"The rate of decline in total mail volume has slowed, but we do not anticipate improvements for several more quarters," the USPS said in its quarterly financial report. "We expect advertising mail to stabilize and slightly increase as the economy improves."
The Postal Service's cost-cutting efforts include a plan to reduce work hours "by approximately 90 million" in the fiscal year that will end Sept. 30, which is less than the 115-million hour reduction in the previous fiscal year. One challenge to further cost reductions in general and the workforce in particular is the growth of delivery points. About 1 million new addresses have been added in the past year.
From October to December 2009, the number of mail pieces declined 9% and revenue declined 4% from the year-earlier period, the report said. That was an improvement from the previous 12 months, when volume declined 13% and revenue 9%.
Helped by a 9% reduction in career employees during calendar year 2009,USPS's cost reductions finally kept pace with its revenue declines. As a result, it lost "only" $263 million in the most recent quarter, versus a $380 million loss for October-December 2008.
But the fact that the Postal Service lost money even in what is usually its busiest quarter shows just how dire its financial situation is.
"Revenue is expected to continue to decrease in 2010 and, even with substantial cost reductions, our 2010 net loss is projected to be over $7 billion," the report said. Most of that projected loss is a $5.5 billion payment to a retiree-benefit fund that is nothing more than an accounting trick to make the federal deficit look smaller.
The Postal Service is scheduled to reveal next week its proposal to deliver mail one less day per week. But that won't have much impact on the current fiscal year.
"No significant savings are anticipated for 2010 from the proposed ability to adjust the six day delivery requirement, even if granted sometime during 2010, as multiple operational, contractual, and customer issues will need to be resolved before actual implementation of a five day per week delivery schedule," the report noted. "However, such important new flexibility could provide direct cost savings beginning in 2011."
- Mail Volumes Have Declined Faster Than The Postal Workforce, But That Might Change: More on the USPS' drastic cutbacks last year.
- How USPS Could Bypass Congress on Saturday Delivery: Explains the bogus overfunding of a retiree healthcare account and how the USPS could go to five-day delivery without Congressional approval.