We don’t think it will come as a surprise to anyone that the US Postal Service has again reported huge financial losses. But there is some good news as well as some obvious bad news behind those numbers; and some interesting information to boot.
First the good news:
· The USPS delivered 589 million more packages in FY 2017 than they did in the previous fiscal year
· Those additional packages represented an 11.4% growth rate, not a bad growth rate for any business, But remember the USPS is not just any business
· And finally, the current FY loss of $2.7 Billion is down from the previous year’s loss of 5.6 billion. And, that is a significant improvement
Now for the bad news:
· The USPS delivered 5 billion fewer pieces of mail in FY 2017 than they delivered in the previous fiscal year. This was a 3.6% decrease from the previous year.
· The reason this is so critical is because according to Postmaster Megan Brennan, letter and mail shipping accounts for 70% of its yearly revenue
· USPS also defaulted on more than $6.9 billion in payments to pre-fund future pension and health benefits for postal workers
So when you analyze the good news and stir in the bad news, you come away more confused than ever and here’s why.
Letter and mail shipping has been and will continue to be on a consistent decline. So if that revenue source currently represents 70% of the annual USPS revenues, it would behoove them to find another revenue source that will make up for the continuing losses. They need a positive cash flow solution to replace the declining letter and mail shipping metric and they need to find it and implement really quick.
But wait, don’t they already have a thriving revenue source in delivering packages? You bet they do. Now they need to implement a full-court press to improve their bottom line revenue for delivering packages so that revenue source becomes 70% or perhaps 80% of their annual revenue.
Can it be done? Only time will tell.