US Postal Service 2005 Annual Report Download - page 38

28 | 2005 Annual Report United States Postal Service
use of rail to transport mail and
shift this mail onto highway
routes. This was done as a re-
sult of the higher service perfor-
mance scores that our highway
contractors were achieving. For 2004 Other transportation
expenses increased $18 million. This was due to increases
in international terminal dues of $21 million.
Aviation Security
On October 18, 2005, the President signed into law the
2006 Homeland Security Appropriations Act (P.L.109-
90) which includes language
directing the Department of
Homeland Security (DHS) to
triple the amount of cargo
that is screened before being
placed on commercial airlines,
a requirement which had previously been included in
the 2005 version of the appropriations bill. The law also
requires DHS to strengthen the Transportation Security
Administration’s (TSA) known shipper program, which
targets cargo from shippers unknown to the carrier.
P.L.109-90 also directs TSA to utilize existing technology
for checking passenger baggage for explosives to screen
cargo “to the greatest extent practicable.” The Postal
Service will continue to monitor and communicate with
TSA as it implements these
legislative mandates.
Lawmakers continue to be
concerned about cargo and
aviation security. Additional
legislation in the 109th Congress has been introduced
to establish an air cargo security inspection program,
which would be required to use equipment, technology,
and personnel to inspect cargo that, at a minimum, meet
the same standards established to inspect passenger
baggage. This would require all cargo to be screened, a
stricter requirement than P.L.109-90. Mail is considered
air cargo for these purposes. Issues surrounding air cargo
security legislation include the requiring of proper equip-
ment for effective screening, and the increased time and
expenses associated with cargo inspections.
Supplies and Services
Supplies and services expenses of $2,416 million
remained relatively flat in 2005. In 2004, supplies and
services expense charges of $2,414 million increased
$86 million. The increase was primarily attributable to a
$50 million increase in purchases of mail transportation
equipment compared to 2003.
Depreciation and Amortization
Depreciation and amortization expenses of $2,089 mil-
lion in 2005 were $56 million less than last year.
Depreciation expenses of $2,145 million in 2004
decreased $150 million from 2003. The depreciation
decreases in both years were the result of lower capital
spending in 2002 and 2003.
Other Expenses
Other expenses of $4,409 million increased by $220 mil-
lion in 2005, a reduction from the $327 million increase
from 2004. The major components included in this
category are rent and utilities of $1,589 million, vehicle
maintenance services of $1,036 million, information
technology of $398 million, facility maintenance services
of $223 million and communications of $253 million.
Rent and utilities, up $29 million or 1.9%, experienced
slower growth than 2004, when the increase was 6% or
$85 million over 2003. Vehicle maintenance services in-
creased by $114 million, or 12%, as the fleet ages and fuel
costs rise, the same was true in 2004 when the increase
was $63 million or 7% over 2003. Communications
increased $35 million mainly from upgrading the com-
munication lines in many offices. In 2004 communication
Financial review
Part II
(Dollars in millions) % Change
Other Expenses 2005 2004 2003 2005-2004 2004-2003
$4,409 $4,189 $3,862 5.3% 8.5%
(Dollars in millions) % Change
Depreciation
and Amortization 2005 2004 2003 2005-2004 2004-2003
$2,089 $2,145 $2,295 -2.6% -6.5%
(Dollars in millions) % Change
Supplies and Services 2005 2004 2003 2005-2004 2004-2003
$2,416 $2,414 $2,328 0.1% 3.7%