USPS sees quarterly fiscal Q3 loss but is hopeful about its 10-year plan

As was the case in the fiscal second quarter, fiscal third quarter earnings for the United States Postal Service (USPS), which were issued late last week, showed some signs of progress amid ongoing net losses.

USPS had a quarterly net loss of $3.0 billion, steeper than a $2.2 billion loss for the same quarter a year ago, with this year’s net loss reflecting revaluations and the effects of non-cash workers’ compensation adjustments. While it had another quarter of net losses, total quarterly operating revenue—at roughly $18.5 billion—was up $845 million, or 4.8%, annually.   

For its individual service segments, USPS reported the following:

• Marketing Mail revenue increased by $1 billion, or 42.2%, with volume at 4.3 billion pieces, or 38.6%, with USPS noting that this group experienced steep declines at the beginning of the pandemic and is now rebounding in step with the economy;
• First-Class Mail revenue was up $54 million, or 1.0%, with volume growth, at 130 million pieces, or 1.1%, showing signs of recovering although volumes remain below pre-pandemic levels, with secular declines expected; and
• Shipping and Packages revenue was off $646 million, or 7.8%, with the pandemic-driven surge in packages lessening

For the latter, USPS explained that despite these decreases in the current quarter, its Shipping and Packages volumes remain higher than pre-pandemic levels.

“We believe consumer behavior has evolved during the pandemic and our Shipping and Packages volumes are not expected to return to pre-pandemic levels, as the nation has increasingly relied on the safety and convenience of e-commerce,” it said. “However, competition in the overall market has increased as certain major customers have returned to diverting their volume from our network and aggressively pricing their products and services to fill their networks and grow package density.”

USPS CFO Joseph Corbett said in a statement that even though quarterly financials pointed to an ongoing net loss, its “Delivering for America plan outlines its clear strategies to structure the USPS for success.

By implementing this 10-year plan in full, we expect to operate in a financially self-sustaining manner within the next several years while continuing to fulfill our universal service mission,” he said.

In late March, the USPS released its 10-year plan focused on being financially sustainable and also provide top-level service.

The plan takes an ambitious approach focused on helping the USPS get on solid financial footing, as the organization has been in the red over the last 14 years and incurred a net loss of $9.2 billion in the last fiscal year.

The plan calls for the USPS to continue its universal six-day mail delivery, as well as expanding seven-day package delivery, with the latter being a major revenue source for the organization. And a key part of the plan stated that the USPS will generate $24 billion in net revenue, partly from enhanced package delivery services for business customers, including same-day, one-day, and two-day delivery offerings.   

Other key objectives outlined in the plan include:

• improving cash flow for the investment of $40 billion in workforce, new vehicles, improved Post Offices, technology improvements, and infrastructure upgrades;
• a move to an electric vehicle delivery fleet with Congressional support;
• adjusting select delivery standards to improve efficiency and reliability;
• enhancing customer experience through a new suite of consumer and small business tools;
• stabilizing the workforce with a goal of cutting non-career employee turnover in half, and creating more opportunity for growth, including more predictable progression into career workforce;
• align pricing to reflect market dynamics; and
• ask for bipartisan legislation in Congress to repeal retiree health benefit pre-funding mandate and to maximize future retiree participation in Medicare