The Postal Service on Friday reported a $5.1 billion loss for the 2015 fiscal cycle, a slight improvement over last year, but the ninth consecutive year in which the delivery service has lost money.
Officials said that the loss was due to increased competition, lack of flexibility in products and services it can offer, and the costly mandates for providing health care and retirement benefits to its employees, reported The Washington Examiner. Overall, mail volume is also down, and people are paying more bills online.
"The shipping and package delivery business, as we all know, is extremely competitive. Competition among large delivery companies gets more fierce every day. But not only that ... People that used to be our customers are taking steps to become delivery companies. Regional delivery companies are springing up and start-ups are springing up, too, with companies like Uber," Postal Service Chief Financial Officer Joseph Corbett told post office's Board of Governors Friday morning.
The good news is that revenues were up overall, and the Postal Service made an operating profit of $1.2 billion, showing a continued growth in its package delivery operations, which have grown by 50 percent over the past five years, according to the Associated Press.
However, a special rate surcharge set to expire next year is expected to reduce revenues by $2 billion annually.
"The road is difficult for a number of reasons," Corbett told the Associated Press. "Without the surcharge, for example, in 2015, we would have recorded a controllable loss of $800 million, not income of $1.2 billion. Also, our costs continue to escalate."
The Postal Service was created by the federal government and is under its authority, but it operates as an independent business and does not receive federal funding, forcing it to rely on the sale of postage and other products to continue operating.
A 2006 law requires the service to pre-fund 75 years' worth of retiree health benefits, a heavy burden that no other public or private entity is required to do, according to CFO.com. It is still lobbying Congress to pass legislation that would relieve it from that requirement and give it greater flexibility in setting rates.
