NALC statement on USPS’ report on FY2016 Q2

NALC President Fredric V. Rolando’s statement on the U.S. Postal Service’s financial report for the second quarter of Fiscal Year 2016, covering January, February and March.

The $576 million quarterly operating profit announced today by the Postal Service is positive news for an agency that enjoys widespread public support. The continuing financial upswing shows the importance of maintaining and strengthening the unparalleled—and profitable—postal network.1a-fredric-rolando

This impressive performance in the second quarter of Fiscal Year 2016 brings the operating profit for the year’s first half to $1.833 billion, without a dime of taxpayer money. The Postal Service is now into its fourth straight year of operating in the black—with $4.4 billion in operating profits just since the start of FY2014.

These results show the vitality—and business viability—of the Postal Service in today’s economy. That’s all the more so because they are not a fluke but rather stem from structural factors: An improving economy has helped stabilize letter revenue (Q2 volume up 0.7 percent from second quarter of 2015 and revenue up 1.6 percent), and internet-driven online shopping has sent package volume sharply upward (volume up 11.4 percent and revenue up 16.2 percent over last year’s Q2.) As a result, overall revenue is up by 4.7 percent.

Today’s positive news also validates the emerging consensus among key lawmakers, the Postal Service, postal unions, businesses, mailers and industry groups to move forward with practical reform that all stakeholders can buy into.

Two matters are worth noting in this regard. One is the two-cent decrease in stamp prices that went into effect last month, the first price rollback since 1919. The USPS projects this will cost it about $2 billion annually. This makes no financial sense, particularly when USPS already has the lowest rates in the industrialized world and other nations’ postage rates are rising. Nevertheless, the adverse effect on postal revenues should be short-term in nature since the Postal Regulatory Commission’s scheduled review of the postage rate-setting system begins in less than seven months. We are confident that the PRC will restore rates to sensible levels before implementing a new system.

And the 2006 congressional mandate that USPS pre-fund future retiree health benefits—something no other public or private entity has to do—costs $5.6 billion a year and has accounted for all of the “red ink” you hear about.

If lawmakers adopt a smart, targeted reform package that includes addressing pre-funding, allowing USPS the flexibility to use its invaluable networks for some new products and services, and adopting best private-sector practices in investing the USPS retiree health benefits fund, USPS can continue to provide Americans and their businesses with the world’s most affordable delivery services.

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One Response to "NALC statement on USPS’ report on FY2016 Q2"

  1. Who authorized the two cent reduction in the price of a stamp? Are they the same people who have been claiming that we have been losing money every year? In this years negotiating of a new contract, lets not give away the farm like we have been doing for the past several years. just a suggestion: lets be firm on the percentage of health care costs that we have to pay.lets make the company pay a bigger share of the total premium.

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