USPS Sees $2.5B Surplus for First Half of Year

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The U.S. Postal Service had net income of $2.56 billion -- $1 billion over budget -- for the first half of its fiscal year, the agency reported this week. Meanwhile, mail volume was up and expenses are under plan.


According to the postal service's fiscal and operating statements, revenue from Oct. 1 to March 31 was $35.52 billion, 1.4 percent above the agency's budget plan, while expenses of $32.96 billion were 1.7 percent under budget plan.


For the six months, total volume rose 1.1 percent; Standard mail, 3.6 percent; Package Services, 1.2 percent; and International, 7.5 percent.


"Standard mail is virtually the only large growth category that we've had in several recent quarters," said Malcolm Harris, manager of demand forecasting and economic analysis at the USPS.


International growth fluctuates from quarter to quarter but in general can be attributed to resurgence in global trade, Harris said.


Several mail classes saw declines. Express Mail fell 4 percent; Periodicals, 3.2 percent; Priority Mail, 1.5 percent; and First-Class, 0.8 percent.


The USPS has "tremendous technological competition for First-Class mail and tremendous market competition for Priority and Express mail," Harris said.


The USPS' Quarter 2 Year-to-Date Preliminary Revenue, Pieces, and Weight report also was released. It offered more insight into each mail class. For example, in Standard, the Regular-Automation Presort category saw the greatest volume increase, 6.5 percent over last year. Regular-Nonautomation Presort declined 10.2 percent.


"This is a continuation of a long-run trend plus the incentives we've been building into our rates for at least a decade," Harris said. "Our goal has been to reorient mailers incentives from encouraging presorting to encouraging automation mail."


The Nonprofit Enhanced Carrier Route category saw the biggest volume drop within Standard, falling 20.4 percent. But Harris said this category also fluctuates quarterly.


"This category is heavily influenced by the election cycle," he said. "It was very heavy in the first quarter because of the run-up to the first primaries, and then that subsided."


Enhanced Carrier Route grew 4.8 percent, which Harris said is notable because the category "has been fairly weak over the last decade as more mailings have become more targeted."


Within Package Services, Media Mail increased 10.5 percent and Bound Printed Matter was up 2.2 percent while Parcel Post dropped 3.4 percent.


Notable within Priority Mail is that domestic mail fees in this category, which are fees for bulk mail permits, declined 53.6 percent. Harris attributed the steep decline to commercial mailers who have quit using Priority Mail.


Within First Class, Single-Piece Letters, Flats & Parcels dropped 1.7 percent, but has been down as much as 4 percent in the past few years, Harris said. Total Presort Letters, Flats & Parcels, however, declined only 0.5 percent.


"What is worrisome here is that over the past two years workshared mail -- Total Presort Letters, Flats & Parcels -- most of which is automated, has declined," Harris said. "That is a distinct change from the past. In the 1990s, that category would grow 3 to 5 percent per year."


Harris said this category contains barcoded letters and includes bills, statements and First-Class advertising mail.


"This is a category that has been hit by electronic diversion in the last few years, whereas most electronic diversion was affecting single-piece mail before that," he said. This category "contains some of the highest contribution pieces that the postal service has. These are pieces that contribute a great deal toward funding the network by which the mail is delivered and universal service is delivered."


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