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USPS leaders forecast it would break even this year. It just lost $6.5 billion.

The U.S. Postal Service is in the midst of a 10-year plan aimed at erasing losses and eventually turning a profit. But in its last fiscal year, the agency reported a loss of $6.5 billion, a major step backward after USPS leaders had predicted it would break even.

The 10-year plan is the brainchild of Postmaster General Louis DeJoy, who has argued that the overhaul was essential to stop the financial bleeding and put the USPS on the road to profitability. Under his plan, which he introduced in 2021, the agency had been projected to reach a break-even point in fiscal year 2023 and begin turning a profit in 2024. 

The agency's turnaround plan centers on slower delivery standards and postage hikes, changes geared to cutting costs and raising revenue but that proved unpopular with some businesses and consumers. Yet the most recent fiscal year revealed significant headwinds for the agency's plans, including inflation and a decrease in mail volume, the USPS said on Tuesday.

Revenue slipped $321 million, or 0.4%, to $78.2 billion for the fiscal year ended September 30 compared with the year-ago period, the agency said. The USPS last year reported net income of $56 billion, primarily because of a one-time, non-cash adjustment stemming from the Postal Service Reform Act in 2022, which ended a mandate to pre-fund retirees' health benefits.

Mail volume across the U.S. declined almost 9%, with the number of mailed items falling to about 116 billion, compared with 127 billion the previous year. 

In comments delivered to the Postal Service Board of Governors on Tuesday, DeJoy said he is "not happy" with the USPS' latest financial results and pointed to issues that weren't accounted for in the plan's forecast.

"Our efforts to grow revenue and reduce labor and transportation costs were simply not enough to overcome our costs to stabilize our organization, the historical inflationary environment we encountered and our inability to obtain the [Civil Service Retirement System] reform we sought," he said.

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Some critics are pointing to DeJoy's string of postage rate hikes as the reason for the decline in volume, with a group called Keep US Posted claiming the "unprecedented postage increases" are aggravating the USPS' financial situation.

"Twice-annual, above-inflation postage hikes are worsening the USPS' financial woes and trapping it in quicksand, as even more mail is driven out of the system," Keep US Posted Executive Director Kevin Yoder, a former Congressman from Kansas, said in a statement. 

Keep US Posted, which represents businesses that rely on the USPS, such as greeting-card companies, magazines and catalog businesses, said the losses shows that Congress should "provide more oversight."

"DeJoy shouldn't receive any more blank checks from Congress to only raise postage rates, cut service and drive more debt," Yoder added. 

The USPS is planning to hike postage rates in January, which would mark the fifth rate hike since 2021 and come on the heels of a July postage increase.

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