Postal Service, citing losses, seeks higher stamp prices
The U.S. Postal Service is hoping it can soon raise stamp prices by a penny or more.
The postal service on Wednesday reported a quarterly loss of $562 million, despite growth in package delivery, due to continued erosion in the use of first-class mail as well as expensive mandates for its retiree health care obligations. It also attributed losses to a forced reduction in stamp prices last year.
The postal service is generally barred under federal law from raising prices more than the rate of inflation. But it is seeking greater regulatory leeway to increase prices, including a one-cent rate hike provided in a measure being considered by Congress.
The current cost of a first-class stamp is 49 cents.
"America deserves a financially stable postal service that can continue to play a vital role in our economy and society," said Postmaster General Megan J. Brennan. She said the postal service continues to aggressively cut costs.
The financial report shows what it described as "controllable" income of more than $12 million for the three months that ended on March 31. But when taking into account expenses to prefund retiree health care and other items considered beyond the management's control, it posted a loss.
Operating revenue came to $17.3 billion, a decrease of $474 million from the same time last year.
The postal service continued to notch double-digit growth in its package business, boosted by the strength of Amazon and other Internet retailers. But that wasn't enough to offset losses in both first-class mail and marketing mail, also known as "junk mail," which make up the bulk of revenue.
The postal service is urging relief from the mandate to pre-fund retiree health benefits. Legislation in 2006 required the postal service to fund 75 years' worth of retiree health benefits, something that neither the government nor private companies are required to do.
Legislation passed by a House committee earlier this year would relieve the postal service of much of the expensive pre-funding requirements and allow a one-cent increase in the price of a first-class stamp. The Postal Regulatory Commission is also reviewing whether to offer more leeway to raise stamp prices, a move opposed by many trade groups.
First-class mail volume is down as people rely more on email for online bill payments. The number of first-class and marketing mail items delivered during the last quarter was 34 billion pieces, nearly a 4 percent decrease.
The financial numbers released Wednesday bring the postal service's year to date earnings to $900 million, better than the $1.7 billion loss for the same period last year, largely due to reduced expenses for the health care pre-funding.
The postal service has lost money for 10 years in a row. It says the continuing red ink hurts consumers because it can't make necessary investments to ensure "prompt, efficient and reliable postal services," such as by updating delivery trucks and equipment. Due to public resistance, it dropped a previous proposal to cut costs by eliminating Saturday mail delivery.
"Today's financial report shows the underlying business strength of the U.S. Postal Service while also indicating the need to address external matters beyond USPS control," said Fredric Rolando, president of the National Association of Letter Carriers, which is backing the House bill.
An independent agency, the postal service does not use taxpayer money for its operations.
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