The United States Postal Service suffered a severe financial crisis in the second quarter of fiscal year 2025, with a net loss as high as 3.3 billion US dollars, almost twice the loss in the same period last year. This report reveals that the institution is facing increasing financial uncertainty when dealing with rising costs and a continuously declining volume of mail business.
The controllable losses have more than doubled
From January to March 2025, the United States Postal Service reported a manageable loss of 848 million US dollars. This data does not include unpredictable costs such as worker compensation adjustments and retirement liabilities. In the same quarter of last year, the controllable loss was only 317 million US dollars.
The overall operating income remained stable at 19.7 billion US dollars. However, due to actuarial revaluation, salary increase and cost rise caused by inflation, the expenditure climbed by 1.8 billion US dollars.
Acting Postmaster Douglas Tulino said, “Our agency continues to face economic headwinds.” We are striving to control costs, increase revenues and modernize infrastructure.
The growth of the parcel business
Despite flat revenue, the report of the United States Postal Service shows that the business volume of all its service business lines has dropped significantly:
The volume of Class I mail business decreased by 5.8%, but due to the price increase, the revenue rose slightly.
The volume of marketing email business decreased by 5.7% and the revenue dropped by 1.4%.
The volume of transportation and parcel business decreased by 6.9%, although revenue increased by 0.7%.
This trend highlights the challenge faced by the institution: achieving revenue growth despite a significant decline in business volume.
Operating costs continue to rise
The United States Postal Service reported that the total operating expenses for this quarter were 23.1 billion U.S. dollars, an increase of 8.3% compared with the same period last year. The main factors leading to the increase in expenditure include:
A $1.2 billion adjustment in non-cash workers’ compensation related to actuarial assumptions and changes in interest rates.
An increase of 449 million US dollars in compensation and benefits.
Other operating expenses of 124 million US dollars increased, but were partially offset by a reduction of 116 million US dollars in transportation costs.
Chief Financial Officer Luke Grossman said that this result reflects both uncontrollable spending and shows some initial signs of progress.
Grossman said, “This quarter we saw a continuous increase in package revenue and a reduction of 10 million working hours.” However, for our plan to achieve full success, more administrative measures and legislative support are still needed.
The strategic plan aims at stable operation
These losses occurred at a time when the United States Postal Service was continuously advancing its 10-year transformation plan “Deliver to America”, which was launched in 2021. Although some improvements in operational efficiency have been achieved, such as savings in transportation and labor costs, the institution stated that comprehensive financial stability would still be difficult to achieve without broader reforms.
Tulino highlighted the recent success of the U.S. Postal Service’s Ground Advantage services and stated that the agency is adopting a more competitive strategy.
He said, “We have seen our transportation products gain strong recognition in the market.” Our network improvement has begun to reduce our relative service costs.
Where is the future of the United States Postal Service headed
The United States Postal Service continues to call for legislative support to help offset uncontrollable expenditures.
The financial data for the third quarter will reveal whether the growth of the parcel business and cost-cutting measures can offset the impact of inflation and pension liabilities.
With David Steiner set to take office as the Postmaster General in July, stakeholders will be watching leadership changes that could affect the agency’s future development.
As the United States Postal Service marks its 250th anniversary, its future financial path remains fraught with uncertainties. The agency must strike a balance among the rising expenditures, the declining volume of mail business and the increasing political scrutiny of its future structure.
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