USPS mail volume drops in Q1 of FY2008: MTAC

According to preliminary financial results, the US Postal Service’s mail volume is down by 3% for the first quarter of fiscal year 2008.

The decrease is “very, very troubling,” said Glen Walker, chief financial officer and EVP for the USPS, at the Mailers’ Technical Advisory Committee Meeting on January 30.

The combination of the “rate shock” following the May 2007 rate increase and the rapidly declining economy resulted in “a lot less mail in the system,” Walker said. When asked by an audience member, Walker confirmed that this was particularly concerning because the first quarter of the fiscal year has traditionally been the USPS’ best quarter.

Revenues are up about 3.5% for the first quarter, largely because of the 2007 rate increase, Walker said. The net income for the first quarter is estimated to be $672 million, he said.

“Despite the numbers, we’re not planning to do anything dramatic other than work harder and make our system work,” said Postmaster General Jack Potter, who spoke to the committee later that day. “Financially, we are struggling with revenue, but we’re not unlike other businesses,” he said.

Overall, the number of pieces mailed during this quarter was down by 1.7 billion, Walker said. To put this in perspective, he said, the quarter following September 11, 2001 saw mail volume drop by 5.5%.

During FY2008’s first quarter, which ended on December 31, First-Class Mail volume dropped by 3.9% while Standard Mail volume decreased by 2.6%, Walker said. Of all the mail classes, only Periodicals increased in volume – at a rate of 1.2%, he said.

Letters are relatively stable, whereas Flats are the real issue, said Ashley Lyons, USPS manager of corporate finance planning.

Flats are down in volume by about 11%, he said.

“As we look forward, we’re hoping for the best, but we’re preparing for the worst,” Walker said. With business and consumer confidence declining, the USPS has to focus on reducing its costs and accelerating ideas to generate revenues, he said.

According to the USPS, the first quarter financial results will be available in February.

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