In a filing with the Postal Regulatory Commission this week, the USPS announced a $751 million net loss for the month of January, almost double the $384 million lost in the first three months of the fiscal year which began October 1, 2008. That puts the estimated year to date loss at over $1.1 billion with eight months still to go in the fiscal year. It also announced that mail volume in January was down 16% from January 2008. That seems to indicate that the drop in volume is accelerating, as volume in the first three months was down 9.3%.

The text of the 8K report:

The U.S. Postal Service (USPS) previously announced a loss for the quarter ending December 31, 2008, in an 8K filed on February 9, 2009. USPS discloses that its unaudited January 2009 financial results were an estimated $5.80 billion in revenue and $6.55 billion in expenses, resulting in an estimated net loss of $751 million. This loss compares to a loss of $44 million in January 2008, which resulted from total revenue of $6.58 billion and total expenses of $6.62 billion. Mail volumes declined by over 16% in January 2009 from January 2008. The January results continue to illustrate that the downward pressure on the Postal Service business continues into 2009.

Second quarter Revenue, Pieces and Weight data released by the US Postal Service this week confirmed the continuing decline in mail volume, especially first class mail. While revenue for the three month period ending March 31 was up by 3.5% from the prior year, the increase was entirely due to last year’s price hike, as total mail volume dropped by 3.3%.

First class mail was also down by 3.3%, but virtually all of the decline was in the highest priced sub-class, single piece letters, which declined by 5.8%. The average revenue per single piece was 51 cents. By contrast, first class automation presort volume remained about the same as the prior year, dropping just 0.2%. The average revenue for each automated presort piece was 34 cents.

Standard mail pieces continue to slightly outnumber first class, with about 51% of the total volume. Standard mail declined slightly less than first class, down 3% from 2007. The average piece of standard mail brought in 21 cents in revenue.

The steepest decline in volume was in the Postal Service’s highest priced product, Express Mail, which declined by 14.3%. While Express Mail is the most expensive option offered by the USPS, it now represents just 1.2% of total revenue.

Priority Mail declined by 4.3%, reflecting the softening of the overall package delivery market. Each piece of Priority was worth $6.23 in revenue. Interestingly, while the average weights of first class and standard mail pieces dropped slightly from the prior year, the average Priority Mail piece was heavier, possibly reflecting increased usage of Priority Flat rate boxes.

The NALC’s magazine, Postal Record, this month features a 4 page article on the USPS’s financial performance in FY 2005. It’s a good summation, and ends with a pointed reminder:

with the federal government awash in red ink, there are external risks. As many letter carriers recall, during the 1980s and 1990s, Congress and the White House were more than willing to cut the deficit by raiding the Postal Service “piggy bank,” despite the mandate that USPS operate as an independent entity.

One problem with the summary, though is the statement that “Bucking the downward drift of recent years, first class mail increased slightly”

Not so fast! It is true that total first class volume was up very slightly for the year- 145 million pieces to be exact. The problem is that there was only one month that showed an increase- November. Mainly because of a one time spike in credit card solicitations, volume in that month was 863 million pieces over the prior year. Do the math- outside of November, first class volume was down by over 700 million pieces. A one month spike caused by an external event (in this case a court decision) doesn’t represent a change in the trend.

Of course, regardless of the reason for the spike, I’m happy we got the extra revenue. Ummm, but it turns out we didn’t- while first class volume (adding November back in) was up by 0.1% for the year, the first class revenue we took in was down by 0.9%.

You know what they say about every silver lining having a cloud… 

Behind the Numbers: A look at USPS financial performance

The USPS had a 10.3% increase in January revenues compared with the prior year, thanks to the rate increase implemented on January 8. Unfortunately for the USPS, the money being brought in by the increase is still earmarked for the congressionally mandated escrow fund, not for paying expenses. And while January looked good, for the fiscal year to date, revenue is up by just $343 million or 1.4% over SPLY. Expenses, on the other hand, are up by $918 million or 4.0% above SPLY.

Priority and Express continue to show healthy growth, with Priority volumes up 7.5% year to date, and Express up by 5.5%.

The full report in is available at the USPS Financials web page, in either Excel or Adobe format. The USPS analysis notes appear after the break:

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First class mail volume was down by just under a billion pieces from the prior year in the quarter ending December 31, according to volume numbers released by the US Postal Service on Wednesday. The 3.8% decline in first class volume was only partially offset by a slight (0.5%) increase in standard volume. In terms of dollars, first class was down $415 million, while the standard increase was just $30 million. There was continued growth in both Express Mail (up 5.7%) and Priority (up 4.1%), but the additional revenue from the two classes combined came to just $75 million more than the prior year.

The decline in volume wasn’t a total surprise- a year ago there was a sharp spike in mail volume attributed by USPS CFO Dick Strasser to “the quadrennial impact of election mailings, increased activity in marketing financial services and credit cards”.

An additional concern for the postal service was a 0.7% decline in Total Factor Productivity.

Source: USPS Revenue Pieces and Weights Reports, Postal Quarter 1, FY 2006