The U.S. Postal Service is supposed to be its own business outside of taxpayers. It even calls itself a self-supporting government enterprise. If it was a true business and not under the government, it would be out of business. For 2012, the Postal Service lost a record $15.9 billion. Even if this figure includes an $11.1 billion default to prefund the retiree health benefits, it is not exactly as though “non-GAAP” results matter here.
If you back out the $11.1 billion from the pension funding, then the loss was still close to $4.8 billion without the effects of rounding. If you look down at all of the extraordinary items, the Postal Service said that the sum of total short-term expenses outside of its control came to $13.4 billion. So on that basis it would have a “non-GAAP” loss of $2.5 billion without any rounding effects.
What is so sad is that its shipping and package business grew by 8.7% to almost $12 billion on a volume increase of 244 million pieces. Here is how that compares to the expected growth at for-profit shippers: FedEx Corporation (NYSE: FDX) is expected to post only 3% growth in 2012 to almost $44 billion and United Parcel Service, Inc. (NYSE: UPS) is expected to have only 1.7% sales growth to $54 billion in 2012 (Thomson Reuters figures).
The long and short of the matter is that the Postal Service is growing faster than the private sector, but it is doing it at massive losses. If that is not some serious food for thought, what is?
Now the USPS is calling for more legislative reform. It is asking to determine delivery frequency, meaning it wants to shorten its days of operation. It also wants to offer non-postal products and services. It wants to be able to have quicker pricing and product decisions.
Here is how much regular mail is declining: First-Class Mail revenue fell by $1.163 billion or 3.9%, and Standard Mail fell by $747 million or 4.3% compared to 2011. Total mail volume was 159.9 billion pieces in 2012 versus 168.3 billion pieces in 2011. The total operating revenue was down marginally to $65.2 billion versus $65.7 billion in 2011.
The Postal Service reached its statutory debt ceiling of $15 billion for the first time and it says that liquidity continues to be a major concern and underscores the need for passage of better legislation.
Are we really still supposed to believe that the U.S. Postal Service is an independent self-supporting company outside of taxpayer obligations?
JON C. OGG