The U.S. Postal Service plans to release its third-quarter financial report on Friday morning, and many employees and customers will be hoping for signs of a continued turnaround after years of negative balances.
USPS has lost tens of billions of dollars over the past seven years, as people increasingly turned to digital methods for communication and paying their bills. But the losses have been slowing, thanks in part to some changes in the way the agency operates — not all of them have been popular.
In 2012, USPS found itself in the red by $12 billion. It lost a smaller $5 billion in 2013. The recent improvement is largely due to a significant uptick in package deliveries — USPS is trying hard to compete with the likes of UPS and FedEx.
Last quarter, the agency’s shipping-and-package volume rose by 7.3 percent, and its revenue increased by $379 million. Nonetheless, the Postal Service ended that quarter with a net operating loss of more than $1.8 billion.
One of the biggest drags on USPS finances has been the 2006 congressional mandate that requires the agency to prefund retiree health benefits at a cost of about $5.7 billion per year. Coincidentally, that’s about the same amount that the Postal Service lost last year, meaning the agency could potentially turn a profit if not for the requirement.
Labor groups that represent postal workers have called on lawmakers to repeal the mandate, and Postmaster General Patrick Donahoe said during a teleconference with reporters last year that ending the controversial requirement would be the “single biggest change that would have the least negative impact” among possible reforms for the Postal Service.
Another drag for the USPS has been declining first-class mail, one of the agency’s cornerstone services. Last quarter, volume in that area dropped another 4 percent.
Despite that dip in volume, the Postal Service ended the second quarter with a $2 million increase in first-class mail revenue compared to the same quarter the previous year. The gain was driven by a temporary, emergency postage-rate increase of 3 cents set to expire in early 2016.
Several lawmakers have tried to advance bills to overhaul the Postal Service, but those efforts have stalled in the highly divided Congress. Some of the proposals have called for service cuts such as ending Saturday mail delivery, but those plans have met with stiff resistance from labor groups and rural customers.
Postal Service leaders have implemented certain changes on their own, such as offering employees incentives for early retirement and forging an agreement with Staples that allows the office-supply chain to operate USPS retail counters at some of its locations. Post office employees and unions protested the deal in front of Staples locations nationwide in April.
Correction: A previous version of this story incorrectly stated that USPS reported a $260 million net profit in operations, but that figure represented only controllable expenses. The Postal Service actually reported a net $1.8 billion loss in operations when considering non-controllable expenses.