US Postal Service 2012 Annual Report Download - page 47

2012 Report on Form 10-K United States Postal Service- 46 -
Highway Transportation
Highway transportation expenses in 2012 were $3,378 million, an increase of $35 million, or 1.0%, from $3,343 million in
2011. Even though fuel costs are only a portion of total highway transportation expense, they are the primary driver
behind the increase in 2012. Diesel fuel, which represents approximately 93% of all fuel purchased, cost an average of
$3.93 per gallon during 2012, compared to $3.66 per gallon in 2011, an increase of 7.4%. Partially offsetting the increases
in fuel costs in 2012 was a 3.8% decrease in highway miles driven compared to 2011, as a result of national and local
surface transportation utilization improvement initiatives.
Highway transportation expenses in 2011 were $3,343 million, an increase of $138 million, or 4.3%, from 2010. Diesel fuel
costs averaged $3.66 per gallon during 2011, compared to $2.89 per gallon in 2010, an increase of 26.6%. A 3.9%
decrease in highway miles driven compared to 2010 helped temper the impact of the sharply higher fuel costs.
Air Transportation
Higher jet fuel costs resulted in an increase in domestic air transportation expenses of $149 million, or 7.1%, to $2,259
million in 2012 from $2,110 million in 2011. The volume of mail delivered by air grew slightly as increases in priority and
package services were partially offset by decreases achieved by shifting other mail from air to ground transport.
Air transportation expenses of $2,110 million in 2011 increased $133 million, or 6.7%, compared to 2010 expenses of
$1,977 million. This increase was primarily due to increased jet fuel costs in 2011.
International Transportation
Expenses that are required to transport international mail include both the physical transportation of the mail to the foreign
destinations and fees payable to foreign postal administrations for the transportation of mail within their country. The
largest component of international transportation expense, foreign postal transaction fees, represented 71%, 78%, and
66%, of the total international transportation expense in 2012, 2011, and 2010, respectively.
International transportation expense in 2012 totaled $950 million, a $64 million, or 7.2%, increase from $886 million in
2011. The primary driver of the increase in international expense in 2012 is attributable to payments made to civilian air
carriers for rate and volume increases.
For 2011, international transportation expense of $886 million increased $245 million, or 38.2%, compared to 2010 as
international foreign postal transaction rates increased, and as the ratio of packages to the less expensive First-Class Mail
increased. Also in 2010, the Postal Service received a one-time benefit for the recapture of foreign postal payments
required under Universal Postal Union regulation. There was no such benefit in 2011.
OTHER OPERATING EXPENSES
For 2012, other operating expenses of $9,187 million decreased $635 million, or 6.5%, compared to $9,822 million in
2011.
Other Operating Expenses
(Dollars in millions)
Supplies and Services $ 2,263 $ 2,260 $ 2,236
Depreciation and Amortization 2,075 2,313 2,469
Rent and Utilities 1,623 1,682 1,692
Vehicle Maintenance Service 995 974 820
Information Technology and Communications 695 695 664
Rural Carrier Equipment Maint. Allowance 579 554 534
Miscellaneous Other 957 1,344 911
Total Other Operating Expenses $ 9,187
$
9,822
$
9,326
2010
2011
2012