The U.S. Postal Service reported a nearly 50% increase in shipping and package volume in the latest quarter as a result of a surge in e-commerce due to COVID-19, one of the only bright spots in another quarter marked by steep losses, the agency announced on August 7.
Shipping and package revenue increased in the agency's fiscal third quarter by $2.9 billion, or 53.6%, compared with the same period last year, on a volume increase of 708 million pieces.
However, the net loss for the quarter was $2.2 billion compared to a net loss of $2.3 billion for the same quarter last year. This followed a loss of $4.5 billion in the previous quarter, which ended March 31.
USPS FY3Q (ending June 30). Source: USPS
"Significant declines in our mail volumes as the result of the pandemic were largely offset by corresponding growth in our package business, but the reality remains that the Postal Service is in a financially unsustainable position absent significant fundamental change," commented Postmaster General and Chief Executive Officer Louis DeJoy, speaking today at his first open session of the agency's board of governors since replacing Megan Brennan in May.
USPS continued to see drastic declines in first-class and marketing mail traffic. Marketing mail revenue declined by $1.4 billion (37.2%), on a volume decline of 6.4 billion pieces (36.4%) compared with the same period last year, while revenue from first-class mail fell by $373 million (6.4%) on a volume drop of 1.1 billion pieces (8.4%).
"Secular declines in mail have continued to negatively affect mail revenue and volume, and those declines have been significantly exacerbated by the effects of the COVID-19 pandemic," according to USPS.
Costs also weighed heavy on the agency during the quarter. In addition to higher labor costs to support the e-commerce volume surge, transportation expenses increased as logistics restrictions and limitations associated with the pandemic "led to fewer modes of available transportation, especially air transportation," USPS stated.
The pandemic also increased expenses for supplies such as personal protective equipment (PPE) and increased paid sick leave. In addition, federal provisions allowed companies and other government to get reimbursed for pandemic-related employee leave, but the Postal Service said it is not eligible for such reimbursement.
- US Postal Service loses $4.5 billion in latest quarter
- Postal Service reaches agreement on $10 billion Treasury loan
- USPS, facing fiscal calamity, confronts new challenges to international parcel competitiveness
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.