The United States Postal Service continued to hemorrhage money by losing an additional $5.6 billion this past year, according to a federal report Tuesday.
The postal service releases the report on an annual basis to highlight its budget and expenses. It has lost billions of dollars in recent years with the latest showing more of the same. The postal service puts much of the blame on mandated retiree health benefit expenses but critics contest it’s a management problem.
“The net loss suffered by the Postal Service this year cannot be ignored,” the report states. “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.”
The postal service argued in the report that legislative and regulatory reforms are needed to fix the funding issue. The report notes worker compensation has increased by $922 million while benefits went up an additional $1.2 billion. The postal service argues the increase in labor costs is likely due to there being more package deliveries.
“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,” the report states. “Transportation expense also increased to significantly improve service levels in 2016.
Some have warned of evidence that the postal service is able to use its monopoly profits on mail delivery to cross-subsidize, or artificially decrease, the prices of services that are supposed to compete with companies like UPS and FedEx.
The new report calculates that shipping and packages increased its revenue by 15.8 percent in the last year. It adds the gains were offset by a decline in first-class mail. Some critics, however, contest the issue stems from a culture and leadership that is unwilling to change and adopt cost-effective practices.
“There isn’t really any change in terms of what kinds of reforms they have to be making,” Taxpayers Protection Alliance expert Michi Iljazi told InsideSources prior to the report being released. “We’re not going to really see anything in terms of progress and how they are going to be able to get their books under control, how they are going to be able to stop these quarterly losses.”
The postal service reported a net loss of $5.1 billion for fiscal year 2015. It also reported a $5.5 billion loss in the year before that. The reports in past years put the blame on issues ranging from legislative burdens and statutorily mandated payments they don’t control. Iljazi contests the problem is rooted in leadership that is unwilling to change.
“There really isn’t any indication, at least not from what we’ve heard so far, that we’re going to be getting any form of wholesale change,” Iljazi said. “It’s going to be more of the same in terms of another quarterly loss and as I said sugarcoating the idea that the package delivery is up because of the holiday season that’s coming.”
Iljazi points to Saturday deliveries as an area of reform that the postal service has refused to touch. They insist on keeping the weekend runs without even bothering to look at more cost-effective ways to do it. Iljazi also points to how the postal service disregarded cost saving methods in its plan to acquire its new fleet of trucks.
As InsideSources has previously reported, the postal service has faced criticism in recent years for attempts to expand its services beyond mail delivery even as first-class mail delivery has slowed. According to an internal survey of postal employees obtained by InsideSources earlier this year, the organization’s workforce is deeply dissatisfied with the direction of the organization.
