USPS delivers solid fiscal first quarter results, fueled by ‘Delivering for America plan and Ground Advantage growth

First quarter fiscal year 2025 earnings results issued today by the United States Postal Service (USPS) saw some gains compared to a year ago.

Operating revenue, at $22.499 billion, increased 4.1%, annually, paced by what the USPS called strategic price increases, as well as a strong political and election mailing season. Net income, at $144 million, marked a solid turnaround, compared a $2.1 billion net loss a year ago, largely driven by various strategic initiatives through the organization’s “Delivering for America” plan. Total quarterly volume, at 31.015 million pieces, rose 1.8% annually.

“We are encouraged by our strong revenue and cost control trajectory, as we continue to implement the Delivering for America transformation and modernization plan, which contributed to our net income during the quarter,” said Postmaster General Louis DeJoy. “By steadily improving our product portfolio, we are increasing our competitive position in the shipping marketplace. We are also expanding the capability and efficiency of our operations through our network modernization and by rebalancing our workforce through the recent retirement incentives offered to certain eligible employees. This combination of factors demonstrates that the Postal Service is making strides toward financial sustainability and that we are taking concrete actions to make further improvements.”

Shipping and Packages revenue, at $9.351 billion, saw a 3% annual increase, with volume, at 2.014 billion pieces essentially flat. Priority Mail Services revenue, at $1.892 billion, fell 23.1% annually, with volume, at 159 million pieces, off 35%. Parcel Services revenue at $2.987 billion was down 0.9% annually, with volume down 3.1%, to 1.034 billion pieces.

The USPS Ground Advantage offering, which was rolled out in July 2023, saw revenues of $4.234 billion, for a 22% annual gain, with 713 million pieces delivered, for a 16.3% 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). And Package Services revenue, at $238 million was up 3.3%, with volume, at 108 million pieces, down 7.7% annually.

USPS said in a form 10-Q statement that the U.S. and global economies continue to experience volatility due to inflation and geopolitical conditions, adding that while inflation has continued to moderate over the past year, inflationary impacts and business and consumer confidence still remain unpredictable and continue to impact operations results.

“Other major factors that impacted our operating results include 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 our network, our ability to manage our 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 delivery points,” it said.

Addressing its Shipping and Packages results, USPS said that this business is subject to intense competition, with insourcing from its major customers and major e-commerce retailers and other competitors continuing to grow.

“Our ability to remain competitive and maintain or grow our shipping services market share significantly impacts both revenue and volume,” it added. “The results for our Shipping and Packages category for the three months ended December 31, 2024 and 2023 generally reflect both our efforts and challenges to compete in shipping services, including “last-mile” ecommerce fulfillment markets and Sunday delivery, as well as end-to-end markets, driven by consumers' continued use of online shopping. As part of our ongoing commitment to respond to customer needs, in 2023 we launched an improved affordable ground product, USPS Ground Advantage, that features two-to-five-day service standards for packages up to 70 pounds, replacing our retired First-Class Package Services subcategory and several other service offerings.”

UPS CFO Luke Grossman said that the financial results for the quarter benefit from the organization’s efforts to continue to control costs and reinforces its commitment to the full implementation of the Delivering for America plan

“Adherence to the tenets of the plan has allowed us to save $326 million in transportation costs in the first quarter, during a robust peak season,” said Grossman. “While full success of the plan still requires further administrative and legislative actions, the plan delivers the framework for us to better innovate to grow revenue, work more efficiently, and achieve financial sustainability to fulfill our universal service mission over an integrated network to deliver both mail and packages.”

This 10-year plan was introduced by the USPS 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.