DC Velocity - March 2019

14 DC VELOCITY MARCH 2019 www.dcvelocity.com newsworthy

U.S. Postal Service reports $1.5 billion quarterly loss

The U.S. Postal Service (USPS) rang up a net loss of $1.5 billion during the first quarter of its 2019 fiscal year, blaming rising transportation costs in its growing parcel delivery operations.

The USPS said its revenue of $19.7 billion was up 2. 9 percent over the same quarter last year but that the increase failed to keep up with rising operating expenses, which jumped 7. 9 percent to $21.2

billion for the quarter.

USPS’s rising costs came from three main sources: increases of $657 million in compensation and benefits, $621 million in workers’ compensation due to changes in interest rates, and $207 million in transportation costs ascribed to higher fuel costs and highway contract rate inflation, the Postal Service said.

The agency’s fiscal first quarter runs from Oct. 1 to Dec.

31, a period that was marked in 2018 by a capacity-constrained trucking market that sent freight rates soaring. Some reports have indicated that trucking capacity may begin to ease in 2019, but the USPS will continue to suffer from the rising costs as its parcel business grows while its first-class mail delivery business declines. In past quarterly earnings reports, the USPS has pointed to that transition as one of the main causes of its financial woes.

“We continued to drive growth in our package business
and expanded use of the marketing mail channel during the
quarter. Nevertheless, we face ongoing financial challeng-
es,” Postmaster General and CEO Megan J. Brennan said
in a release. “We remain focused on aggressive manage-
ment of the business, legislative reform, and pricing system
reform, all of which are necessary to put the Postal Service
on firm financial footing.”
Handling packages costs the
USPS more than processing
letters, eating into its prof-
it margins despite the rising
volumes. Over its first quar-
ter, USPS’s first-class mail
revenue declined by $81 mil-
lion, or 1. 2 percent, compared
with the same period last year,
while marketing mail revenue
increased by $218 million, or
4. 9 percent, and shipping and
package revenue increased by
$516 million, or 8. 7 percent.
“Overall volumes increased
this quarter driven primarily by growth in marketing mail
and our package business, which resulted in total revenue
growth of $553 million,” USPS Chief Financial Officer and
Executive Vice President Joseph Corbett said in the release.
“This growth was offset by increased work hours and relat-
ed salaries and benefits, and increases in transportation
costs due to these higher volumes and the continued focus
on meeting customers’ needs.”

RLS Logistics, a family-run third-party logistics service provider specializing in temperature-controlled logistics, has built a 2. 2 million-cubic-foot cold storage facility in Delanco, N.J. This is phase one of a four-phase project that will grow to 8. 5 million cubic feet and accommodate 35,000 pallet positions over the next several years. … Averitt Express, a transportation and supply chain solutions provider, has opened its first branded distribution and fulfillment center in Nashville, Tenn. Located adjacent to Nashville International Airport, the 93,000-square-foot facility will allow the company to offer import and export management, online order fulfillment, pick and pack, small parcel, and white glove delivery services. …

Dart Transit Co., a nationwide transportation service provider, has opened a new operating center in the metro Atlanta area. Located in Ellenwood, Ga., the 21,000-square-foot facility is close to Hartsfield-Jackson International Airport. … FedEx Ground, the ground delivery subsidiary of FedEx Corp., has opened a 500,000-square-foot distribution center in Braselton, Ga. … Hanover Logistics, a full-service third-party logistics service provider, has purchased the former GlaxoSmithKline fulfillment center located in the Penn Township Industrial Park in Hanover, Pa.