The US Postal Service (USPS) ended its first quarter (October – December 2008) with a net loss of$384 million after mail volumes slumped 9.3% due to the economic recession. The US postal operator
already recently announced plans to consider delivering on only five days a week.According to preliminary results, USPS revenues declined by 6.3% to $19.1 billion duringOctober-December 2008 while operating costs fell 1.1% to $19.5 billion. The final first quarterresults will be published later this month.
Mail volume during the three months, which included the peak Christmas posting season,declined by 5.2 billion pieces, USPS announced. This 9.3% drop marked the eighth consecutivequarter of accelerating volume declines. With no economic recovery expected for the remainder of FY2009, the Postal Service projects volume for the year will be down by 12-15 billion pieces.
Most of the decrease in mail volume is attributable to the worsening recession, which hasadversely affected all classes of domestic mail. First-Class Mail volume decreased by 1.8 billionpieces and Standard Mail volume was down 3.0 billion pieces in the first quarter.
If current revenue and volume trends continue, the Postal Service could experience a year-endnet loss significantly higher than last year’s $2.8 billion loss. “We are taking bold stepsto cut costs immediately. At the same time, we are examining, realigning and streamlining ourbusiness to address longer-term financial pressures while continuing to provide high levels ofservice to the America public,” Postmaster General John Potter said.
USPS is aiming to eliminate $5.9 billion in costs through fiscal year 2010, including thereduction of 100 million workhours this year, doubling last year’s efforts. In Q1, almost 27million workhours were reduced compared to the same period last year. Other cost-containmentefforts include freezing the salaries of all Postal Service officers and executives at 2008 paylevels, reducing travel budgets, and halting all construction of new postal facilities.
Postmaster General John Potter has also formally asked the US Congress for permission to beable to scale back deliveries from six days a week to five if necessary. USPS will also hold talkswith unions over more flexible working times, and wants to reduce its direct pension contributions.
