The U.S. Postal Service, as it has for years, reported an overall loss in the second quarter due to declining mail volume and ongoing pension obligations, while its parcel delivery business continues to grow by double digits.
Letter mail volume declined in the quarter by about 1.4 billion pieces or 3.8%, while package volume grew by 137 million or about 11%. Shipping and parcel revenue was up 11.5%, from $4.23 billion to $4.72 billion.
“We are addressing declines in letter mail volumes by aggressively managing our work hours and compensation expense, while balancing and fine-tuning the resources needed to accommodate growth in package volumes and to optimize customer service,” USPS Chief Financial Officer and Executive Vice President Joseph Corbett said in a release. “Despite inflationary pressures in the marketplace, the Postal Service’s controllable operating expenses rose by less than 1% in the quarter.”
Even as the parcel business has been a bright spot for the USPS, there are reports that FedEx and UPS are both looking to grab back some of its lucrative last-mile business, which it handles for them through its Parcel Select service. According to DC Velocity, both major carriers are offering new zone 1 pricing to a select group of large B2C customers who have requested it, which they can offer cheaply due to volume consolidation through network reconfiguration and because it doesn’t require expensive over-the-road trucking.
If this practice grows it could challenge USPS’ claim to be the number-one ecommerce carrier by volume due to its last-mile business, including work for the carriers.