USPS’ sad song continues: Billion- dollar losses, mail weakness offsets parcel gains

For the U.S. Postal Service, the story remained much the same in its fiscal 2019 second quarter as its been for many prior quarters – gains in shipping and package revenue offset by declines in first class and marketing mail, flat to down total revenue and net losses measured in the billions of dollars.

USPS reported total revenue of $17.5 billion for the quarter ending March 31, an $8 million year-over-year decline. Shipping and package revenue rose 4.9 percent to $5.4 billion on volume growth of 0.3 percent, or 5 million pieces. First class mail revenue dropped 3.3 percent to $6.2 billion, while volume fell by 576 million pieces as digital delivery alternatives continued to erode USPS’ most profitable segment. Marketing mail revenue fell 3.9 percent to $3.8 billion, while volume dropped by 959 million pieces as digitization took its toll on that segment as well.

The quarterly net loss hit $2.1 billion, widening from the $1.3 billion reported in the year-earlier quarter. Total operating expenses were $19.6 billion for the quarter, a 4 percent increase from the same period last fiscal year. So-called controllable expenses, costs that are within USPS’ operating control, rose to $806 million compared to $656 million for the same quarter last year.

USPS confronts a number of Congressionally mandated expenses that are beyond its control, notably the requirement that it pre-fund employee retiree health care expenses, an obligation that amounts to billions of dollars each year and is a key obstacle to sustainable profitability.