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US mail misery

£5.23bn loss in year American postal service was supposed to break even

 

There’s postal action on both sides of the Atlantic with the USPS announcing a £5.23billion ($6.5bn) loss just as the UK’s Royal Mail was fined £5.8million for missing delivery targets.

The US Postal Service (USPS) had been expecting to break even in 2023 but Keep US Posted, a non-profit advocacy group including greeting card publishers, has warned the postage rate hikes were contributing to the company’s debts.

Above & top: USPS was supposed to break even this year, not lose £5.23bn
Above & top: USPS was supposed to break even this year, not lose £5.23bn

The group is battling to protect the US mail service saying: “Whether it brings something as special as a handwritten card or something as necessary as medication, USPS is the only institution capable of going the last mile to reach, serve, and tangibly link every American – and now it needs our help.

“In the shadow of Covid19, demand for mail, and appreciation for it, is surging. That’s why we need to make sure the US Postal Service can deliver for all of us.”

Postmaster General Louis DeJoy had put his Delivering For America plan into action which was projected to make the business financially solvent with unprecedented postage increases every six months since January 2022.

Keep US Posted executive director and former congressman Kevin Yoder said: “But they are clearly only triggering a dramatic loss in mail volume and fuelling even more debt for the US Postal Service. Twice-annual, above-inflation postage hikes are worsening USPS’ financial woes and trapping it in quicksand, as even more mail is driven out of the system.”

Above: Louis DeJoy’s Delivering For America plan has sparked protests
Above: Louis DeJoy’s Delivering For America plan has sparked protests

His comments followed an open session on Tuesday, 14 November, where the delivery company’s board of governors announced the staggering £5.23bn loss for the year, driven by mail volume declines of over 9% and a 2% drop in parcel volumes.

The board said it anticipates a £5.07bn ($6.3bn) loss next year, noting that the 10-year Delivering For America plan, which depended on parcel growth that hasn’t materialised, could face changes.

Kevin added: “Rate hikes are sabotaging traditional mail, which still accounts for the majority of USPS revenue. Not only are the American people slated to endure an unprecedented fourth stamp hike in two years this January, but we’ll be bailing out the postal service, unless Congress acts now to provide more oversight.”

Here in the UK letter volumes have dropped by 25% since before the pandemic – 10.5m in 2019 down to 7.7m in 2021, but rising to 7.9m in 2022 – while parcel deliveries grew significantly as online shopping increased from 1.29m in 2019 to 1.7m in 2021 and dropping back to 1.5m last year.

Above: Royal Mail letter volumes have also dropped while parcels have increased
Above: Royal Mail letter volumes have also dropped while parcels have increased

But industry regulator Ofcom announced a £5.8m fine for Royal Mail on Monday, 13 November, for missing first and second-class delivery targets by a “significant and unexplained margin” causing “considerable harm” to customers.

And there was universal condemnation in March when an inflation-busting 16% increase in the price of first-class stamps was announced, smashing through the £1 barrier for the first time at £1.10 from 3 April, with the second-class price, capped by Ofcom “to make sure an affordable option is always available”, rose by over 10% from 68p to 75p.

That was then compounded by a second 15p increase taking first-class letter stamps to £1.25 from 2 October, although the second-class price wasn’t altered.

As part of the GCA’s #Cardmitment campaign to encourage Christmas card sending, the messaging is to encourage the public to use second-class stamps, highlighting how for only 75p you can send a card from John O’Groats to Lands End and keep in touch with friends and family.

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