NALC statement on USPS’ FY2016 Q3 financial results

From the National Association of Letter Carriers:

NALC-LOGOToday’s quarterly report puts the year-to-date operating profit of the Postal Service at $1.3 billion, demonstrating the overall strength of the postal turnaround. Operating profits for each of the past two years have exceeded $1 billion, and the Postal Service is now into its fourth straight year of operating in the black. The year-to-date operating profit is up by $100 million from 2015’s first nine months. And the postmaster general today said she expects a “robust” fall season with political mail, followed by the peak holiday season.

The third quarter’s $522 million operating loss reflects the typical slowness of Q3 plus the first stamp price rollback since 1919, with the ending in April of the “exigent” price increase—which lowered the quarter’s revenue by about $450 million. That rollback makes little financial sense, since USPS already has the industrial world’s lowest rates.

Nonetheless, the adverse effect on postal revenues should be short term, with the Postal Regulatory Commission’s legally mandated review of the postage rate-setting system starting early next year. We are confident that the PRC will restore rates to sensible levels before implementing a new system.

The big picture is that USPS operations are $4.4 billion in the black since 2012. That’s an impressive performance for a government entity that gets no taxpayer money—earning its revenue instead by selling stamps—and that enjoys widespread public support while providing Americans and their businesses with the industrial world’s most-affordable delivery network.

Equally important is that these operating profits stem from two ongoing structural factors: As the economy continues to improve from the worst recession in 80 years, letter revenue is largely stabilizing. And as the internet drives online shopping, package revenue is skyrocketing, auguring well for the future.

Indeed, the red ink you hear about has nothing to do with the mail but rather with congressional politics—the 2006 decision by a lame-duck Congress to compel the Postal Service to do something no other entity in the country has to do: pre-fund future retiree health benefits. No other public agency or private company has to do this even one year in advance; USPS must pre-fund these benefits decades into the future. That $5.8 billion annual charge is the “red ink.” (It goes on the ledger as a debit, whether or not it’s actually paid in a given year.)

Both the pre-funding and rate issues can be readily addressed if Congress acts on practical, targeted postal reform. There is a strong consensus within a coalition consisting of the Postal Service, postal unions, businesses, mailers and industry groups, as well as key legislators, for a reform package that all stakeholders can buy into, including addressing pre-funding, allowing USPS to use its invaluable networks for some new products and services, and adopting best private-sector practices in investing the USPS retiree health benefits fund. Our coalition will work with Congress to overcome the short-term impact of the rate roll-back and move legislation this year.

News media coverage

USPS counts on ‘broad bipartisan support’ for reform amid losses (Federal News Radio)

Federal News Radio’s story quoted President Rolando, Postmaster General Megan Brennan, USPS Chief Financial Officer Joseph Corbett and Sen. Tom Carper (D-DE). Rolando was quoted at greater length than the others; the story ended with a forward-looking comment from the president:

Fredric Rolando, president of the National Association of Letter Carriers, called on Congress to improve the Postal Service’s financial situation.

“Both the pre-funding and rate issues can be readily addressed if Congress acts on practical, targeted postal reform. There is a strong consensus within a coalition consisting of the Postal Service, postal unions, businesses, mailers and industry groups, as well as key legislators, for a reform package that all stakeholders can buy into, including addressing pre-funding, allowing USPS to use its invaluable networks for some new products and services, and adopting best private-sector practices in investing the USPS retiree health benefits fund,” Rolando said in a statement. “Our coalition will work with Congress to overcome the short-term impact of the rate roll-back and move legislation this year.

. . .

“As the economy continues to improve from the worst recession in 80 years, letter revenue is largely stabilizing,” Rolando said. “And as the Internet drives online shopping, package revenue is skyrocketing, auguring well for the future.”

Click here to read the story.

Price Decrease Deepens Postal Service Losses in Third Quarter (Government Executive)

A balanced story in Government Executive attributed USPS losses to the “forced reversal” of the price increase, workers’ compensation interest rates and pre-funding, even as revenue grew. The story quoted only PMG Brennan and President Rolando, the president at somewhat greater length—in fact, the story ended with a comment from Rolando:

Fredric Rolando, president of the National Association of Letter Carriers, said the report bodes well for the future.

“As the economy continues to improve from the worst recession in 80 years, letter revenue is largely stabilizing,” Rolando said. “And as the internet drives online shopping, package revenue is skyrocketing, auguring well for the future.”

Click here to read the story.

Postal Service delivers more packages, fewer letters (WTOP Radio)

WTOP, an all-news station serving the Washington, DC metropolitan area, wrote a short and somewhat positive piece for its website.

Click here to read the story.

U.S. Postal Service Revenue Rises on Shipping Growth, but Losses Mount (The Wall Street Journal)

A balanced story in The Wall Street Journal led with stronger revenue and talked about the revenue increase, as well as operating profit year-to-date, while also discussing the losses and first-class mail decline.

Click here to read the story.

US Postal Service posts $1.57 billion loss (The Hill)

The story in The Hill included the Postal Service’s increases in revenue and in shipping volume as well as its overall losses. The story also discussed possible congressional action.

Click here to read the story.

U.S. Postal Service posts $1.6 billion quarterly loss, again calls for reform legislation (The Washington Times)

Although the story in The Washington Times contained some confusing information, it did attribute USPS losses to pre-funding. The article ended with the reporter station that most people prefer to receive paper bills even if they pay them electronically.

Click here to read the story.

Postal Service posts $1.6B loss for quarter (The Washington Examiner)

The story in The Washington Examiner mention pre-funding and quoted President Rolando, giving the president more space than either of the two other sources—CFO Corbett and a conservative taxpayer group.

The National Association of Letter Carriers, a postal workers union, argued the U.S. Postal Service was doing fine if you simply looked at its operating expenses, that is, its budget minus the pension obligation. The union has long argued that Congress went overboard when it required the the postal service to agressively pay down its pension and healthcare liabilities — benefits owed to the union’s own members — because doing so makes the service’s financial bottomline look bad.

“The red ink you hear about has nothing to do with the mail but rather with congressional politics — the 2006 decision by a lame-duck Congress to compel the Postal Service to do something no other entity in the country has to do: pre-fund future retiree health benefits. No other public agency or private company has to do this even one year in advance; USPS must pre-fund these benefits decades into the future,” said union President Fredric Rolando.

The story also noted that there is no tax money involved.

Click here to read the story.