US Postal Service Announces $6.5 Billion Loss for 2023 Despite Big Plan to Break Even
US Postal Service Announces $6.5 Billion Loss for 2023 Despite Big Plan to Break Even
In a disappointing turn of events, the U.S. Postal Service has revealed that it suffered a staggering $6.5 billion loss in the fiscal year that ended on Sept. 30. This news comes despite the organization’s efforts to improve profitability.
The announcement was made by the USPS on Tuesday, and according to Reuters, there is no indication that the service will be able to break even next year either.
U.S. Postmaster General Louis DeJoy expressed his dissatisfaction with the results, stating that revenue had fallen by 0.4 percent to $78.2 billion. He also highlighted that the losses were worsened by $2.6 billion in inflation costs that exceeded projections and couldn’t be recovered.
Despite ongoing attempts to turn things around, the USPS has been grappling with financial difficulties for years. Stamp prices have been raised multiple times, and the service aims to reduce transportation costs by $1 billion in the coming year. Additionally, a 10-year restructuring plan is underway, with the goal of eliminating $160 billion in projected operating losses.
Initially implemented in 2021, the plan had predicted that the USPS would start breaking even by 2023. However, it is evident that this milestone was not achieved.
DeJoy, who was appointed by former President Donald Trump, did mention that the belt-tightening measures have reduced the projected loss from $160 billion to less than $60 billion.
Unfortunately, Americans are increasingly relying less on the postal service. First-class mail volume dropped by 6.1 percent in 2023 to 46 billion pieces, marking a 53 percent decline since 2006 and the lowest volume since 1968.
Nevertheless, revenue has risen to $515 billion primarily due to higher stamp prices.
A significant portion of the loss can be attributed to a 2.6 percent increase in compensation and benefits expenses for the USPS’s 640,000 employees, amounting to $52.8 billion.
In an attempt to mitigate the financial strain, the USPS chose not to make the full $5.1 billion in retirement plan payments that were due.
Despite these cost-cutting measures, operating costs still saw a $5.8 billion increase last year, totaling $85.4 billion, a 7.3 percent rise.
In response to the ongoing financial challenges, the USPS is requesting another increase in stamp prices, proposing a hike from 66 cents to 68 cents. Stamp prices have already surged by 32 percent over the past four years.
In 2022, President Joe Biden signed legislation providing the USPS with approximately $50 billion in financial relief over the next decade, as reported by Reuters.
While first-class mail remains the primary delivery volume for the USPS, it generates significantly less revenue compared to package delivery, according to The Wall Street Journal. Consequently, the USPS has been striving to capture a larger share of the package-handling business and has improved its on-time delivery to match competitors like FedEx and UPS.
The Journal reported that in 2022, 95.1 percent of USPS packages were delivered on time, surpassing FedEx’s 92.4 percent and slightly trailing UPS’s 96.9 percent.
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What role does package delivery play in the USPS’s revenue generation and how does it compare to its competitors
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The U.S. Postal Service (USPS) has announced a disappointing $6.5 billion loss for the fiscal year that ended in September 2023. This significant setback comes despite the organization’s efforts to improve its financial performance.
The USPS made this announcement on Tuesday, and according to Reuters, there is no indication that the service will be able to break even next year.
Postmaster General Louis DeJoy expressed his dissatisfaction with the results, highlighting a 0.4 percent decline in revenue to $78.2 billion. Furthermore, the losses were exacerbated by $2.6 billion in inflation costs that exceeded projections and could not be recovered.
The USPS has been facing financial difficulties for years, and despite various attempts to turn things around such as raising stamp prices and reducing transportation costs by $1 billion in the coming year, the organization is still struggling. Additionally, a 10-year restructuring plan is underway, aiming to eliminate $160 billion in projected operating losses.
The initially implemented plan, which predicted the USPS would start breaking even by 2023, clearly fell short of its goal.
DeJoy, appointed by former President Donald Trump, did mention that belt-tightening measures have reduced the projected loss from $160 billion to less than $60 billion.
Unfortunately, Americans are relying less on the postal service, with first-class mail volume dropping by 6.1 percent in 2023 to 46 billion pieces. This marks a 53 percent decline since 2006, resulting in the lowest volume since 1968.
Nevertheless, revenue has increased to $515 billion primarily due to higher stamp prices.
A significant portion of the loss can be attributed to a 2.6 percent increase in compensation and benefits expenses for the USPS’s 640,000 employees, totaling $52.8 billion.
In an attempt to mitigate the financial strain, the USPS decided not to make the full $5.1 billion in retirement plan payments that were due.
Despite these cost-cutting measures, operating costs still saw a $5.8 billion increase last year, totaling $85.4 billion, a 7.3 percent rise.
In response to the ongoing financial challenges, the USPS is requesting another increase in stamp prices, proposing a hike from 66 cents to 68 cents. Stamp prices have already surged by 32 percent over the past four years.
In 2022, President Joe Biden signed legislation providing the USPS with approximately $50 billion in financial relief over the next decade, according to Reuters.
While first-class mail remains the primary delivery volume for the USPS, it generates significantly less revenue compared to package delivery. The USPS has been striving to capture a larger share of the package-handling business and has improved its on-time delivery to match competitors like FedEx and UPS.
According to The Wall Street Journal, in 2022, 95.1 percent of USPS packages were delivered on time, surpassing FedEx’s 92.4 percent and slightly trailing UPS’s 96.9 percent.
A Note from Our Founder:
Every morning, we at The Western Journal wake up and pursue our mission of giving you the important information you need about what’s happening in America. We can’t do that without your help.
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