USPS 1Q Shipping and Package Volume Increased 12.8%

The U.S. Postal Service ended the first quarter of fiscal 2015 with operating revenue of $18.7 billion, a 4.3% increase over the same period last year.

The increase in operating revenue was driven, in part, by the record number of holiday season packages delivered with high reliability during its busiest time of the year.

Total volume was 42.6 billion pieces compared to 42 billion pieces in the same quarter the previous year. Shipping and package volume increased 12.8%.

“Our employees delivered double-digit growth in packages this holiday season, which shows our growing ability to compete for and win new package delivery customers,” said Postmaster General and Chief Executive Officer Megan Brennan. “To keep the momentum going, and to ensure we are the shipper of choice for our residential and business customers, we will continue to expand customized delivery solutions and package capacity while delivering high levels of service.”

Although revenue and volume are closely linked to the strength of the U.S. economy and changes in how customers use the mail, the USPS has been proactive in growing volume in standard mail and shipping and packages and slowing the decline of the most profitable product, First-Class Mail.

Parcel Services revenue for the quarter increased $206 million, or 27.2%, for the three months, compared to the same period last year. This category includes Parcel Select revenue of $908 million, Parcel Returns revenue of $38 million and Standard Mail Parcels revenue of $18 million. These services continue to show strong volume growth of 22.6% for the three month period, compared to the same period last year.

The USPS says this growth was driven largely by the continuing growth of ecommerce. However, this category represents one of its lowest available priced services, and as a result, provides a relatively low level of contribution compared to many of its other services.

That’s the good news, now for the bad news. The USPS also suffered a net loss of $754 million. The net loss included a $1.4 billion expense accrued for the mandated prepayment to the Postal Service Retiree Health Benefits Fund.

“Though liquidity remains a concern, the Postal Service must begin to make necessary investments to grow our business and address some of the critical vehicle, facility, and package handling equipment requirements that have been deferred in recent years,” said Chief Financial Officer and Executive Vice President Joseph Corbett.