U.S. post office loss doubles as it warns COVID-19 will hit its finances

By Diane Bartz WASHINGTON (Reuters) - The U.S. Postal Service on Friday said its losses more than doubled to $4.5 billion in the quarter ending in March and warned the economic slowdown spurred by the spread of COVID-19 could severely hurt its finances over the next 18 months. The Postal Service's Board of Governors also met on Friday and said the service needs financial help from Congress to maintain service at current levels.

Reuters May 09, 2020 01:05:37 IST
U.S. post office loss doubles as it warns COVID-19 will hit its finances

COVID-19 will hit its finances" src="https://images.firstpost.com/wp-content/uploads/reuters/05-2020/09/2020-05-08T140651Z_1_LYNXMPEG4719Q_RTROPTP_2_USA-POSTOFFICE.jpg" alt="US post office loss doubles as it warns COVID19 will hit its finances" width="300" height="225" />

By Diane Bartz

WASHINGTON (Reuters) - The U.S. Postal Service on Friday said its losses more than doubled to $4.5 billion in the quarter ending in March and warned the economic slowdown spurred by the spread of COVID-19 could severely hurt its finances over the next 18 months.

The Postal Service's Board of Governors also met on Friday and said the service needs financial help from Congress to maintain service at current levels. The White House has threatened to block aid that Congress has already approved during the pandemic, and has accused the Postal Service of charging too little to package shippers such as Amazon.com Inc.

"The stark reality is that the pandemic will cause meaningful near-term and long-term implications, from the steep decline in revenue we will suffer this year and in the coming years. That will endanger our ability to fulfill our universal service missions absent congressional intervention," said Postmaster General Megan Brennan, who steps down June 15.

She said the Postal Service had requested funding from Congress and unrestricted access to borrowing. She told a congressional committee last month that the new coronavirus alone could mean $13 billion in lost revenue this year.

The agency said quarterly revenues rose $348 million to $17.8 billion, but noted that rising workers compensation costs increased its expenses.

The meeting comes two days after the governors announced they had selected Republican donor Louis DeJoy to be the next postmaster general.

The Postal Service has been struggling for years as online communication replaces letters, and after a 2006 law required it to pre-fund its employee pension and retirement health care costs for the next 75 years. It is funded entirely through services and postage and has been further hurt as advertisers have decided to reduce mail during the pandemic.

Congress has authorized the Treasury Department to lend the Postal Service up to $10 billion as part of a $2.3 trillion coronavirus stimulus package. President Donald Trump has threatened to block that aid.

Since early in his administration, Trump has criticized the post office, saying it charges too little to deliver packages sent by online retailers such as Amazon, whose founder and Chief Executive Jeff Bezos also owns the Washington Post, which has been critical of the president.

E-commerce packages account for most of the USPS Parcel Select business, which brought in revenue of $6.8 billion on the delivery of 2.9 billion packages during the fiscal year ended Sept. 30, 2019.

The three largest USPS customers – identified by experts as Parcel Select users Amazon.com, United Parcel Service Inc and FedEx Corp - account for 8.5% of its operating revenue. USPS makes money on every package, based on a review by the Postal Regulatory Commission. Shippers get discounted rates for some U.S. ZIP codes, but not on roughly 23,000 ZIP codes outside of urban areas where it is more competitive, said Robert Fisher, a postal consultant and a former USPS executive.

Delivering to far-flung doorsteps in more remote areas is expensive and few shippers want to pay extra fees that companies like UPS and FedEx tack on to cover the cost. Fisher is skeptical that the USPS will ever be at risk of disappearing. "It's not going to happen anytime soon because approximately one out of three Amazon packages is still delivered by the Postal Service, and it will be skewed towards the places where it's more expensive for them to do it themselves," he said.

The pandemic has also boosted interest in expanding options to vote by mail rather than crowding into polling places, making it more important that funding extends past November for the presidential election.

(Reporting by Diane Bartz, Chris Sanders and Lisa Baertlein; editing by Jonathan Oatis and David Gregorio)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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