Postal Service Revenues Run Short of Expectations, Postmaster General Says

The Postal Service is facing a financial crunch, with revenues running short of what was expected following last year’s rate increase, Postmaster General Anthony M. Frank said today.

The mail service still expects to finish this fiscal year in the black, but with a significantly smaller margin than had been planned, officials said.

Frank told the agency’s governing board that changes must be made to hold down costs and improve revenues.

So far in the fiscal year, which began in October, the Postal Service took in $18.5 billion and spent $17.6 billion, leaving net revenues of $847 million, reported Senior Assistant Postmaster General Comer S. Coppie.

That was $104 million less than expected in the wake of the postal rate increase that took effect in April, 1988.

Many Mailers Switched

Because it is required by law to break even over the long run, the Postal Service counts on showing a surplus in the period right after a rate hike, in order to balance losses which will occur as its costs rise.

Lately, rate hikes have come every three years, and Frank has said he hopes to maintain that cycle, with the next increase in 1991.

Income has been less than expected because of changes in the “mix” of mail, Coppie said. In other words, many large mailers have switched from more costly first-class mail to the pre-sorted first or third class, which costs them less and brings in less revenue for the post office.

While managers expected some of this switch, it has occurred faster than they expected with the resulting decline in revenue, Coppie said.

At the same time, continuing efforts to cut costs have not been as successful as had been hoped for, he added.

Pressing Automation

Frank told the postal Board of Governors that he is continuing to press forward with automation of the postal system as a means of cutting costs and speeding delivery.

Also, he said, he is trying to improve employee relations and is looking for ways to broaden product lines and make prices more competitive.

The Postal Service cannot change its domestic rates without seeking approval from the independent Postal Rate Commission.