For the first time since before Transport Intelligence records began in 2013, the US Postal Service has generated a profit from its operations. Where a margin of +0.64% ($144m) isn’t huge, compared to Q1, 2024’s loss of $2.07bn – a margin of -9.6% – this might well be a sign that the strategic plan Delivering for America is delivering.
Postmaster General Louis DeJoy said, “This combination of factors demonstrates that the Postal Service is making strides towards financial sustainability and that we are taking concrete actions to make further improvements.”
Revenue grew 4.1% y-o-y to $22,499m in the quarter. Among other segments, Shipping & Packages reported a 3.0% y-o-y growth to $9,351m. The agency put this success down to the ‘strong acceptance in the marketplace’ of the relatively new USPS Ground Advantage product. The Ground Advantage product saw revenue growth of 32.9% y-o-y to $4,234m.
Turnaround in the eyes of the leadership
USPS stated, “This increase in net income is attributed to our operations revenue increase of $885m, transportation expense reductions of $326m and favourable non-cash workers’ compensation adjustments of nearly $1.8bn, partially offset by increased compensation and benefits expense of $618m”.
DeJoy continued, “By steadily improving our product portfolio, we are increasing our competitive position in the marketplace. We are also expanding the capability and efficiency of our operations through our network modernisation and rebalancing our workforce through the recent retirement incentives offered to certain eligible employees.”
Ongoing mail volume declines
As with a majority of other universal service obligation postal operators, USPS is dealing with an ongoing decline in letter mail volumes. Another win for the postal operator was revenue growth for the First Class Mail segment, with volumes down 3.9% but revenues up 4.2% to $7,005m. This, USPS leadership said was due to strategic price increases.
Ultimately, as with other major USO operators, USPS is looking to undergo a transformation into one of a profitable parcel carrier in time. With the strong growth in Shipping & Packages and its internal efficiency drive there are signs that this might yet be possible in the near term.
Author – Richard Shrubb
Source: Ti Insight
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