The United States Postal Service (USPS) on Tuesday reported a $6.5 billion net loss for fiscal year 2023 despite initially aiming to break even.
The Postal Service said operating revenue fell $321 million, or 0.4%, to $78.2 billion compared to the same period last year, as first-class mail fell to the lowest volume since 1968.
The federal entity pointed to $2.6 billion in inflation costs and a decrease in mail volume for the significant losses. The 2023 fiscal year ended on Sept. 30.
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Total operating expenses for FY 2023 were $85.4 billion, an increase of $5.8 billion, or 7.3%, compared to the same period last year.
USPS had hoped to break even in 2023 as part of a 10-year restructuring plan, known as the "Delivering for America" plan, that was announced in 2021 and aims to eliminate $160 billion in predicted losses.
However, that plan has taken an early hit with news of the 2023 losses.
The results come after USPS posted a net income of $56 billion last year. However, that stemmed primarily from a bailout via the Postal Service Reform Act in 2022, which ended a mandate to pre-fund retirees' health benefits. The agency's adjusted loss in 2022 was $473 million.
Postmaster General Louis DeJoy said agency officials were not happy about the results but added that the federal entity is in the early stages of one of the nation's largest organizational transformations. He said the restructuring is already providing a more consistent, reliable and timely delivery to American businesses and residences.
"We are also addressing near-term financial headwinds relative to inflation as we make strong progress in our long-term cost control and revenue-generating strategies," DeJoy said.
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"The whole organization is highly focused on implementation of the Delivering for America plan and creating a more effective, efficient and competitive Postal Service to serve the nation far into the future."
DeJoy touted how USPS in July launched "USPS Ground Advantage," a new shipping service that he says offers customers a simpler and more affordable way to ship packages.
Crunching the latest numbers, first-class mail fell 6.1% in 2023 and is down 53% since 2006, but revenue from first-class mail increased by $515 million, or 2.1%, because of higher stamp prices.
First-class is the highest revenue-generating mail class, accounting for $24.5 billion, or 31% of USPS revenue in 2023. It is used by most people to send letters and pay bills.
The net loss was also impacted by accounting for its underfunded retirements caused by an actuarial revaluation and discount rate changes, the agency said.
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The USPS, which has 640,000 employees, reported a 2.6% increase in employee compensation and benefits costs coming to a total of $52.8 billion. It plans to cut $1 billion in transportation costs next year.
The USPS is also planning to hike postage rates in January, which would mark the fifth rate hike since 2021 and come on the heels of a July postage increase, according to CBS.
Reuters contributed to this report.
