Post office $700 million in the red

Declining mail volume and rising fuel prices resulted in a $707 million loss for the Postal Service in the quarter that wrapped up March 31.

For the quarter, the agency handled 51.3 billion pieces of mail, a decline of 3.3 percent from the same period a year earlier. Both first class and standard mail declined for the period.

The second-quarter loss more than offsets a profitable performance in the first quarter of the fiscal year, resulting in a loss of $35 million on revenue of $39.3 billion for the first half of the year, the post office reported.

"Weakness in the housing and credit markets, both of which are heavy users of mail, are leading the declines in mail volume," Postmaster General John Potter said.

The agency has been working to cut costs, and postal rates increase next Monday, with the price of a first-class stamp rising a penny to 42 cents.

Revenue in the second quarter was $18.9 billion, an increase from last year because of a price increase in May 2007. But the agency said its costs were $19.6 billion for the period, increasing because of higher transportation expenses, largely fuel costs.

The post office also reported strong delivery performance. National on-time performance for the delivery of first-class mail scheduled for overnight service was 96 percent, two-day service was 94 percent on time and three-day service was 92 percent on-time.

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