US Postal System Continues to March Backward

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The death of the U.S. Postal Service (USPS) has been written about for years, and at least partially exaggerated. However, its new earnings report shows that it is marching in the wrong direction.

Adjusted for noncash charges, the revenue for the USPS’s fiscal third quarter was flat at $16.1 billion. However, the bottom line was not encouraging:

The Postal Service reported a net loss for the quarter of $2.1 billion, an increase in net loss of $573 million, compared to the same quarter last year. Controllable loss for the quarter was $587 million, an increase in controllable loss of $35 million, driven by higher transportation costs.

USPS management is careful to break out the figures over which it has the ability to affect. This quarter those numbers were troubled by one of several factors that can hammer it from time to time. “Transportation costs” were the culprit this time.

Postmaster General and CEO Megan J. Brennan made a comment that does not entirely make sense:

 The growth in our lower-margin package business is not sufficient to make up for the accelerating mail volume declines.

Also:

In the third quarter, letter mail volumes declined by approximately 1.4 billion pieces, or approximately 4%, while package volumes grew by 133 million pieces, or approximately 11%, continuing a multi-year trend of declining letter mail volumes and increasing package volume. Year-to-date, despite growth in package volume, overall volume has declined by more than 3 billion pieces.

One bad thing could not make up for another.

Without question, internet-delivered messages and rivals like UPS and FedEx will continue to plague the USPS. This continues to beg the question of whether it has too many trucks and too many people and delivers mail on too many days. It has not come up with any strong arguments against progressive costs cuts. And the sooner the better.