The United States Postal Service released its financials for April 1st through June 30th, 2020.
COVID-19’s impact on retail, commercial customers, and mail service providers has resulted in a decline in mail volume. The number of packages shipped has grown substantially with the surge in e-commerce. Experts expect this surge to abate as the economy opens. This increase in packages and shipping has driven increased work hours and operating expenses, however.
These increased costs were complicated by logistics restrictions, the need for personal protection equipment (PPE), and increased paid sick leave.
$10 billion from the CARES Act can address the short-term liquidity difficulties but only postpones the Postal Service’s financial crisis. They reported total revenue of $17.6 billion in the third quarter of 2020. This is an increase of $547 million (3.2%) over the same period in 2019. These numbers include a decrease in marketing mail and first-class mail (37.2% and 36.4% respectively) as well as the increase in shipping and packages revenue (up 53.6%). The Postal Service had operating expenses of $19.8 billion for the quarter, up 2.5% ($19.8 billion), compared to the same quarter last year. Compensation and benefits expenses increased by 5.5% ($632).
“Significant declines in our mail volumes as the result of the pandemic were largely offset by corresponding growth in our package business, but the reality remains that the Postal Service is in a financially unsustainable position absent significant fundamental change. As we work on a plan to ensure our future, we will continue to focus on efficiency and revenue growth opportunities while delivering vital services for the country,” said Postmaster General and Chief Executive Officer Louis DeJoy. “Despite our very significant challenges, I remain optimistic about the future of the Postal Service, but we need to get moving to effect change immediately.”
The net loss for the quarter was $2.2 billion compared to a net loss of $2.3 billion for the same quarter last year. The controllable loss for the quarter was $1.5 billion, compared to a controllable loss of $1.1 billion reported for the same quarter last year.
“The strong growth of our package volume in the third quarter was encouraging, but there is great uncertainty about whether that growth will be sustainable,” said Chief Financial Officer Joseph Corbett. “At the same time, First-Class Mail and Marketing Mail have seen deep volume declines associated with the pandemic, and that lost volume may never return, as was the case following the Great Recession of 2007-2009. We cannot let the recent growth of our package business mask our underlying business model problems, and we are redoubling our efforts to develop a plan to ensure our viability to provide universal service to all of America.”
