Package, shipping services still the only
bright spots for USPS
Once again, shipping and package services provided what is arguably the lone bright
spot in an otherwise darkening financial picture for the U.S. Postal Service (USPS).
USPS reported a $5.2 billion net loss in its fiscal third quarter ending June 30, a significantly wider deficit than the $3.1 billion net loss it reported for the same period
in 2011. USPS lost $3.2 billion in its fiscal second quarter.
The post office blamed most of the third quarter’s loss on the $3.1 billion expense
for prefunding retiree health benefits, as required by law. On Aug. 1, USPS defaulted
on a scheduled $5.5 billion prefunding payment due to insufficient cash reserves.
Without help from Congress, it will default on a similar payment of $5.6 billion due
Sept. 30, it said.
The third quarter’s results are indicative of the Postal Service’s overall fiscal situation for the year so far. In the first three quarters, USPS posted a combined net loss of
$11.6 billion; similar to this past quarter, $9.2 billion of that total loss is attributed to
the costs of prefunding retiree health benefits, the organization said.
LOOKING UP: SHIPPING AND PACKAGE
For the second consecutive quarter, USPS’s shipping and package segments showed
strength. These segments include Express and Priority Mail as well as “Parcel Select,”
which provides “last-mile” deliveries of packages to any residential destination.
Revenue for those services totaled $3.3 billion, up 9 percent from the same period a
year ago. Volumes grew year over year by 5. 2 percent, to 43 million pieces.
As has been the case for years, however, gains in shipping and package services
could not come close to offsetting the persistent decline in first-class mail, the post
office’s most profitable product. In the third quarter, first-class mail volumes fell 4. 4
percent from the same period a year ago, as more communications and transactions
were processed electronically.
The decrease in first-class mail resulted in a 3.6-percent drop in overall mail volumes and a decline in operating revenue of less than 1 percent, USPS said.
Even after subtracting the estimated $9.2 billion cost for prefunding health benefits, USPS has still lost $2.4 billion so far this fiscal year. ;
Port Miami wins approval to operate as foreign-trade zone
The U.S. Department of Commerce has accepted Port Miami’s application for a Foreign
Trade Zone (FTZ). The principal and most common benefit of a free trade zone is that
the importer does not have to pay duties on materials and merchandise until it withdraws the merchandise for consumption or sale in the U.S. market. Many companies
also do light manufacturing or assembly in an FTZ; when they withdraw the goods for
consumption, they can pay duties on either the original materials or on the finished
product, whichever is lower. A third benefit is that foreign exporters shipping into the
FTZ will not be required to pay U.S. import duties as long as the goods are heading
from one foreign country to another.
Port officials said the plan will expand Miami-Dade County’s global competitive-
ness by making it easier for companies to set up duty-free warehouses. By creating
more duty-free zones, Port Miami can enhance the utilization of its facilities.z
Paul Piquado, the Commerce Department’s assistant secretary for import adminis-
tration, and Miami-Dade County Mayor Carlos A. Gimenez presided over an official
license signing ceremony Aug. 9 at Port Miami.
Formerly known as the Port of Miami, the port has rebranded itself and is now
known as Port Miami. ;
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