The U.S. Postal Service posted a $3.3 billion net loss in the second quarter of fiscal year 2025, nearly doubling its losses from the same period last year. The report signals worsening financial uncertainty as the agency struggles to manage rising costs and declining mail volumes.
Controllable losses more than doubled
From January to March 2025, the USPS reported a controllable loss of $848 million. That figure excludes unpredictable costs like workers’ compensation adjustments and retirement liabilities. In the same quarter last year, the controllable loss stood at $317 million.
Overall operating revenue held steady at $19.7 billion, but expenses climbed by $1.8 billion due to actuarial revaluations, compensation increases, and inflation-driven costs.
“Our organization continues to face economic headwinds,” said Acting Postmaster General Douglas Tulino. “We are working diligently to control costs, increase revenues, and modernize our infrastructure.”
Package growth offset by volume decline
Despite flat revenue, USPS reported significant drops in volume across its service lines:
- First-Class Mail volume dropped by 5.8%, even as revenue rose slightly due to price increases.
- Marketing Mail declined by 5.7% in volume and 1.4% in revenue.
- Shipping and Packages volume fell 6.9%, though revenue increased by 0.7%.
This trend underscores the agency’s challenge: growing revenue while managing steep volume losses.
Operating costs continue to rise
USPS reported total operating expenses of $23.1 billion for the quarter, up 8.3% from the same period last year. Key contributors to this increase included:
- $1.2 billion in non-cash workers’ compensation adjustments tied to actuarial assumptions and interest rate changes.
- $449 million more in compensation and benefits.
- $124 million in higher other operating expenses, partially offset by $116 million in reduced transportation costs.
Chief Financial Officer Luke Grossmann said the results reflect both uncontrollable expenses and early signs of progress.
“We saw continued growth in package revenues and reduced work hours by 10 million this quarter,” Grossmann said. “However, full success of our plan requires additional administrative and legislative action.”
Strategic plan aims to stabilize operations
The losses come as USPS continues implementing its 10-year transformation initiative, Deliver for America, launched in 2021. While some operational efficiencies have emerged—such as savings in transportation and workforce costs—the agency says full financial stability remains out of reach without broader reforms.
Tulino highlighted recent success with USPS Ground Advantage and said the agency is adopting a more competitive approach.
“We are seeing strong market acceptance of our shipping products,” he said. “Our network improvements are starting to reduce our relative cost of service.”
What’s next for the Postal Service?
- USPS continues to call for legislative support to help offset uncontrollable expenses.
- The third-quarter financials will reveal whether package growth and cost-cutting efforts can offset inflation and pension liabilities.
- With David Steiner set to become postmaster general in July, stakeholders will watch for leadership changes that could shape the agency’s future.
As USPS marks 250 years of service, the financial path ahead remains uncertain. The agency must balance rising expenses, declining mail volumes, and growing political scrutiny over its future structure.
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