USPS reports $1.7 billion fiscal second quarter loss

The United States Postal Service (USPS) reported today that, for the Fiscal Year (FY) 2022 second quarter, it had an adjusted loss of roughly $1.7 billion, slightly above a $1.3 billion loss, for the fiscal first quarter, while coming in flat on an annual basis.

USPS said quarterly operating revenue—at around $19.8 billion—was up compared to around $18.8 billion a year ago, with total revenue—at around $19.8 billion up compared to around $18.9 billion a year ago. Total volume was up 2.9%, or 886 million pieces, annually.

“During the quarter we made strong strides in on-time service performance, demonstrated the effectiveness of our network through the delivery of COVID-19 tests, and continued to aggressively implement key aspects of Delivering for America, our 10-year transformation plan,” said Postmaster General and CEO Louis DeJoy in a statement. “Our financial results this quarter demonstrate the challenging nature of the current inflationary economic environment as we make structural progress in balancing longstanding revenue and cost imbalances and returning the organization toward financial sustainability.”

USPS said that the major factors impacting its operating results included overall customer demand, mix of postal services, and contribution associated with those services, volume of mail and packages processed through its network and its ability to manage its cost structure in line with secularly declining levels of mail volume, increased competition in the more labor-intensive Shipping and Packages business, and an increasing number of delivery points.

And it added that on April 6, 2022, Postal Service reform legislation was enacted:

• establishing the Postal Service Health Benefits program for the Postal Service’s employees and retirees and requiring their enrollment in Medicare;
• repealing the requirement that the Postal Service annually prepay future retiree health benefits and cancelling all past due prefunding payments;
• providing authority for the provision of certain services to state, local, and tribal governments;
• requiring the Postal Service to develop and maintain a publicly available dashboard to track service performance and to report regularly on its operations and financial condition;
• codifying delivery frequency at six days per week in those areas where it is currently provided; and
• requiring that the Postal Service maintain an integrated delivery network for mail and packages.

It noted that when this legislation went into effect on April 6, 2022, it did not change the conditions surrounding the Postal Service's retiree health benefits as of March 31, 2022, and, therefore, the repeal of the prefunding for retiree health benefits and the cancellation of past due amounts will be reflected in the Postal Service's third quarter results.

Shipping and Packages revenue increased 1.3%, to $7.873 billion, with total volume down 5% annually, to 1.772 million pieces.

“We believe consumer behavior has evolved during the pandemic and our Shipping and Packages volume is not expected to return to pre-pandemic levels, as the nation has increasingly relied on the safety and convenience of e-commerce,” USPS said in its Form 10-Q statement. “However, the surge in e-commerce has continued to abate as the economy recovers. Furthermore, competition in the overall market has increased as certain major customers have returned to diverting their volume from our network and aggressively pricing their products and services to fill their networks and grow package density.”