USPS sees a $3.1 billion quarterly fiscal third quarter loss

Third quarter fiscal year 2025 earnings issued this week by the United States Postal Service (USPS) saw a steeper net loss, at $3.1 billion, than the $2.5 billion reported a year ago, for the quarter.

Operating revenue, at $18.8 billion was basically flat on an annual basis, up 0.2%. The USPS attributed the slight increase to price increase for its First-Class Mail category and also a product mix shift toward what it called higher-value offerings in its Shipping and Packages group—which it said was partially offset by declining First-Class Mail and Shipping and Packages.  Total quarterly volume, at 25.822 million pieces, rose 2.8% annually.

“The Postal Service continues to play an important role in the American economy and society, and in the daily lives of the American public, as it has for 250 years,” said Postmaster General David Steiner, whom assumed his new role on July 15. “America needs a financially strong Postal Service to continue to meet the needs of the nation far into the future. To restore our financial strength, we must continue to evolve amid a changing business environment so that we can provide high-quality service at a reasonable cost. Growing our revenue and cutting our costs to serve is the only path to financial health. Our top priorities are improving performance and addressing and fixing the larger trends driving our financial losses. I believe strongly that the Postal Service is capable of operating as Congress intended as an independent entity of the executive branch, that can compete effectively and operate efficiently in the performance of our public service mission and fully fund our operations.”

Shipping and Packages revenue, at $7.775 billion, was up 0.8% annually, and volume, at 1.627 million pieces dipped 6.5% annually. Priority Mail Services revenue, at $1.515 billion, fell 12.2% annually, with volume, at 134 million pieces, off 15.7%. Parcel Services revenue at $1.950 billion was down 26.4% annually, with volume down 32.2%, to 632 million pieces. Package Services revenue, at $206 million, rose 2.5% annually, and volume fell 9.6%, to 850,000.

The USPS Ground Advantage offering, which was rolled out in July 2023, saw revenues of $4.084 billion, for a 30.9% annual gain, with 776 million pieces delivered, for a 39.6% annual increase (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 Ground Advantage service).

In a form 10-Q statement, USPS said that it continues to pursue strategies within its control to increase operational efficiency and improve liquidity.

It also stated that the U.S. and global economies continue to experience volatility due to inflation and geopolitical conditions.

“While inflation has continued to moderate in the past year, inflationary impacts and business and consumer confidence remain unpredictable and continue to impact our results of operations,” it said.

And it added that USPS continues to execute on its Delivering for America initiative, a 10-year plan it introduced in March 2021, with a focus on the USPS being financially sustainable and also provide top-level service. It 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 17 years and incurred a net loss.

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.   

“We continue to execute on the Delivering for America strategies, which include the full integration of our mail and package processing, transportation, and delivery network,” he said. “This strategic focus is aimed at reducing costs, enhancing reliability, shoring up our capabilities to effectively deliver mail and packages, and growing our market share in the package delivery sector. As we accomplish our goals and demonstrate our ability to attain the service, operational, and revenue targets we seek, we will also pursue administrative and legislative actions from Congress to remedy the financial and regulatory burdens that negatively impact the full achievement of our legislated business model. These include: realigning retiree pension benefit funding rules for CSRS benefits, diversification of pension assets, raising the statutory debt ceiling, and reforming workers’ compensation administration.”

USPS Chief Financial Officer Luke Grossmann said that while the Postal Service continues to face financial challenges, it is an organization pursuing continuous improvements and innovation, remaining focused on moving toward financial sustainability through operational efficiency, product strategies that will generate growth, and pricing adjustments.

In recent months, the USPS has made headlines on various fronts, including reports noting that the White House intended to make major changes to the organization, with the Wall Street Journal reporting that members of the USPS governing board would be fired and also put the USPS under the direct control of the United States Department of Commerce. And a Washington Post report said that the board has retained outside counsel and gave “instructions to the White House if the president removed members of the board or attempt to alter the agency’s independent status.”

But this development is far from a done deal, with reports citing the White House as saying that it has no plans to issue an executive order.

The USPS also said in March it is taking steps to implement refinements to service standards, including new online tools and a fact sheet to help customers prepare for the changes, which it said will  affect First-Class Mail, Periodicals, Marketing Mail, Package Services (including Bound Printed Matter, Media Mail, and Library Mail), USPS Ground Advantage, Priority Mail, and Priority Mail Express.

USPS said that these measures are estimated to save the Postal Service a minimum of $36 billion over the next decade through reductions in transportation, mail and package processing and real estate costs. And it added that the service standards refinement will occur in two phases to ensure effective operational implementation: the first phase was scheduled to start April 1, with the second phase on July 1.