November 14, 2017

USPS posts multibillion loss in FY 2017 despite gains in package revenue, volume

Declines in mail volumes dwarf package increases.

By DC Velocity Staff

The U.S. Postal Service today reported double-digit gains in shipping and package revenue for its 2017 fiscal year ending Sept. 30, but as it has been in years past the growth wasn't anywhere near enough to offset the declines in its two core mail products that resulted in a multibillion dollar loss for the year.

Revenue for USPS "Shipping and Packages" segment increased by 11.8 percent, while volumes grew by 11.4 percent year over year. The segment accounted for 28 percent of USPS' total operating revenue and 3.8 percent of total volume, the highest ratios in USPS' history. Two years ago, those levels were at 22 percent and 2.9 percent, respectively.

The segment is composed of Priority Mail, Priority Mail Express, Parcel Select, and Parcel Return, which are all classified as "competitive" products that can be priced according to market conditions. Prices for these services increased an average of 9.5 percent in January 2016, and 3.5 percent in May 2015, USPS said.

The largest percentage increases came from its Parcel Select product, where packages tendered by shippers to carriers like Atlanta-based UPS Inc. and Memphis-based FedEx Corp. as well as to third party parcel consolidators are inducted deep into the postal network for last-mile deliveries by letter carriers, mostly to residences. Demand for the product has risen with the growth of e-commerce.

Package volume also experienced end-to-end growth as consumers continued to utilize online shopping, especially during the last two holiday seasons where a record number of packages were delivered, USPS said.

Still, USPS reported a $2.7 billion net loss for the fiscal year on a $1.9 billion revenue decline to $69.6 billion. Overall volumes fell by 4.9 billion pieces, USPS said. First-class and marketing mail, by far the largest parts of the postal operation, reported a year-over-year volume decline of 5 billion pieces, dwarfing the increase of 589 million pieces generated by the package and shipping category.

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