The US Postal Service has seen record losses as traditional mail is replaced by electronic means. Without enough money to pay for years of employee benefits, the agency is calling for legislation to enable them to raise their prices.
On Thursday, the USPS reported losses of $2.1 billion in the third fiscal quarter of 2017, compared to a $1.6 billion loss in the same quarter last year.
Over the past 10 years, the USPS has incurred a net loss of $63.3 billion and they project future losses without legislative and regulatory changes.
The agency also warned that it will likely have to default on $6.9 billion in payments for future retiree health benefits and pensions, according to the Associated Press. From 2012 to 2016, the USPS has defaulted on $33.9 billion in Postal Service Retiree Health Benefits Fund prefunding payments.
If their debt is not addressed soon, the American taxpayer will likely have to cover the costs when future employees retire and cash in on their benefits, to which they are legally entitled.
In order to keep the agency running, US Postmaster General Megan Brennan suggested a new pricing system that would allow them to cover its costs.
In the third quarter, the Postal Service recorded an increase in packages or approximately 11 percent, but saw a decline in letter mail, which make up 70 percent of their annual operating revenues, by approximately 1.4 billion pieces or around four percent. Combined, the year-to-date volume has declined by more than 3 billion pieces.
“The growth in our lower-margin package business is not sufficient to make up for the accelerating mail volume declines,”Brennan said in the announcement. “Our financial situation is serious, but solvable.”
However, the Postal Regulatory Commission (PRC), an independent panel that monitors and regulates USPS, is due to conclude a 10-year review of the postal service’s rate-setting system this year. The PRC could remove the price cap on stamps.
“Our financial situation is serious, but solvable,” Brennan said, citing an unreasonable rate cap that restricts stamp price increases to the rate of inflation. “We’re clearly looking for the PRC to establish a new pricing system for us.”
The Postal Service is also looking to invest in new fuel-efficient delivery trucks and other innovations to compete with new forms of competition.
“The volume declines in mail are expected to continue due to the ongoing migration from mail toward electronic communication and transaction alternatives,” Joseph Corbett, Chief Financial Officer and Executive Vice President, said in the announcement. “To address this trend, we have focused on innovations, including mobile and digital strategies, to improve the value of mail. We must also continue to focus on reducing expenses and improving efficiencies, including adjusting employee staffing and scheduling to match the changing workload.”