USPS Reports Less-Than-Stellar First-Quarter Numbers

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The U.S. Postal Service's first quarter was less than stellar, the agency reported yesterday.


Richard Strasser, USPS chief financial officer, reported at the Board of Governors monthly meeting that net income for the first quarter -- Sept. 9 to Dec. 1 -- of fiscal 2001 was $246 million, or $142 million below plan. Revenue grew by $175 million to $15.4 billion, which was $159 million below plan. The USPS' expenses, which were $15.2 billion, came in $17 million less than budget.


Strasser also said the USPS saw a 1.8 percent gain in total factor productivity.


He said mail volume grew by 3.3 percent overall, but First-Class, Priority and Standard-B mail saw declines in revenue. Standard Mail and international mail registered gains.


The lower-than-expected mail volume in many categories contributed to the USPS' financial problems, Strasser said.


"First-Class Mail grew only two-tenths of 1 percent in volume, and this is primarily a function of the slowing economy," Strasser said. "The magnitude of this slowdown definitely is driven by the economy."


Despite the rate increase that went into effect earlier this week, Strasser said he is still concerned about the numbers.


"Unfortunately, implementing a rate increase during a recession is one of the less favorable situations you'd like to find yourself in, because the increase in rates itself [has] a diminishing effect on volume," Strasser said.


He added, "Financially, we are hard-pressed because of the inflation in our costs, and of course because the rate commission came back with $1 billion less revenue in the recommended rates. We are concerned about the financial outlook."


Postmaster General William J. Henderson said the holiday mailing season was successful.


"Automation helped us smoothly process 100 million more cards and letters than last holiday season," he said.


Between Thanksgiving and Christmas in 1999, the USPS canceled 3.9 billion cards and letters. Last year's total for the same period reached 4 billion.


"Dec. 18 was a record mail volume day for stamped cards and letters," he said. "With more than 314 million, that's 13 percent above the same period last year."


Henderson noted that information on package volume during the holiday mailing season was not yet available. He reported that first-quarter volume was 1.6 billion pieces higher than the same period last year. First-Class Mail volume grew 2 percent but was 1.7 percent below plan for the quarter.


Henderson also said that for the first quarter in history, Standard Mail volume grew more than First-Class Mail volume did. Standard-A volume, which traditionally consists of advertising mail, mail-order catalogs and other direct mail pieces, increased 6.8 percent from the year-ago period and was 6.5 percent more than expected.


The board also approved funding to invest in computer technology that will enable large-volume mailers to track their mail as it flows through the automated mail stream while allowing postal management to better match equipment and staffing to workloads, improving productivity and reducing operating costs.


The system essentially steps up construction of the agency's information platform.


The funding approval allows for upgrades to 300 integrated data servers, a primary source of operational and mail sorting data for the information platform, and will allow the postal service to purchase 25 new systems to support emerging postal and customer data requirements.


In making his presentation to the board, Charles Bravo, USPS vice president for the project, focused on the need to serve two primary audiences.


"The integrated data system was deployed to 300 processing plants and only collects data from letter mail barcode sorters at the end of each mail processing run," Bravo said. "Our customers need mail status information on flats as well as letters. They also need this information in near real time rather than having to wait for the end of each processing run, a typical delay of anywhere from 30 minutes to six hours."


Bravo said the second drive behind the expansion is postal management's need for information about the mail during processing.


"Like our customers, we need this information, and we need it in near real time," Bravo said. "Our current systems cannot support these needs."


The board also elected Robert Ryder chairman and S. David Fineman vice chairman. Terms of office are one year. The chairman and vice chairman are always elected at the board's meeting each January.
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