USPS cites continued progress in fiscal second quarter earnings despite recording another net loss

Fiscal year 2024 United States Postal Service (USPS) second quarter earnings issued this week saw some signs of improvement, while recording another quarterly net loss.

Operating revenue, at $19.7 billion, were up 2.1%, or $410 million, annually, and total quarterly volume, at 28.011 million pieces, fell 2.1% annually. USPS also reported a quarterly net loss of $1.5 billion, compared to a $2.5 billion quarterly loss a year ago.

“Our financial results this quarter demonstrated positive trends regarding improved revenue generation and cost control. This reflected progress in the implementation of our 10-year transformation and modernization plan,” said Postmaster General Louis DeJoy, in a statement. “We also saw gains in package deliveries through our successful USPS Ground Advantage offering, which was enabled by our new operating model. As we continue to modernize our processing, transportation, and delivery functions, we will increasingly operate with greater efficiency and capability, and at a consistently higher level of performance.”

USPS said in a form 10-Q statement that the U.S. and global economies continue to experience significant volatility due to inflation and geopolitical conditions, adding that while inflation has moderated in recent months, inflationary impacts and business and consumer confidence still remain unpredictable.

It also cited ongoing regulatory constraints causing delays in its ability to generate revenue to keep pace with inflation, explaining its price cap system restricts its ability to timely adjust prices in line with inflation. What’s more, it said the Postal Regulatory Commission is currently re-evaluating the system for regulating the prices for its Market-Dominant products through a rulemaking that was recently announced, “which could impact our pricing authority for such products either positively or negatively.

USPS also cited other factors impacting its operating results, including overall customer demand, the mix of postal services and the pricing and contribution associated with those services, the volume of mail and packages processed through its network, the ability to manage its cost structure in line with secularly declining levels of mail volume, increased competition in the more labor-intensive Shipping and Packages business, and an increasing number of touch points.

Shipping and Packages revenue, at $7.7 billion, increased 1.9% annually, with volume up 1.5%, to 1.714 billion pieces. Priority Mail Services revenue was down 35%, to $1.945 billion, with volume off 34% to 180 million pieces. Parcel Services revenue, at $2.4 billion, was off 2.3% annually, and volume, at 868 million pieces, was flat. The new USPS Ground Advantage offering, which was rolled out in July, saw revenues of $3.087 billion, with 554 million pieces delivered (this service is comprised of two-to five- day service standards for packages up to 70 pounds, and USPS is incorporating three services—USPS Retail Ground, Parcel Select Ground, and First-Class Package Service—into this new Ground Advantage service) And Package Services revenue, at $232 million was flat, with volume, at 112 million pieces, off less than 1%.   

USPS Chief Financial Officer Joseph Corbett noted that the second quarter saw continued growth in package revenues, which along with lower transportation expenses, favorably impacted its business.

“Inflation, and higher mandated retirement benefit costs, continue to offset these positive efforts. We continue to manage the costs within our control, working toward financial stability for our organization through the full implementation of the Delivering for America plan.”

Industry experts maintain that the USPS is on the right path in order to become financially solvent.

John Haber, chief strategy officer for transportation and logistics services provider Transportation Insight, told LM that the organization has made a lot of progress.

“I do think the network rationalization is necessary, but the question is how is the execution going?” he said. “We are seeing in Houston and Atlanta that it is not going very well. There are some things that need to be fixed, certainly on the labor side. Postmaster DeJoy has a very difficult job, and I think he has made a lot of progress, but the execution issues need to get quickly fixed.”

And Josh Taylor, senior director of professional services for Shipware, an audit and parcel consulting services company, said that the USPS has made some very wise decisions, noting that combining services to create Ground Advantage was good branding and a smart way to eliminate unnecessary costs that were not leading to more market share.