Perhaps drone delivery can’t come fast enough for the United States Postal Service as the organization reported on Friday that it had lost a staggering $1.5 billion during just the first three months of this year.
The service blamed the loss on more people using its shipping and package services, which have very narrow margins while revenues from other, more lucrative products, declined rapidly.
While the organization receives no tax dollars for its day-to-day operations it is, however, subject to congressional control.
To stem losses it has asked to end most Saturday deliveries, yet the move was blocked by Congress due to intense opposition by postal unions.
The financial losses highlight a powerful trend: people are sending fewer letters. The Postal Service sent 420 million fewer pieces of mail compared to the same period last year, while lucrative first-class mail fell by 2.1 percent while standard mail dropped by 1.1 percent.
A 14.4 percent increase in shipping and package volume was not enough to offset the decline in other shipping categories.
The lack of profitability, despite a slight revenue increase of 1.1 percent, is due to high staffing costs. While labor costs dropped they were more than offset by high pension and benefits costs which contributed to the huge loss.
The huge losses show that the Postal Service and its union are a powerful political lobby who have enough clout to keep receiving federal funds in order to pay extremely large pensions despite the money coming, eventually, from tax-payers.
To reduce labor costs the service is aggressively pursuing drones, in the hopes of avoiding big pension payouts in the future.
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