Marketing Mail Volumes Up, First-Class & Packages Down As Inflation Bites Bottom Line

WASHINGTON, DC – The U.S. Postal Service announced its financial results for the third quarter of its fiscal year 2022 (April 1, 2022 – June 30, 2022).

The Postal Service’s operating revenue was $18.7 billion for the quarter, an increase of $257 million, or 1.4 percent, despite a volume decline of 201 million pieces, or 0.7 percent, compared to the same quarter last year.

Marketing Mail revenue increased $324 million, or 9.4 percent, compared to the same quarter last year, on volume growth of 545 million pieces, or 3.5 percent. Marketing Mail experienced steep volume declines at the onset of the pandemic but has been rebounding as the economy continues to recover.

Marketing Mail has generally proven to be a resilient marketing channel, and its value to U.S. businesses remains strong due to healthy customer returns on investment and better data and technology integration.

First-Class Mail revenue was essentially flat, compared to the same quarter last year, despite a volume decline of 620 million pieces, or 5.1 percent. First-Class Mail volume continued to decline due to on-going migration from mail to electronic communication and transaction alternatives and remains lower than pre-pandemic levels.

Shipping and Packages revenue decreased $85 million, or 1.1 percent, compared to the same quarter last year, on a volume decline of 92 million pieces, or 5.0 percent, compared to the same quarter last year.

Shipping and Packages volume remains higher than pre-pandemic levels despite the volume decline compared to the same quarter last year, due to the prior year pandemic-related surge in e-commerce.

Adjusted loss grew by $418 million, compared to the same quarter last year, despite the increase in revenue, due to inflationary impacts on several operating expense categories. Compensation and benefits expense increased $198 million, or 1.6 percent, primarily due to wage increases in labor agreements tied to inflation, and in particular the impacts of cost of living adjustments.

Highway transportation expense increased $131 million, or 10.1 percent, primarily due to the inflationary impacts of higher average diesel fuel costs. Other operating expense increased $373 million, or 14.9 percent, as inflationary pressures have led to higher average fuel prices for delivery vehicles and an increase in rent and utilities.

The pandemic has significantly transformed the mix of mail and packages processed through the Postal Service’s network and the Postal Service anticipates that its volumes and mix will not return to pre-pandemic levels. The Postal Service continues to grow its mail services revenue through optimization of its pricing strategies and effective use of its pricing authority, as outlined in the Delivering for America plan.

The following table reconciles GAAP net income (loss) to the non-GAAP financial measures for the three months ended June 30, 2022 and 2021:

Service Improvement

The Postal Service continued to make significant progress in improving service during the quarter through the Delivering for America 10-year transformation plan. One of the goals of Delivering for America is to meet or exceed 95 percent on-time service performance for all mail and shipping products once all elements of the plan are implemented.

It took on average 2.5 days to deliver a mailpiece or package during the third quarter, which is a 7 percent improvement, compared to the average of 2.7 days the same quarter last year. From an on-time delivery perspective, 93.3 percent of First-Class Mail pieces were delivered on time during the quarter, an increase of 5.4 percentage points from the fiscal second quarter.

Other achievements resulting from the 10-year plan include expansion of the Postal Service’s package processing capacity, improvements in operating precision and the roll out of USPS Connect, a set of delivery solutions that leverage the ongoing network improvements with new pricing to meet evolving business needs.