Standard Mail increase is fiscal Q3 bright spot for Postal Service

The US Postal Service reported a 4.2% year-over-year increase in Standard Mail for the third quarter of its fiscal year, indicating advertising mail has rebounded for the second straight quarter.

It marked one piece of good news in an otherwise difficult quarter for the USPS. The Postal Service posted a net loss in the quarter of $3.5 billion, bringing its total loss year-to-date to $5.4 billion. Total mail volume, which includes First Class Mail, Standard Mail and Periodicals, dropped about 700 million pieces in the third quarter, bringing the total decline in mail volume for the year to a loss of 6.6 billion pieces. The USPS does not expect to see growth in First Class Mail for the foreseeable future.

The Postal Service expects to lose about $7 billion this fiscal year if Congress does not pass legislation that would adjust the payment schedule for its retiree health care fund. More than three-quarters of that expected net loss is due to the $5.5 billion payment the USPS must make to the fund on September 30, the final day of its fiscal year.

Joseph Corbett, Postal Service CFO and EVP, told the open meeting of the Postal Service Board of Governors that the increase in Standard Mail volume reflected some of the economic optimism the nation experienced earlier this year. However, now, as news reports suggest the economy has stalled, the USPS is worried it could hamper Standard Mail’s rebound, he said.

“Still, July volumes ran slightly above last year,” Corbett said, “so we hope this rebound will continue.”

Expenses were another bright spot for the Postal Service as the organization was able to reduce its costs by about $100 million in the quarter for a year-to-date reduction of about $1.3 billion. Postmaster General John Potter said the USPS plans to reduce total costs by $3.5 billion this fiscal year, which follows the $6.1 billion in cost reductions it made in FY 2009.

“Even with this significant cost reduction, the Postal Service must continue to pursue its bold business plan,” Potter said. The plan includes the exigent price increase the USPS filed with the Postal Regulatory Commission last month, as well congressional approval for changes to the retiree health fund prefunding schedule and authority to move to five-day delivery.

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