The USPS, the United States postal service, said Friday (7) at a public board session that it will prioritize revenue growth over package volume and may raise package prices even if that reduces the volume shipped.
In the quarter ended June 30, USPS posted operating revenue of US$ 19.9 billion, up 6.1% year over year. Net loss fell from US$ 3.1 billion to US$ 2.5 billion.
Packages and parcels generated US$ 8.25 billion in the period, an increase of US$ 588 million (7.7%) from a year earlier. Volume, however, fell by 55 million pieces, a 3.4% drop. The increase reflected growth in Ground Advantage and the temporary shipping price increase implemented in April for some package services.
Pricing strategy
USPS chief executive David Steiner said the results show the pricing strategy still has room for further increases. “We have more increases to apply in the market. It would be financially irresponsible not to do so,” he said.
Steiner compared USPS policy to supply and demand at airlines and supermarkets, which adjust prices to maximize financial return rather than to sell the largest possible quantity. Regulation limits increases in monopolized products, but the agency has more flexibility than private carriers.
Impact on e-commerce
Even in First-Class Mail, revenue rose 4.3% in the quarter, with volume 3.5% lower. For e-commerce, USPS remains attractive for lightweight and last-mile deliveries, but the new guidance indicates the agency no longer seeks packages at any price. Additional adjustments could occur before the year-end peak.
Unsustainable model
Steiner said that even an increase in revenue does not solve a “structurally unsustainable” model. “We need to fix the business model that produced the 17-year imbalance between costs and revenue, and that will require Congress’s involvement,” he said.
