The U.S. Postal Service released its financials for fiscal year 2018 on Wednesday, marking its 12th year of operating at a loss despite an increase of revenue from its shipping and packaging business.
What are the details?
The United States Postal Regulatory Commission's report showed that USPS had a net loss of over $3.9 billion in the past year — compared to a loss of $1.2 billion in 2017 — in spite of a 10 percent spike in sales from its shipping and packaging division. The fiscal year 2018 ended on Sept. 30.
According to The Associated Press, this is the 12th consecutive year the independent government agency has operated in the red.
USPS' bottom line has been hurt by rising costs, including worker pay, employee benefits and fuel prices, Reuters reported. Another factor that has dogged the agency is consumers' increased use of email over letter mail, the latter of which makes up 70 percent of USPS' revenue.
Postmaster General and CEO Megan Brenna stated in a news release Wednesday:
The secular mail volume trends continue largely due to electronic diversion and transaction alternatives. We compete for business in every product line, every day from the first mile to last mile.
We are aggressively managing our business and continuing to focus on serving our customers and communities. However, the flawed business model imposed by law continues to be the root cause of our financial instability. We are seeking reforms that would allow the organization to reduce costs, grow revenue, compete more effectively, and function with greater flexibility to adapt to the marketplace and to invest in our future.
Is there anything more to it?
The last time USPS was in the black was 2006. That year, Congress passed the Postal Accountability Enhancement Act, which required the agency to prefund 75 years' worth of retiree health benefits within a decade.
USPS has defaulted on those payments every year since 2012, and 2018 was no different.
"We made the difficult decision to prioritize the maintenance of adequate liquidity to ensure the continued achievement of the Postal Service's primary mission of providing universal postal services to the American people," USPS Chief Executive Office and Executive Vice President Joseph Corbett said, according to the release.
"Making the pre-funding payments in full or in part would have left the Postal Service with insufficient liquidity to ensure the continued achievement of our mission," he added.
As of 2013, the retiree health care pre-payment was around $5 billion a year, according to KGO-TV. The USPS 2018 financials show the organization is behind in its liability for the health benefits — known as the Postal Service Retiree Health Benefits Fund — by roughly $66.5 billion, citing estimates from the Office of Personnel Management.
The Postal Service has been pleading with Congress to provide them relief from the mandate imposed by the Postal Accountability Enhancement Act, and to allow them to raise postal fees higher than the rate of inflation.
This week, regulators approved the Postal Service's request to increase the price of a first-class stamp from 50 to 55 cents. The change will go into effect in January.