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Postal Service’s holiday parcel volumes decline year-over-year

Traffic fell nearly 10% from 2020 holiday season as consumers returned to in-store shopping

Less e-commerce meant less holiday volumes for USPS(Photo: Jim Allen/FreightWaves)

The U.S. Postal Service reported first-quarter fiscal 2022 results Tuesday that included a nearly 10% year-over-year decline in peak holiday season package and shipping volume and a nearly 8% drop in revenue, as delivery demand in the holiday quarter slackened from the frenetic 2020 peak season when more consumers did their holiday shopping online.

Volume for the Postal Service’s fiscal 2022 first quarter, which covers the last three months of the calendar year, came in at 1.96 billion pieces, down from 2.17 billion pieces in the 2021 fiscal quarter. Revenue from shipping and packages services was $8.6 billion, down from $9.3 billion in the prior quarter.

The Q1 results were much higher than in the same period two years ago, before the COVID-19 pandemic profoundly changed buying behavior and delivery activity. In the fiscal 2020 first quarter, which covered the 2019 holiday season, the Postal Service handled 1.73 billion parcels and other non-mail items with revenue of $6.6 billion. 

Postal officials had forecast a general slackening off of e-commerce volumes as vaccinated Americans increasingly returned to year-round in-store shopping. That trend was evident during the recently completed holiday period.

The shift toward more in-store buying this past holiday season was likely more beneficial to the Postal Service than other parcel-delivery carriers because the Postal Service is required to pick up and deliver from every U.S. address. Less online buying meant fewer costly and time-consuming parcel deliveries to residences. 

The Postal Service’s on-time delivery performance during the 2021 holiday improved markedly over the 2020 period, when it was hit by unprecedented volumes that it could not prepare for, many absences due to the pandemic and bad weather in key pickup and delivery nodes across the country. 

According to consultancy ShipMatrix Inc., the Postal Service hit its 2021 holiday delivery targets 96.5% of the time, a more than 300-basis-point improvement over the 2020 holiday, when it was inundated with unplanned surges from big shippers with volumes restricted by FedEx Corp. (NYSE: FDX) and UPS Inc. (NYSE: UPS).

For the 2022 first quarter, the Postal Service posted $21.3 billion in operating revenue, down less than 1% year-over-year. It reported an adjusted loss of $1.3 billion in the quarter, compared with a $288 million adjusted loss in the prior period. Operating expenses rose nearly 8% year-over-year, with transportation costs rising 9.2% due to higher fuel costs and an increase in non-fuel transport expenses.

The one-off adjustments came in the areas of higher workers’ compensation and employee health benefit costs, areas the Postal Service has no control over. Those expenses were $1.06 billion higher than in the prior year due to higher interest costs to fund those obligations, the Postal Service said.

Mark Solomon

Formerly the Executive Editor at DC Velocity, Mark Solomon joined FreightWaves as Managing Editor of Freight Markets. Solomon began his journalistic career in 1982 at Traffic World magazine, ran his own public relations firm (Media Based Solutions) from 1994 to 2008, and has been at DC Velocity since then. Over the course of his career, Solomon has covered nearly the whole gamut of the transportation and logistics industry, including trucking, railroads, maritime, 3PLs, and regulatory issues. Solomon witnessed and narrated the rise of Amazon and XPO Logistics and the shift of the U.S. Postal Service from a mail-focused service to parcel, as well as the exponential, e-commerce-driven growth of warehouse square footage and omnichannel fulfillment.