The US postal service extended its losses during the second quarter, despite a hike in package revenues and an emergency price rise effected in January.
The agency announced on Monday that it shed $2 billion from April to June, compared with a $740 million net loss in the same quarter the prior year, and a loss of $1.9 billion in its first quarter.
According to ABCNews, although the Postal Service is under Congressional oversight, the agency is independent and is not funded via tax.
A surge in its shipping and package venture boosted the agency’s operating revenue by 2% from last year to $16.5 billion.
The volume of its most lucrative brand, first-class mail, dropped 1.4% as more people consumers communicate digitally, but the short-term price hike cancelled out the losses by pushing revenues up 3.2% for the product. The rate hike is a temporary measure to offset effects of recession.
The rise in losses was for the most part due to a $1.5 billion surge in operating costs following workers compensation payouts, the agency said.
USPS attributes much of its financial turmoil to a 2006 requirement to stow away billions of cash to cover future retirees’ healthcare. The Postal Service has failed to remit three of its payments, which are already due, tothe fund and anticipates that will default on the next $5.7 billion installment due September 30.
The agency said it was unable to upgrade its fleet because of the losses.
“To continue to provide world-class service and remain competitive, we must invest up to $10 billion to replace our aging vehicle fleet, purchase additional package-sorting equipment, and make necessary upgrades to our infrastructure,” the agency’s chief financial officer Joseph Corbett is quoted by Reuters as saying.
The agency is seeking congressional approval to reduce door-to-door delivery and halt Saturday mail delivery.
To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Yashu Gola at firstname.lastname@example.org