The Postal Service ended the first quarter of fiscal 2025 with a net profit — a rare moment in the black that Postmaster General Louis DeJoy says is evidence the agency is on the “right path” to overcome long-term financial challenges.
USPS reported $144 million in net income for the first quarter of fiscal 2025, a dramatic reversal from the $2.1 billion net loss for the same quarter last year. The agency’s first quarter is usually its best all year.
USPS, however, still anticipates ending FY 2025 with a $6.9 billion net loss.
The last time USPS saw a net profit was in fiscal 2022, when it ended the year with a $56 billion net profit, ending a nearly 15-year streak of annual net losses.
That sudden change, however, came from Congress passing the Postal Service Reform Act, which ended a mandate for USPS to pre-fund its retiree health benefits well into the future, and brought the agency back to a pay-as-you-go system. The legislation also forgave $57 billion in deferred payments to its retiree health fund.
DeJoy told the USPS Board of Governors Thursday that the agency saw $8 billion in total revenue in December — its highest revenue month ever — and took on its peak holiday surge of mail and packages “with expanded processing capabilities.”
“We did more with less this quarter. We hired fewer seasonal employees, relied on fewer annexes, flew fewer planes, ran fewer trucks to fewer places, and processed more mail and packages,” DeJoy said. “At the same time, we continue to open new facilities, relocate operations, reroute many transportation trips, deploy new technology, implement new processes, and roll out new vehicles as we race to develop an infrastructure that can deliver the service we desire and the necessary revenue to cover our costs.”
USPS reported $968 million in controllable income this quarter, more than double the $472 million it reported for the same period last year. It also saw lower costs for transportation and compensation claims for employees hurt on the job.
For the first quarter, USPS saw more than $7 billion in revenue from first-class mail — a 4.2% increase compared to the same period last year — despite a nearly 4% decrease in volume. Higher prices for first-class mail led to revenue growth, and are expected to continue.
USPS didn’t raise prices last month, as it has in recent years, but expects to set higher rates again this July. USPS delivered 83.5% of all first-class mail on time this quarter.
USPS saw more than $9.3 billion in package revenue this quarter — a 3% increase from the year prior — despite a nearly 1% decline in year-over-year volume.
USPS leadership celebrated its financial progress, and took exception to a regulator’s recent opinion that upcoming changes would mean a “certain downgrade” for rural mail, but wouldn’t save USPS enough money to justify the changes.
The Postal Regulatory Commission warned in an advisory opinion last Friday that the next wave of changes under its 10-year Delivering for America plan would slow mail for a “significant portion of the nation,” and would at best achieve “meager savings” that wouldn’t help the agency financially in the long run.
“In sum, the commission essentially suggests that they are smart and we are dumb,” DeJoy said.
USPS Board of Governors Chairwoman Amber McReynolds also challenged the regulator’s assessment.
“As noted in our financial reports today, our progress is far from meager,” she said.
The regulator’s assessment focuses on two major initiatives: USPS opening massive new mail processing facilities across the country, as part of a historic “network modernization” plan, and the agency running trucks less often between those plants and post offices to transport mail, under a “Regional Transportation Optimization” strategy.
USPS estimates that, under a best-case scenario, its initiatives would save up to $3.7 billion annually — approximately 4.5% of its nearly $82 billion in operating expenses last year.
“What business in the private sector or government entity in the public sector would scoff at and trivialize nearly $4 billion in annual savings?” DeJoy said. “And what expertise or relative experience does the PRC have about running the most complicated and demanding logistics system in the world in a cost-effective manner?”
The PRC’s advisory opinion, however, is nonbinding, and USPS can continue to implement its plans.
DeJoy said 2025 will be another “year of dramatic change” for USPS, “as we continue to refine and execute our Delivering for America plan.”
“We need to get even better — in fact, much better — but we soon will be great. It is required of us,” he added.
DeJoy reiterated that his 10-year reform plan is the “only comprehensive plan in existence that attempts to transform the Postal Service and set it on a path for a viable future.”
To further cut costs, USPS is offering early retirement buyouts to mail handlers who work in the agency’s mail processing facilities and other USPS employees who work in a variety of support positions.
Eligible USPS employees have until March 7 to accept the early retirement offers, and would agree to retire from the agency effective April 30.
“This retirement incentive will allow us to right-size our staffing, culminating in a significant long-term cost benefit to the Postal Service,” DeJoy said. “We will continue to dismantle the siloed work streams and the legacy bureaucracy in favor of an organization structured for cross-collaboration and agility.”
USPS recently told its regulator it plans to no longer count Sundays and federal holidays in tracking its on-time mail delivery metrics. While USPS doesn’t deliver mail on these days, its mail processing operations run every day. DeJoy said USPS is “burdened by the current framework” of measuring on-time mail.
“Our plan and strategies are simple and proven, if not yet at the Postal Service, certainly found across the array of private enterprises circling around us,” DeJoy said. “It takes time to change the behavior of our bureaucracy and have it work towards new ambitions, especially one as enormous and as weakened as the Postal Service.”
The post USPS ‘soon will be great,’ DeJoy says, after posting rare net profit for quarter first appeared on Federal News Network.