Rate Increase Narrows USPS Revenue Gap

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U.S. Postal Service revenue for its most recent accounting period was under plan yet was closer to projections because of the June 30 rate increase, a postal official said this week.


Bill Tayman, USPS manager of corporate financial planning, said revenue for Accounting Period 11, which ran June 15 through July 12, was $4.86 billion, just 0.7 percent below the planned $4.9 billion.


"Up until AP 10 we were 4.8 percent under plan and during AP 10 were 5.6 percent under plan," he said, "so being only seven-tenths of a percent under plan is a considerable improvement."


But Tayman said the planned $4.9 billion "did not include the assumption of the rate increase." A postal service spokesman could not say what the plan figure would have been if the rate increase were included in the estimate.


Though the year is not over, Tayman said, "earlier we said that an early implementation of rates would bring in an additional $1 billion," and the numbers indicate the agency is on track to meet this estimate.


Expenses were $5 billion in AP 11, lower than the planned $5.2 billion, because "we have cut the heck out of our work hours," Tayman said. "We continue to be really pleased with our expense performance."


During the first three quarters of this fiscal year, which ends next month, the postal service trimmed 13,750 career employees from its rolls and reduced work hours more than 54 million below last year's level.


As for mail volumes, Standard Mail was flat between this year's AP 11 and the same time period last year. For AP 10, Standard Mail volume rose 0.9 percent over AP 9. Tayman said the June 30 rate increase helped boost volume in AP 10, which ran from May 18 to June 14.


"Normally, before a price increase, mailers will try to get mailings out before the prices go up," he said.


Though Standard Mail volume is down 5 percent for the year, Tayman said Standard Mail has been improving.


"We think that the advertising market is starting to come back a bit," he said. "We were hammered in the first quarter but we've seen gradual improvement in each quarter."


First-Class Mail volume fell 3 percent for AP 10 and 11 compared with last year. Tayman attributed it to that "there were tax rebate mailings to every citizen in this period last year as well as the notice mailings to every citizen about the tax rebate checks."


Volume also spiked last year, he said, because of the Gramm-Leach-Bliley Financial Modernization Act of 1999, which required banks and other financial institutions to provide opt-out notices to consumers by July 1, 2001. Such notices must be sent annually.


In addition, he said, "Prudential had several big mailings sent out at this time last year that explained that it was changing its ownership structure to stock structure," which added to mail volume.


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