The U.S. Postal Service said today that its fourth-quarter deficit totaled $1.3 billion. That’s $2 billion less than the deficit the service ran in the fourth quarter of 2011. The USPS said that a decline in first-class mail and the Congressional requirement that the Postal Service fully fund its retirement fund for the next 75 years are the major factors behind the string of losses.
Operating revenues in the fourth quarter were down just 1%, to $17.7 billion as holiday cards and packages boosted sales. Package shipments rose 4.7% in the quarter, but first-class mail dipped 4%.
The recent announcement that the USPS would end Saturday mail delivery is expected to save $2 billion a year, but that decision still needs Congressional approval and that is not something the USPS can assume will be forthcoming. Congress has expressly denied the Postal Service’s attempts to shut down its Saturday delivery on every previous ocassion.
The biggest problem the USPS faces is the pension pre-funding requirement established in 2006, which forces the Postal Service to provide for the retirement benefits it may have to pay for employees it hasn’t even hired yet. No other entity, public or private, must meet such a requirement. The USPS currently allocates more than $5 billion a year to its pension requirement.