At the November 14 meeting of its Board of Governors, the Postal Service reported a loss of $9.5 billion for its 2024 fiscal year (October 1, 2023, through September 30, 2024). That amount is $3 billion larger than the loss reported for fiscal 2023, far different from the projected $1.7 billion surplus anticipated in Postmaster General Louis DeJoy’s 10-Year Plan. In its press release, the agency’s publicists naturally wanted to explain the loss as beyond management’s control and that, otherwise, The Plan was working:
“The net loss for the year under generally accepted accounting principles (GAAP) totaled $9.5 billion, compared to a net loss of $6.5 billion for the prior year, an increase of $3.0 billion primarily attributed to the year-over-year increase in non-cash workers’ compensation expense. Over 80% of our current year net loss is attributed to factors that are outside of management’s control, specifically, the amortization of unfunded retiree pension liabilities and non-cash workers’ compensation adjustments. …
“The plan delivers the framework for us to better innovate to grow revenue, work more efficiently, and achieve financial sustainability to fulfill our universal service mission over an integrated network to deliver both mail and packages.” Despite its efforts to spin a more positive story, the numbers showed continued loss of market-dominant mail, a sub-optimal increase in competitive product volume, and revenue growth that was both less that equal to the price increases imposed in FY 2024 and less than the growth of expenses.
Not surprisingly, revenue was 1.73% higher than in FY 2023 – not because of greater volume, but because of price increases in January and July 2024 totaling more than 9.7%. As for volume, whether because of price increases or diversion to electronic media, total mail volume fell 3.2% year-over-year, ending at 122.489 billion pieces – the least annual mail volume since 1981.
The PMG hopes to build competitive product volume to offset the loss of traditional mail but, whether because of marketplace competition, prices, or service, growth in that category by the end of FY 2024 was far from inspiring – revenue was 2.7% higher on volume growth of only 1.98%.
Given these revenue and volume figures, costs and complement continued to be incongruent. Contractual raises and cost-of-living adjustments drove up compensation costs, while DeJoy’s insistence on a primarily fixed-schedule career workforce solidified complement at a level arguably inconsistent with plunging volume.
The details of the agency’s fiscal 2024 financial performance were presented in its Form 10-Q, a document similar to those issued by private companies to report annual results. The 100-page report also was an opportunity for management to add comments and explanations that cast the results more favorably, and the USPS took full advantage. Among other things, the report served as yet another vehicle to promote the PMG’s 10-Year Plan, uncritically invoking it 29 times as the polestar guiding its decisions and actions.
Given the nature of the document, it’s not surprising that the Postal Service cites all the factors, like labor contracts, federal obligations and mandates, regulatory requirements, marketplace competition, and the economic environment, that allegedly impede it from achieving high performance. The Plan – if only it could be implemented without obstruction or delay – is repeatedly cited as the solution; failures or shortcomings in The Plan aren’t mentioned. However, reading between the lines, it’s clear that the same challenges that faced prior PMGs haven’t gone away and that, as a result, The Plan isn’t producing the magical results that proponents would suggest. Reality remains in force.
Moreover, if the report reflects management’s thinking, there still seems to be no realization that ratepayers will respond with their business if prices are reasonable and service is as expected and reliable. Declaring pricing practices are “judicious,” or publicizing measures to advance “high-quality service” and performance “excellence” are vainglorious bloviation if what customers are really paying, and the service they’re really experiencing, aren’t as advertised. USPS volume and revenue will be impacted accordingly. Whether the fiscal year’s results will affect the governors’ faith in DeJoy and his Plan remains to be seen, but many observers might conclude that the governors’ hitherto unwavering confidence might deserve reconsideration.
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