The US Postal Service announced a significant net loss of $6.5 billion for the fiscal year ending on September 30, 2023. This alarming figure comes as first-class mail volume reaches its lowest point since 1968. According to the Postal Service, revenue experienced a slight decline of 0.4%, resulting in $78.2 billion.
Louis DeJoy, the US Postmaster General, expressed dissatisfaction with the results and acknowledged that the loss was driven by unforeseen inflation costs amounting to $2.6 billion. DeJoy stated, “We are not happy with this result.” The agency has actively raised stamp prices in an effort to mitigate losses. Additionally, a long-term restructuring plan, initiated in 2021, aims to eliminate the projected $160 billion losses over the next ten years. Nevertheless, this plan no longer anticipates a breakeven year in 2024.
DeJoy revealed that USPS successfully lowered the projected 2021 losses of $160 billion to just under $60 billion through cost reductions and increased package revenues. However, the decline in first-class mail volume remains a significant challenge. In 2023 alone, first-class mail volume dropped 6.1% to 46 billion pieces, marking a 53% decline since 2006. Despite this decline, higher stamp prices led to a revenue increase of $515 million.
The net loss was also influenced by adjustments made due to underfunded retirements caused by actuarial revaluation and discount rate changes. As of now, USPS employs 640,000 individuals, with employee compensation and benefits costs amounting to $52.8 billion, a 2.6% increase. USPS plans to reduce transportation costs by $1 billion in the coming year.
Operating expenses for the year totaled $85.4 billion, an increase of $5.8 billion, or 7.3%. USPS reported that, in order to maintain liquidity, they did not fulfill the full $5.1 billion retirement plan payment obligations.
In April 2022, President Joe Biden signed legislation granting USPS approximately $50 billion in financial relief over the course of a decade.
Recently, USPS has sought approval to raise the price of first-class stamps from 66 cents to 68 cents, effective January 21. This increase would mark a 32% spike within the past four years, as stamp prices were only 50 cents in early 2019.
The decline in first-class mail volume, primarily used for letters and bill payments, remains a significant concern, as it accounts for $24.5 billion, or 31% of USPS’s revenue in 2023.