USPS Parcel Volume Drops, Revenue Increases

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Pricing increases on parcel delivery helped the U.S. Postal Service in Q1, as parcel volume declined 3.5% to 70 million pieces, while parcel revenue gained 2.4% to $8.84 billion. Overall revenue increased 1% to $21.5 billion, with a net loss of $1.03 billion, an improvement over $1.55 billion a year earlier.

A decline in parcel volume is being seen across the board in the challenging climate, with both UPS and FedEx seeing it diminish in recent quarters.

The so-called controllable net income for the USPS, after backing out unfunded liabilities and workers’ compensation, was $180 million, compared to $880 million last year. In 2022, Congress approved a postal reform bill that eliminated the requirement to prefund retiree health benefits.

“We are making demonstrable progress with our Delivering for America plan,” said Postmaster General and CEO Louis DeJoy in prepared remarks. “We continue to focus on service reliability for the American public as we modernize our outmoded and aging postal network to move mail and packages in an integrated network and deliver to nearly 165 million delivery points six days a week while covering our costs.”

USPS operating expenses were down $129 million or 0.6% in the quarter. However, retiree benefit and workers’ compensation expenses, again uncontrolled, created a 5.3% operating expense increase of $1.1 billion on a reported basis.

DeJoy told the USPS Board of Governors the agency continues to implement its 10-year Delivering for America plan, including the pending arrival of tens of thousands of new delivery vehicles, many of them electric, the creation of regional sortation and distribution hubs, and investments in mail and parcel processing automation.

“We are making good progress in work hour reductions and transportation savings,” he said. “However, inflation reigns dominant in our cost structure and eliminates the gains we are making. Our efforts will continue and in time their positive results will prove successful.”

In separate news, the USPS said it has applied to the Postal Regulatory Commission to consolidate three separate products under a single umbrella. If approved by the PRC, Retail Ground, Parcel Select Ground and First-Class Package Service will be rolled out this summer as new offering called USPS Ground Advantage.

Last year, the USPS said, it reduced prices for Retail Ground and Parcel Select Ground by an average of 7% and 12%, respectively.

In October, the PRC approved the removal of USPS Retail Ground from its list of competitive products, the elimination of the ground offering from Parcel Select and the expansion of First Class Package Service to handle items up to 70 lbs.