November 14, 2023
The Postal Service reported that the agency lost $6.5 billion in FY 2023 which ended September 30. This contrasts with the promise to break even in the Delivering for America Plan. It also exceeds the annual planned loss of $4.5 billion published a year ago.
USPS announced and the Governors approved a financial plan to lose another $6.2 billion in FY 2024 that started October 1.
Last year’s loss came despite the USPS succeeding in reducing work hours by 28 million. The singular success was overwhelmed by several failures:
To achieve a slightly smaller loss in FY 2024 of $6.2 billion, USPS plans to increase Shipping and Packages revenue by $2.016 billion or 6.4%. That is a massive one-year jump from FY 2023’s 1% gain. On the assumption of a large increase in package revenue, USPS hopes to boost total revenue from $79.3 billion to $81.7 billion, a jump of $2.4 billion or 3%. The agency expects a $542 million increase in First-Class Mail revenue to be mostly offset by a $518 million drop in Marketing Mail revenue. USPS plans to continue its work-hour reductions by another 24 million, or 2.1% in FY 2024.
As discouraging as a planned loss of $6.2 billion is, it is built on the assumption of a major acceleration of the package line which has been dead in the water. All signs are for a pricing race to the bottom as package delivery capacity greatly exceeds demand.
Several USPS Governors spoke at the open meeting today, marking the first time any of them noted publicly that Delivering for America is not delivering on its promises and needs some mid-course corrections. But they all seemed to toe the line with Postmaster General DeJoy’s plan, as one of them said, “There is no alternative.”
None of the Board of Governors spoke about the most urgent issue facing Market Dominant Mail users: that semi-annual above-inflation rate hikes are driving massive amounts of mail out of the system. A network operator that benefits greatly from economies of scale should have unnecessary volume suppression front and center in its strategic deliberations. Total USPS volume in FY 2023 dropped from 127.444 billion to 116.146 billion, down 11.3 billion or 8.9%.
The Delivering for America Plan could soon have the dubious distinction of breaching the 100 billion piece mark that was first reached 44 years ago in 1980, perhaps as early as this year.