ends.
He attributed the projected loss to unanticipated costs, such as the sharp increase in gasoline prices over the summer and a decline in first class mail volume and revenues which was partially offset by a 5% increase in Standard A (advertising) Mail.
The PMG cautioned that although the USPS is currently making money, just how much of a deficit the USPS will end the fiscal year with “depends on how far down our revenue falls in this last quarter.”
“That’s something he’s been saying for some time,” said Richard A. Barton, the Direct Marketing Association’s senior vice president, Congressional Matters. Pointing out that the DMA “has been concerned about the softness of postal finances for some time,” Barton also said the group “certainly hopes things are not as bad as the PMG thinks they might be.”
Although the USPS “has been able to reduce its expenses more than it had originally expected, it’s just not getting the revenue and volume it expected, and it’s not looking good for the future” observed Barry Brennan, the Mail Advertising Service Association’s director of postal affairs.
Neither man would predict what effect Henderson’s disclosure would have on the pending rate case.
The PRC is expected to file its recommendation on the request with the postal service’s Board of Governors in October.
The effect of Henderson’s disclosure also could not be determined on the future of contract talks between the USPS and three of its four labor unions which are just beginning. Postal service contracts with the American Postal Workers Union, the National Association of Letter Carriers, and the National Postal Mail Handlers expire in late November.
Network
