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The U.S. Postal Service (USPS) ended
its 2011 fiscal year (October 1, 2010 -
September 30, 2011) with a net loss of
$5.1 billion. The year-end loss would
have been approximately $10.6 billion
had it not been for passage of legislation
that postponed a congressionally mandated
payment of $5.5 billion to pre-fund
retiree health benefits.
Total 2011 mail volume declined by
3 billion pieces, or 1.7 percent, from
2010. The Postal Service's largest and
most profitable product, First-Class
Mail, continued its year-over-year
decline, from $34.2 billion in 2010
to $32.2 billion in 2011 (5.8 percent),
which dwarfed continued growth in its
more competitive products, packages
and Standard Mail.
Economic indicators suggest that the
worst of the precipitous volume decline
during the recession is over. The lack
of strong economic growth, however,
continues to have an impact on the
Postal Service's financial situation.
USPS Shipping Services' revenue, which
includes Priority Mail and Express
Mail, increased $530 million in 2011
(6.3 percent). The increase in Shipping
Services revenue was driven by strong
growth in the Parcel Select and Parcel
Return Services, due to increased
mailings of packages, as customers
continued to use the Internet more
often to purchase products. Revenue
from Standard Mail increased by
$495 million (2.9 percent) on a
volume increase of 2 billion pieces
(2.6 percent).
"The Postal Service can become
profitable again if Congress passes
comprehensive legislation to provide
us with a more flexible business model
so we can respond better to a changing
marketplace," said Postmaster General
and CEO Patrick R. Donahoe. "To return
to profitability we must reduce our
annual costs by $20 billion by the end
of 2015. We continue to take aggressive
cost-cutting actions in areas under our
control and urgently need Congress to
do its part to get us the rest of the
way there."
Strategies to reduce total expenses
include organizational redesign
initiatives. Benefits of some of
these plans, however, may be partially
offset by rising fuel prices. The
Postmaster General has reported that
despite taking aggressive steps to
reduce costs, the U.S. Postal Service
will not survive as a self-financing
entity without significant changes to
current law. The path forward for the
Postal Service will require that all
stakeholders embrace fundamental change,
"and that our employees, the labor
unions and management associations,
mailing industry customers and business
partners (all) play a constructive
role shaping our future," Donahoe said.
Several new marketing initiatives
have been introduced that may help
to improve revenue growth, including
expansion of simplified addressing
for business mailers, Priority Mail
Regional Rate Boxes, Reply Rides Free,
customized cards and the sale of
gift cards.
Other 2011 USPS financial results include:
* Operating revenue of $65.7 billion
compared to $67.1 billion the year before.
* Operating expenses of $70.6 billion
compared to $75.4 in 2010.
The Postal Service continued to increase
operating efficiency in 2011, including
a reduction in work hours by 34 million,
despite an increase of 636,500 delivery
points. Its productivity gains were the
result of effective workforce management,
efficient use of materials and transportation,
and continued advancements in the use
of technology. Since 2001, the Postal
Service has reduced work hours by 28 percent,
while delivering to almost 14 million
additional addresses.
"The continuing and inevitable electronic
migration of First-Class Mail, which
provides approximately 49 percent of
our revenue, underscores the need to
streamline our infrastructure and make
changes to our business model," said
Chief Financial Officer Joe Corbett.
"Since peaking at 213 billion pieces
in 2006, our volume has continued to
decline each year."
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