Fiscal first quarter 2026 earnings issued this week by the United States Postal Service (USPS) saw declines.
Operating revenue, at $22.2 billion, fell 1.2% annually, or $264 million, which USPS said was largely due to declining First-Class Mail, Shipping and Package, and Marketing Mail volume declines, which it said were partially offset by price increases. And its net loss under generally accepted accounting principles came in at around $1.3 billion, well below $144 million in net income for the same quarter a year ago.
“While we are pleased that the holiday quarter was quite strong with regard to service improvement as measured by our on-time delivery scores and other important service performance metrics, we continue to face difficult systemic financial and business model headwinds,” said Postmaster General David Steiner. “To right our financial ship, we are aggressively pursuing growth strategies—which include creating new opportunities for businesses to leverage our vast last-mile delivery network—and driving greater efficiencies throughout our operations. We are convinced that these efforts, if combined with needed regulatory, administrative, and legislative changes, can meet the needs of the American public and return the Postal Service to long-term financial stability and strength.”
To that end, USPS added that it is seeking further administrative and legislative reforms to remedy outdated and unwarranted financial and regulatory burdens. These reforms include: changes in retiree pension benefit funding rules for the Civil Service Retirement System (CSRS) benefits, diversification of pension assets, raising the statutory debt ceiling, and workers’ compensation administration reform.
USPS reported that First-Class Mail revenue increased $68 million, or 1.0%, on a volume decline of 702 million pieces, or 6.1%, compared to the prior year. Marketing Mail revenue decreased $126 million, or 2.7%, on a volume decline of 1.8 billion pieces, or 10.9%, compared to the prior year. Shipping and Packages revenue decreased $23 million, or 0.2%, on a volume decline of 243 million pieces, or 12.1%, compared to the prior year.
In its Form 10-Q statement, USPS said that its Shipping and Packages business is subject to intense competition, as some of its major customers continue to increase their delivery densities across a greater geography. It also noted that in-sourcing from major customers, major e-commerce leaders, and other competitors continues to grow.
“Our ability to remain competitive and maintain or grow our shipping services market share significantly impacts revenue and volume,” said USPS.
Shipping and Packages revenue, at $9.3 billion, was down 1.2% annually, and volume, at 1.770 million pieces dipped 12.1% annually. Priority Mail Services revenue, at $1.562 billion, fell 17.7% annually, with volume, at 116 million pieces, off 26%. Parcel Services revenue at $2.1 billion, was off 15.8%, with volume down 30%, to 669 million pieces. Package Services revenue, at $266 million, rose 10% annually, and volume fell 7%, to 100 million pieces.
The USPS Ground Advantage offering, which was rolled out in July 2023, saw revenues of $1.562 billion, for a 17% annual decrease, with 885 million pieces delivered, for a 17.5% 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 Chief Financial Officer Luke Grossmann said that the financial results for the quarter continue to reflect the realities of the organization’s mandated cost structure and the ongoing decline in volume.
“We were able to offset these constraints to some degree by aggressively managing the costs under our control, including a 9 million work hour decrease during a successful peak season, which kept our largest expense component relatively flat,” said Grossmann. “But for our strategy to truly succeed, further reforms and regulatory changes will be required on top of organizational efforts to find additional operational efficiencies and to develop revenue strategies and innovative products and offerings that generate growth.”
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.
