Complete Story
01/10/2024
The United States Postal Service in 2023
Source: Jim Hamilton, Consultant Emeritus at Keypoint Intelligence. Content provided by Canon Solutions America.
The United States Postal Service (USPS) wraps up its fiscal year at the end of September. Then, by the middle of November, it releases its annual report, a document that is chock full of assessments of its results and plans for the future. The USPS is now entering the third year of its 10-year plan called “Delivering for America,” first made public in March of 2021. The major takeaways as described in the USPS’s press release are quite sobering. The top line is that the USPS reported a $6.5 billion loss in the 2023 fiscal year. This part is not that surprising given the various economic factors that the USPS is saddled with. More concerning is the report of an 11.4% decline in volumes within the Marketing Mail category.
A USPS Assessment
United States Postmaster General Louis DeJoy, who was appointed by President Trump in June of 2020, spoke recently at the 2023 Concordia United States Summit. (Concordia is described as a “member-based organization dedicated to actively fostering, elevating, and sustaining cross-sector partnerships for social impact.”) In his talk entitled “Delivering for America: Lessons of Leadership from the United States Postal Service,” De Joy was alternately optimistic and concerned about the future of the USPS. He started with numbers:
- 31,000 retail centers
- 19,000 delivery units
- 400 processing plants
- 250,000 vehicles (expect an announcement soon about an environmental plan)
- 300,000 carrier routes
- 165 million delivery points
- 640,000 employees
He described the USPS as one of our country’s most trusted, most used, and most needed institution. He asserted that the USPS was in catastrophic condition when he became Postmaster General in 2020 and he thought at the time that it was possible that it might fail. He is now more confident 2 years into his 10-year plan, but acknowledges the challenges that face the USPS. Key among those challenges is an ongoing drop in mail volume due to electronic delivery methods. He also cited “institutional memory” as an issue. It was difficult for an institution like the USPS—which was accustomed to growing print volumes through the 1970s and early 1990s—to figure out how to rethink its methods in an entirely changed competitive environment.
Looking into the Numbers
A few things stand out when looking at the USPS’s 2023 revenue and volume numbers:
- Overall revenue is down somewhat despite regular postal rate increases.
- Only two service categories showed revenue increases between 2022 and 2023: First-Class Mail and Shipping and Packages.
- Volume dropped in every single category.
Table 1: USPS Revenue and Volume Comparison (2023 versus 2022)
Service Category |
2023 Rev. |
2022 Rev. |
|
2023 Vol. |
2022 Vol. |
First-Class Mail |
$24,505 |
$23,990 |
45,979 |
48,960 |
|
Marketing Mail |
$15,076 |
$15,996 |
59,410 |
67,092 |
|
Shipping and Packages |
$31,641 |
$31,317 |
7,057 |
7,232 |
|
Informational |
$1,571 |
$1,712 |
322 |
355 |
|
Periodicals |
$918 |
$955 |
2,993 |
3,400 |
|
Other |
$4,475 |
$4,537 |
385 |
405 |
|
Total operating revenue and volume |
$78,186 |
$78,507 |
116,146 |
127,444 |
The Bottom Line
Moving forward, the USPS hopes that an emphasis on packaging will offset the loss of hardcopy mail volume. This requires remaining competitive with other services like FedEx and UPS. This focus on packaging is not exactly reassuring to service providers handling marketing mail and transactional documents, particularly when they see ongoing rate increases in their segments. There is no question that Postmaster General De Joy has a significant challenge on his hands. And while there have been some positive takeaways in the early years of his Delivering for America plan, some significant challenges remain.
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