The U.S. Postal Service concluded the
2008 fiscal year (October 1, 2007 -
September 30, 2008) with a net loss of
$2.8 billion as the national economic
slowdown lowered mail volume and as
the Postal Service bore additional
costs mandated by the Postal Accountability
and Enhancement Act of 2006. The loss
occurred despite more than $2 billion
in cost-cutting measures that included
the use of 50 million fewer workhours
compared to the previous year. The
Postal Service continued to improve
national on-time First-Class Mail
delivery performance, reaching record
highs in fiscal year 2008.
USPS mail volume in fiscal year 2008
totaled 202.7 billion pieces, a decline
of 9.5 billion pieces, or 4.5 percent,
compared to the previous fiscal year.
Declining mail volume was a symptom
of the worsening national economy,
particularly related to the financial
and housing industries and increased
use of the Internet for communications.
Total revenue in fiscal year 2008 was
$75 billion, unchanged from last year.
Expenses totaled $77.8 billion, including
the $5.6 billion payment required by
the Postal Act of 2006 to pre-fund
retiree health benefits. Excluding all
the retiree health benefit fund payments
from 2008 and 2007, expenses were up
less than 1 percent over last year.
Cost reductions offset nearly all of
the impact from rising inflation, of
which the major contributors were a
$562 million increase in cost of living
adjustments paid to craft employees
and $525 million in additional fuel
costs.
Financial Outlook
"We expect the new fiscal year to be
another difficult one for the Postal
Service and the entire mailing industry,
as economic factors will continue to
reduce mail volume and increase expenses,"
Postmaster General John Potter told
the Postal Service Board of Governors
at a November 2008 meeting. "As we continue
to reduce workhours and other costs, our
top priority remains providing excellent
service to our customers. The combination
of excellent service and affordable
prices makes Postal products a great
value."
In addition to the weak or contracting
economy and the diversion of mail to
electronic means, the pre-funding of
retiree health benefits continues to
have a significant impact on Postal
Service finances. "The Board will work
with members of Congress to ease some
of the financial pressure we are currently
facing from the Postal Act," Board
Chairman Alan Kessler announced in
November 2008. "Legislative relief
is only part of the solution to the
problems facing the Postal Service.
The Board and management will actively
pursue the actions necessary to further
reduce costs and grow revenue," Kessler
added.
Fourth Quarter Service Performance
In the fourth quarter of FY 2008,
on-time delivery performance for
overnight First-Class Mail service
remained at 97 percent for the second
consecutive quarter, one point above
the same period last year. Two-day
service was 94 percent on-time and
three-day service was 93 percent
on-time, unchanged from the fourth
quarter of the previous year.
With the beginning of the new fiscal
year, the Postal Service has implemented
new service standards and has expanded
the geography and classes of mail for
which service is measured in 2009.
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