US Postal Service 2012 Annual Report Download - page 25

Download and view the complete annual report

Please find page 25 of the 2012 US Postal Service annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 119

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119

2012 Report on Form 10-K United States Postal Service- 24 -
As can be seen in the above chart, these expenses have decreased every year since 2007, except for 2011. In 2011, we
experienced sharp increases in benefit costs and fuel prices compared to 2010 as well as unusually high non-cash legal
expenses associated with the contingent liability reevaluation process. Despite these items, we continue to be successful
at improving efficiency and reducing those expenses over which management has oversight and control.
In December 2011, Oxford Strategic Consulting named our organization the best postal service within the world’s top 20
largest economies for access to services, resource efficiency, and public trust after their comprehensive review of the
performance of universal postal service providers. The report found that the Postal Service delivers nearly double the
number of letters per employee as its closest ranking global competitor and is more than five times as efficient as the third
ranking competitor.
Operating efficiency, as measured by Total Factor Productivity (TFP), increased 1.0% in 2012 and 1.3% in 2011
compared to the previous years. This marked the eleventh year of positive TFP growth since 2000 and cumulative growth
of 22.5% since 1972. Productivity gains are a result of effective workforce management, efficient use of material (supplies
and services including transportation), and maximizing the return-on-capital investments (mainly automation). Work hours
in 2012 decreased by 27 million, or 2.3%, despite an increase of approximately 654,500 delivery points during 2012. Mail
volume declined 5.0%. In 2011, work hours were reduced by 34 million, or 2.9%, with an increase of approximately
636,500 delivery points, while overall mail volume declined 1.5%.
Operating expenses in 2012 were $80,964 million, including $11.1 billion of accrued contributions due to the PSRHBF,
compared to $70,634 million in 2011, an increase of $10,330 million, or 14.6%, resulting from the law that changed the
date of the scheduled $5.5 billion annual prefunding of the PSRHBF due by September 30, 2011 into 2012. Operating
expense in 2011 did not include any prefunding expenses related to retiree health benefits, as the $5.5 billion previously
scheduled to be paid by September 30, 2011 was changed to August 1, 2012 by the enactment of P.L. 112-33.
Transportation expenses increased $241 million, or 3.8%, from 2011 driven by higher fuel prices primarily in the first three
quarters of the year. These fuel price increases more than offset decreases in mail volume and improved transportation
utilization rates. In addition, retiree health benefits premium expenses for current retirees were $188 million, or 7.7%,