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The U.S. Postal Service reported Friday that losses for fiscal 2020 widened to more than $9 billion even as revenue rose, given a drop in demand for mail services and a rise in expenses amid the COVID-19 pandemic.
The net loss for the year ended Sept. 30 was $9.18 billion, after a loss of $8.81 billion a year ago.
The USPS said net losses include costs outside of management’s control, including workers’ compensation expenses caused by government mandated actuarial revaluation and discount rate changes, and the amortization of unfunded liabilities.
Excluding those non-controllable items, the “controllable loss” widened to $3.75 billion from $3.42 billion.
Total revenue rose 2.8% to $73.13 billion, as a jump in shipping and packages revenue amid a surge in e-commerce demand during the pandemic, helped offset an overall decline of 7.6% in mail services revenue, its largest category.
The rise in revenue came despite a 9.4% drop in total volume to 129.17 billion. That implies that revenue per piece increased 13.4% to 56.6 cents.
Within mail services, first-class mail volume fell 4.2% to 52.62 billion pieces and marketing mail volume dropped 15.2% to 64.14 billion pieces, “as a result of the pandemic, and to a lesser extent, secular mail declines,” the USPS said.
“Mail volume began to show slight improvement in the last few weeks of the year, although this was driven in part by the temporary surge in political and election mail associated with the recent general election cycle,” the USPS said in a statement.
In shipping and packages, revenue rose 25.3% to $28.54 billion, while volume increased 18.8% to 7.32 billion pieces.
“Given the lasting declines in mail that accompanied the 2007-2009 Great Recession, the Postal Service expects that the COVID-19 crisis may have similar effects on mail volume going forward and that it may never recover to its pre-pandemic levels,” said Chief Financial Officer Joseph Corbett. “Further, while we do believe that our package volumes will remain higher given what looks to be a potential permanent shift in consumer behavior, we do not expect our package revenue growth over the medium-to-long term to make up for our losses in mail service revenue caused by COVID-19.”
Meanwhile, total expenses increased by $2.34 billion, or 2.9%, to $82.31 billion. Compensation and benefits expenses increased by $1.2 billion, given workforce additions needed to address the surge in package volume, and increased overtime and paid sick leave resulting from the COVID-19 crisis.
Transportation expenses rose by $630 million, due mostly to increased package volumes and limited availability of commercial air transportation due to the pandemic, which resulted in higher shipping costs.
The pandemic also “significantly increased” expenses for supplies and services, such as personal protective equipment (PPE).
The USPS faced public and regulatory scrutiny in recent months, as cost-cutting measures launched by President Trump-appointee Postmaster General Louis DeJoy, who took the reins in May, were viewed as a political tool to curb mail-in voting.
After facing criticism and the threat of an FBI investigation, DeJoy said over the summer that he would suspend the planned reforms until after the election.
“2020 has been an extraordinary year for the Postal Service and the nation,” DeJoy said. “Amid the tumult of the COVID-19 pandemic — and with the challenges of the election, disruption in workforce, rapid changes in our marketplace and long-term financial distress — the 644,000 women and men of the Postal Service delivered for the American public.”
