View Photo Gallery: The cash-strapped U.S. Postal Service has announced plans to eliminate more than 250 processing centers.

The holidays weren’t merry or bright for the U.S. Postal Service.

The nation’s mail delivery service lost $3.3 billion in its first quarter, which runs from Oct. 1 through Dec. 31 and encompasses the holiday shopping and shipping season.

Total mail volume reached 43.7 billion pieces, a 6 percent decrease from the previous year, USPS said. Revenues on first class and standard mail dropped 3.7 percent to $650 million.

Despite slumping mail volume, the Postal Service’s shipping services improved, generating $2.8 billion for the quarter, a 7 percent year-to-year climb.

The rising cost of gasoline also affected revenues and forced USPS to spend 6.3 percent more on transportation expenses in its first quarter. In order to reduce overall costs, the Postal Service cut 8 million work hours, helping cut pay and benefits expenses by $180 million, or 1.4 percent.

Joe Corbett, the USPS chief financial officer, warned again that the Postal Service will likely default on retirement and health benefits payments later this year, unless Congress changes the current pay formulas.

A coalition of businesses tied to the mailing industry once again called on lawmakers to quickly pass postal reform legislation.

“We have a Postal Service that essentially is living from paycheck to paycheck, which is a very risky proposition for the American economy and the 8 million private sector workers whose jobs rely on the mail,” said Art Sackler, head of the Coalition for a 21st Century Postal Service. “A great financial quarter isn’t going to save the Postal Service, but a terrible financial quarter could sink it. That’s why Congress needs to pass postal reform legislation now.”

Follow Ed O’Keefe on Twitter: @edatpost

Further reading:

Postal regulatory chairman’s $70,000 in travel comes under scrutiny

Miami postal service worker dies after falling into storm drain while searching for cell phone

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