USPS’s Shipping & Packages Group earnings results are encouraging

Once again, United States Postal Service (USPS) Shipping and Packages Group results, for the fiscal first quarter, turned in a strong performance, according to results issued earlier today.

Total first quarter net income—at $318 million—was well ahead of a $748 million net income loss, for the same period a year ago. And total operating revenue—at $21.495 billion—topped the $19.351 billion from a year ago.

The Shipping and Packages Group’s operating revenue shined compared to First-Class Mail and Marketing Mail, which decreased 2.7%, to $6.301 billion, and 5.6%, to $4.165 billion, respectively, with a whopping 42.1% annual increase, to $9.378 billion.

What’s more, volume growth for this segment jumped 25% annually, to 2.173 billion packages.

While the ongoing COVID-19 pandemic is part of the reason for this growth, to be sure, USPS observed in its Form 10-Q report that: “The volume increased due to the surge in e-commerce resulting from the COVID-19 pandemic, and revenue outpaced volume increases due to the January 2020 price increases associated with certain Competitive services, as well as the time-limited prince increase effective during the first quarter of 2021.”

Parcel Services revenue saw a 25.4% annual gain, to $2.741 billion, with volume up 12.6% annually, 1.022 billion pieces.

Even though those respective gains are impressive, USPS explained that it is a last-mile service that bypasses much of its infrastructure and subsequently is one of its lowest-priced packaged services.

“Revenue and volume increased due to the surge in e-commerce from the COVID-19 pandemic,” said USPS in its Form 10-Q report. “Revenue grew at a greater rate than volume largely due to the January 2020 price increases applicable to Competitive services, as well as the time-limited price increase effective during the first quarter of 2021.”

Though its Shipping & Packages Group’s gains are noteworthy, USPS stated that its operating expenses for the quarter reflect the impacts of the pandemic, in the form of things like greater expenses for supplies, higher air transportation costs due to lower availability of commercial air flights, and greater compensation costs representing both increased sick leave and labor costs associated with the higher volumes in the USPS more labor-intensive Shipping & Packages category.  

Despite the ongoing financial challenges the USPS remains up against, its Shipping and Packages group, which has been a standout, of sorts, for the organization, through its services which directly benefit shippers, including Priority Mail, Priority Mail Express, Parcel Select, Parcel Return, and First-Class Package Services for Retail and also Commercial, as well as its successful efforts to compete in shipping services such as ‘last-mile’ e-commerce fulfillment markets and Sunday delivery, as well as end-to-end markets, had a growth quarter overall.

It is not secret that this most recent batch of quarterly numbers help to support that ongoing thesis, to be sure. With the pandemic hopefully becoming a memory sooner than later, that does not portend a deceleration in e-commerce activity, by any stretch. That should be viewed as good news for the organization on all fronts, given the sustained success its Shipping & Packages Group continues to see.