Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

U.S. Postal Service chief warns of inflation impact

Published 04/22/2022, 05:10 PM
Updated 04/22/2022, 05:16 PM
© Reuters. FILE PHOTO: United States Postal Service Postmaster General Louis DeJoy speaks during a House Oversight and Reform Committee hearing on "Legislative Proposals to Put the US Postal Service on Sustainable Financial Footing" on Capitol Hill in Washington, DC

© Reuters. FILE PHOTO: United States Postal Service Postmaster General Louis DeJoy speaks during a House Oversight and Reform Committee hearing on "Legislative Proposals to Put the US Postal Service on Sustainable Financial Footing" on Capitol Hill in Washington, DC

By David Shepardson

WASHINGTON (Reuters) - U.S. Postmaster General Louis DeJoy says the agency is dealing with significant inflation costs as it works to stem losses, acknowledging higher costs will put further pressure on stamp prices.

DeJoy told Reuters in a 90-minute interview late on Wednesday the U.S. Postal Service (USPS) is feeling the impact of higher costs as it works on its plan to eliminate $160 billion in projected red ink over 10 years.

"Inflation is significantly higher than we forecasted in the plan. I think we're going to incur $1.8 billion more this year in unplanned inflation," DeJoy said.

In the year ending Sept. 30, USPS reported https://about.usps.com/what/financials/annual-reports/fy2021.pdf?msclkid=20269dd6c27311ec9b8b3c650a4bc093 a net loss of $4.9 billion on revenue of $77.1 billion and $82 billion in expenses. USPS is expected to offer more details on the inflation impacts when it reports financial results on May 5.

Earlier this month, USPS filed notice with the Postal Regulatory Commission to raise prices of first-class mail stamps from 58 cents to 60 cents and raise overall First-Class Mail prices approximately 6.5% - after hiking stamps by 3 cents in August.

USPS noted the price hike was below the 8.5% annual inflation rate.

DeJoy, who cited issues like transportation and labor costs, was blunt about the anticipated impact of inflation and the need to keep hiking prices.

"I am pretty frank about it - we're raising prices. Whether I run out of cash tomorrow or three years from now I've still got a plan that's running out of cash with a 650,000-person organization," DeJoy said.

USPS won about $50 billion in financial relief from Congress under legislation signed by President Joe Biden this month. DeJoy says he still needs to eliminate about $35 billion to $40 billion in costs and raise revenue by about $25 billion over a decade to meet financial targets.

© Reuters. FILE PHOTO: United States Postal Service Postmaster General Louis DeJoy speaks during a House Oversight and Reform Committee hearing on

"The ball's in our court now - we've got a lot of work to do," DeJoy said.

Struggling with diminishing mail volumes despite having to deliver to a growing number of addresses, USPS has reported net losses of more than $90 billion since 2007. In February, it booked a quarterly net loss of $1.5 billion.

Latest comments

put mail delivery up for bid by private enterprise
Eliminate those expensive gas powered delivery trucks and replace them with horses ??
USPS won about $50 billion in financial relief from Congress under legislation signed by President Joe Biden this month. DeJoy says he still needs to eliminate about $35 billion to $40 billion in costs and raise revenue by about $25 billion over a decade to meet financial targets. When we will take steps to reduce deficit it everywhere 😲
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.