The U.S. Postal Service (USPS) announced its financial results for the first quarter of its fiscal year 2022 (Oct. 1, 2021 – Dec. 31, 2021).
The company’s operating revenue was approximately $21.3bn for the quarter, a decrease of $202m, or 0.9%, on volume decline of approximately 1.5bn pieces, or 4.1%, compared to the same quarter last year. Revenue declined at a slower rate than volume due to price increases implemented during calendar year 2021. Overall, the Postal Service accepted for delivery more than 13.2bn letters, cards, flats, and packages between Thanksgiving and New Year’s Eve, exceeding the 12.7bn accepted for delivery during the same timeframe in 2020.
Shipping and Packages revenue decreased $738m, or 7.9%, on a volume decline of 210m pieces, or 9.7%. The measured decline in Shipping and Packages volume is a result of the higher package volumes in the prior year due to the pandemic-related surge in e-commerce, which continues to abate as the economy recovers and market competition intensifies. However, Shipping and Packages volume remains higher than pre-pandemic levels.
First-Class Mail revenue increased $160m, or 2.5%, compared to the same quarter last year, despite a volume decline of 529m pieces, or 3.8%. The revenue increase was driven by price increases, while the volume decline is reflective of the continuing migration from mail to electronic communication and transaction alternatives, which has been exacerbated by the pandemic.
Marketing Mail revenue increased $304m, or 7.3%, compared to the same quarter last year, despite a volume decline of 710m pieces, or 3.6%. Marketing Mail has generally proven to be a resilient marketing channel, and as the economy has shown a recovery, its value to US businesses remains strong due to healthy customer returns on investment and better data and technology integration.
Adjusted loss for the quarter totalled approximately $1.3bn, compared to an adjusted loss of $288m for the same quarter last year. The figure excludes non-cash workers’ compensation adjustments for the impacts of actuarial revaluation and discount rate changes. On a US generally accepted accounting principles basis, the Postal Service had a net loss of approximately $1.5bn for the quarter, compared to net income of $318m for the same quarter last year. USPS stated that the increases in both net loss and adjusted loss were partially driven by inflationary impacts to operating expenses, including rising prices associated with energy and fuel expenses.
Total operating expenses increased approximately $1.7bn, or 7.9%, compared to the same quarter in 2021. Excluding non-cash workers’ compensation adjustments for the impacts of actuarial revaluation and discount rate changes, total operating expenses increased $782m, or 3.6%.
Workers’ compensation expense increased by $936m and retiree health benefits increased by $125m, or 10.4%, compared to the same quarter in 2021.
Transportation expense increased $239m, or 9.2%, compared to the same quarter in 2021, primarily due to higher average diesel fuel rates, higher average unit costs per mile, and higher average jet fuel prices. Retirement benefits expense increased $125m, or 7.0%, compared to the same quarter in 2021, primarily due to higher pension contribution rates, as established by the Office of Personnel Management (OPM). Compensation and benefits expense increased $121m, or 0.9%, compared to the same quarter last year, primarily due to contractual wage increases partially offset by lower work hours.
The pandemic has significantly transformed the mix of mail and packages processed through the USPS’ network and the company anticipates that its volumes and mix will not return to pre-pandemic levels. USPS continues to grow its revenue in mail services through optimization of its pricing strategies and effective use of its pricing authority, as outlined in the Delivering for America plan.
Source: USPS
