The Postal Service got off to another rough start for the new year, reporting a $1.5 billion net loss in the first quarter of the 2022 fiscal year on total revenue of $21.3 billion.
The loss is a sharp downturn from the same quarter last year in which it actually reported net income of $318 million.
USPS said that the losses were in part due to rising inflation which drove up its operating costs for energy and fuel expenses. Total operating expenses increased approximately $1.7 billion, or 7.9%, compared to the same quarter last year.
Of those expenses, transportation costs rose 9.2% ($239 million) primarily due to higher average diesel fuel rates, higher average unit costs per mile, and higher average jet fuel prices.
Retirement benefits expenses also rose 7% ($125 million) primarily due to higher pension contribution rates as established by the Office of Personnel Management (OPM).
Shipping and Packages revenue decreased by 7.9% over the same quarter last year ($738 million) on a volume decline of 210 million pieces, or 9.7%. USPS said the decline 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 2.5% ($160 million) despite a volume decline of 529 million pieces, or 3.8%, driven by price increases. The volume decline is largely due to continuing migration from mail to electronic communication and transaction alternatives which has been exacerbated by the pandemic.
Marketing Mail revenue increased 7.3% ($304 million) despite overall volume declining by 3.6% over the same quarter last year.
“Despite the record package volume during the holiday season, the overall surge in e-commerce has begun to subside,” said Chief Financial Officer Joseph Corbett. “This shift in market trends, along with the continued declines in mail volumes, our increasing costs, and general economic conditions creating inflationary pressure, highlight the ongoing financial challenges that the Postal Service faces. While we continue to adapt to efficiently manage our business, invest in our infrastructure and our people, and optimize our network, our Delivering for America plan must be fully implemented, including legislative changes, to restore the Postal Service to financial sustainability.”