U.S. Postal Service: Actions Needed to Stave off Financial Insolvency Page: 4 of 22
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Crisis Has Worsened,
and USPS Is Likely to
As we have noted previously, USPS urgently needs to restructure its
networks and operations as its financial condition and outlook have
reached a crisis level. USPS has experienced a cumulative net loss of
nearly $20 billion over the last 5 fiscal years, including an $8.5 billion loss
in 2010; and a reported net loss of $5.7 billion in the first 9 months of
fiscal year 2011. By the end of this fiscal year, USPS projects that it will
incur a $9 billion loss, experience a substantial cash shortfall, reach its
$15 billion borrowing limit, and not make its statutorily mandated $5.5
billion retiree health benefits payment to the federal government. USPS
summarized its situation as the equivalent of facing Chapter 11
USPS's financial problems are related to customers' changed mail use-
that is, mail volume is declining as people shift to electronic
communications and payment alternatives rather than using USPS. Total
mail volume peaked in fiscal year 2006 at 213 billion pieces and declined
by almost 20 percent to about 170 billion pieces by the end of fiscal year
2010. In the first 3 quarters of this fiscal year, the volume for First-Class
Mail-USPS's most profitable product that accounted for 49 percent of
USPS operating revenue-has declined by 6.5 percent compared to the
same period last year. USPS has said that mail volume declines and
changes in the mail mix have outpaced even its most pessimistic
forecasts. USPS has projected a further drop in total mail volume to about
133 billion pieces by 2020.
USPS does not now have-nor expects in the future to have-sufficient
revenue to cover its costs without legislative changes. These costs
include compensation and benefits for a workforce of about 653,000 total
employees, a network of about 33,000 USPS-operated retail2 and
processing facilities, and 6-day delivery services to about 150 million
locations, which expands by roughly 1 million new residences and
businesses each year. USPS had $67 billion in revenue in fiscal year
2010 and $75.5 billion in expenses, resulting in a loss of $8.5 billion,
which it expects to grow to a $20 billion loss by 2015. USPS also faces a
variety of challenges, including difficulties reducing costly excess capacity
in its networks; closing facilities due to stakeholder resistance or statutory
2USPS-operated retail facilities include (1) main post offices, where local postmasters
oversee retail operations in the geographic area; (2) postal stations located within a
municipality's corporate limits; and (3) postal branches located outside a municipality's
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United States. Government Accountability Office. U.S. Postal Service: Actions Needed to Stave off Financial Insolvency, text, September 6, 2011; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc292869/m1/4/: accessed January 16, 2019), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.