Fiscal third quarter earnings results issued late last week by the United States Postal Service (USPS), again saw steep declines.
Quarterly operating revenue, at $19.9 billion, fell 6.1% annually, following a 2.3% annual fiscal second quarter gain. And its net loss under generally accepted accounting principles came in at $2.5 billion, down from $3.1 for the same quarter a year ago, while steeper than a $2.0 billion fiscal second quarter loss.
Operating revenue, at $19.9 million, headed up 6.1%, or $1.1 billion, annually, paced by what USPS described as ongoing growth in its USPS Ground Advantage Shipping and Packages subcategory and also gains in Marketing Mail. What’s more, it added that operating revenue gains were supplemented by First-Class Mail and Marketing Mail price hikes, as well as a transportation-related, time-limited price increase that took effect on April 26, for various Shipping and Packages category offerings, which it noted were partially offset by declining First-Class Mail and Shipping and Packages volume declines.
“Our results this quarter reflect some progress relative to those areas of the business where we can exercise control, namely with revenue generation, cost control and service improvement,” said Postmaster General David Steiner. “Nevertheless, the Postal Service is today continuing to face a severe liquidity crisis, and our financial losses this quarter reflect systemic challenges inherent in our Congressionally established business model and regulatory framework. We are taking responsible steps to conserve cash to extend our operating window, but we require thoughtful legislative and other actions to establish a financially sustainable Postal Service capable of serving the American public far into the future.”
As previously reported in March, the USPS has hired restructuring advisers to review its finances as leaders warn the agency could run out of money by 2027 if major changes are not made. The move comes as the Postal Service continues to struggle with falling mail volumes and rising costs across its nationwide delivery network. Officials say outside advisers will help evaluate financial options and long-term strategies for stabilizing the organization.
Steiner said, at the time, that the organization’s financial situation remains serious.
“We are out of cash in 12 months if we don’t do anything different,” he said.
But in late June the USPS said it is no longer on track to run out of cash next year after a series of financial moves pushed its projected cash shortfall back to at least 2031. But Steiner warned lawmakers this that the agency’s long-term financial problems remain unresolved.
Steiner told members of the Senate Homeland Security and Governmental Affairs Committee that the Postal Service’s latest projections now show it can continue operating until sometime between 2031 and 2034 without running out of cash. Just a few months ago, USPS had warned Congress that it could exhaust its cash reserves and be forced to halt mail delivery as early as February 2027.
The Postal Service has been dealing with financial challenges for years. Traditional first-class mail, once the backbone of the organization’s business model, has steadily declined as more communication moves online.
On April 9, 2026, USPS said that the Postal Regulatory Commission (PRC), an independent Federal agency that provides transparency and accountability of all USPS operations, approved a Temporary Conditional Waiver that removes restrictions requiring the Postal Service to use funds generated through retirement-related rate authority solely for minimum pension amortization payments. And USPS added that it will decide later this year whether to use the authority granted under the waiver. Under PRC rules, the waiver permits these funds to be directed toward operating costs and capital investments, provided the waiver’s conditions are satisfied.
Although the Postal Service welcomes this temporary relief, it said it continues to encourage the PRC to focus on the organization’s long-term financial stability, as mandated by law, and to address its earlier request for regulatory reforms. These proposed changes include revising the Market Dominant ratemaking framework by eliminating the price cap and implementing a regulatory monitoring system to support a more sustainable financial model. If the price cap remains in place, the Postal Service believes the PRC should allow rates to be reset at levels that adequately cover costs while preserving adjustment mechanisms flexible enough to respond to changing external conditions.
USPS reported that Shipping and Packages revenue rose $588 million, or 7.7%, to $8.25 billion, with volume down 55 million pieces, or 3.4%, to 1.554 million. Marketing Mail revenue rose $440 million, or 12.3%, on a volume gain of 574 million pieces, or 4.3%. First-Class Mail revenue was up $255 million, or 4.3%, with volume off 343 million pieces, or 3.5% annually.
In its Form 10-Q statement USPS explained that its Shipping and Packages business is subject to intense competition, noting that in-sourcing from its major customers, major e-commerce retailers, and other competitors continues to grow.
“Our ability to remain competitive and maintain or grow our shipping services market share significantly impacts both revenue and volume,” it stated. “The results for our Shipping and Packages category for the three and nine months ended June 30, 2026 and 2025 generally reflect both our efforts and challenges to compete in shipping services, including “last-mile” ecommerce fulfillment markets and Sunday delivery, as well as end-to-end markets, driven by consumers’ continued use of online shopping.”
The USPS Ground Advantage offering, which was rolled out in July 2023, saw revenues of $4.645 billion, for a 14.6% annual increase, with 785 million pieces delivered, for a 2.3% annual increase. This service is comprised of two-to five- day service standards for packages up to 70 pounds, and USPS is incorporating three services—USPS Retail Ground, Parcel Select Ground, and First-Class Package Service—into this Ground Advantage service.
USPS added in the Form 10-Q that it continues to face systemic imbalances that make its current operating model unsustainable.
“As communicated in the Delivering for America plan, we are implementing strategic operational reforms to meet the changing needs of our business and residential customers,” it said. “While significant progress has been made to date, the overall success of the plan still requires complete implementation of numerous management initiatives, along with administrative and legislative reforms that are outside of our control. Shortfalls or delays in implementation of the plan will place additional pressure on our liquidity and financial results. As a result of these concerns, we do not have sufficient liquidity to meet all of our existing legal obligations when due while also repaying our maturing debt and making the critical infrastructure investments that have been deferred in recent years, and that are necessary to fulfill our primary mission, without putting our ability to fulfill that primary mission at undue risk.”
This was also raised by USPS CFO Luke Grossman whom observed that the financial results for the quarter reflect a slight improvement compared to the same quarter last year, as USPS continues to grow revenue and manage the costs under its control, including reducing 4 million work hours during the quarter.
“However, management actions alone will not resolve ongoing financial problems that are caused by an outdated business model that isn’t responsive to change,” said Grossman. “We need to pair those helpful management actions with legislative, regulatory, and administrative reforms to get our organization on its way to financial sustainability.”
USPS said that while it has been selling delivery service directly from its DDUs for a number of years, it was typically geared towards what it called a limited number of very large customers. And it said that going forward customers will be able to suggest a combination of volume, pricing and tender times at each available DDU location for USPS delivery either the same day or the next day.
