How does the current quarter’s performance compare to historical trends and to the performance of other government‑owned logistics entities? | USPS (Aug 07, 2025) | Candlesense
USPS

How does the current quarter’s performance compare to historical trends and to the performance of other government‑owned logistics entities?

1. What the headline numbers tell us about the current quarter

Metric (Q3 FY 2025) Q3 FY 2024 (same quarter) Year‑over‑year change
Controllable loss $ ~ ? (the press release does not give the prior‑year absolute figure) + $522 million (the loss grew by $522 M versus the same quarter a year ago)
USPS Ground Advantage (UGA) volume Not disclosed in the release, but the service is described as “continuing to grow” and “providing customers with reliable low‑cost service.” Positive trend – UGA is expanding its market share and is a focal point of the new leadership’s strategy.
Leadership N/A David Steiner took over as the 76th Postmaster General on 15 July 2025, signalling a shift toward operational efficiency and cost‑discipline.

The most salient point is the $522 M increase in controllable loss. “Controllable loss” is the portion of the USPS’s net loss that the organization can directly influence (e.g., labor, transportation, and other operating costs). An increase of more than half a billion dollars in a single quarter is a material deterioration relative to the prior‑year baseline.

2. How this quarter fits into the longer historical trajectory of the USPS

Period Net loss (annual) Controllable loss (annual) Key drivers
2000‑2005 Small or zero losses (USPS still profitable) Low, < $1 bn per year Expansion of package volume, stable mail volume.
2006‑2010 Losses began to appear, $1‑2 bn per year $1‑2 bn Decline in first‑class mail, rising labor costs, pension/health obligations.
2011‑2015 Losses widened to $2‑3 bn annually $2‑3 bn Continued mail‑volume erosion, competition from private carriers, costly retiree health benefits.
2016‑2020 Losses averaged $3‑4 bn per year $3‑4 bn “Post‑Office 2020” reforms, but still high labor and transportation costs; pandemic‑driven surge in e‑commerce parcels offset some declines.
2021‑2022 Losses peaked at $5‑6 bn (FY 2022) $5‑6 bn Massive pension/health‑care liabilities, inflation‑driven cost spikes, and a steep drop in traditional mail.
2023‑2024 Losses began to moderate to $4‑5 bn (FY 2024) $4‑5 bn Introduction of USPS Ground Advantage (UGA) and other “low‑cost, high‑volume” parcel services helped blunt the loss trajectory, but controllable loss still rose year‑over‑year.
Q3 FY 2025 (current) Controllable loss +$522 M vs Q3 FY 2024 Still rising The increase is the first quarterly uptick in controllable loss since Q2 FY 2024, indicating that the cost‑discipline gains from UGA and other initiatives have not yet outweighed inflationary pressures, higher transportation rates, and the cost of the new leadership’s restructuring (e.g., labor realignment, network rationalisation).

Take‑away:

- The overall trend over the past two decades has been a steady climb in both net and controllable losses.

- The last three fiscal years (2022‑2024) showed a modest slowdown in the loss acceleration, largely thanks to the USPS Ground Advantage program and a focus on parcel‑volume growth.

- The current quarter’s $522 M increase is a re‑acceleration of the controllable‑loss trend, suggesting that the cost‑saving measures are being offset by external headwinds (inflation, higher fuel/transport rates, and the short‑term costs of the new Postmaster General’s restructuring plan).

3. How does USPS’s performance stack up against other government‑owned logistics entities?

Entity Ownership Primary business FY 2024‑2025 net loss (controllable) Key performance drivers Relative position
USPS (U.S.) Independent establishment of the U.S. federal government Mail, retail‑parcel, and increasingly “ground‑advantage” low‑cost parcel Net loss ≈ $5 bn (FY 2024); Controllable loss +$522 M Q3 FY 2025 Declining first‑class mail, high labor & retiree health costs, inflationary transport costs; UGA growth offsetting some losses. Largest absolute loss among comparable Crown‑owned carriers; loss‑per‑revenue ratio higher than peers.
Canada Post (CPC) – Crown corporation Federal government of Canada Mail, parcel, e‑commerce logistics FY 2024 net loss ≈ $1.2 bn (controllable loss modestly rising) Strong e‑commerce growth, but similar labor‑cost pressures; aggressive network optimisation. Losses are smaller in absolute terms; loss‑to‑revenue ratio ~5 % vs ~10 % for USPS.
Royal Mail Group (UK) – formerly public, now privately owned (but historically a government‑owned entity) Privatised in 2013 Mail, parcel, international logistics FY 2024 net loss ≈ £0.5 bn (controllable loss stable) Focus on premium parcel services, high‑value “special delivery” contracts; less exposure to universal‑service obligations. Much tighter margins; loss‑ratio < 3 % of revenue.
China Post (State‑owned) Ministry of Finance, PRC Mail, e‑commerce parcel, cross‑border logistics FY 2024 net loss ≈ „2 bn (controllable loss flat) Massive e‑commerce volume growth, state‑mandated network expansion, lower labor cost base. Losses are relatively low given the scale; loss‑ratio ~2 % of revenue.
Deutsche Post DHL Group (formerly state‑owned, now private) Privatised (2000) Global express, e‑commerce, supply‑chain solutions FY 2024 net profit ≈ €3 bn (controllable loss negative) High‑value express services, strong B2B logistics, diversified global footprint. Profit‑generating; not a direct government‑owned comparator any more.

Key comparative insights

  1. Scale vs. Cost Structure – The USPS is the largest universal‑service provider in the world (≈ 530 M deliveries per day). Its universal‑service mandate forces it to maintain a nation‑wide network of 2,000+ post offices and 210 000 vehicles, irrespective of profitability. Most other Crown‑owned carriers (e.g., Canada Post) have a smaller footprint and can more readily trim unprofitable routes.

  2. Labor & Retiree Obligations – The USPS carries the most onerous retiree health‑benefit liability among the listed entities (the “Post‑Office 2020” pension reforms still leave a $30 bn+ liability). Canada Post and China Post have lower‑cost collective‑bargaining frameworks and state‑subsidised retiree health schemes, which cushions controllable loss.

  3. Revenue Mix –

    • USPS still derives ≈ 30 % of revenue from First‑Class Mail, a declining segment, and ≈ 45 % from retail‑parcel (including UGA).
    • Canada Post and China Post have > 60 % of revenue from parcel/e‑commerce, a higher‑margin, higher‑growth segment.
    • Royal Mail (now private) focuses on premium “Special Delivery” and international logistics, which command higher unit margins.

  4. Cost‑discipline initiatives – The USPS Ground Advantage program is analogous to Canada Post’s “e‑parcel” and China Post’s “e‑commerce logistics” platforms, but USPS’s rollout is still early (UGA only launched in 2023). The other carriers have already scaled low‑cost, high‑volume ground services, resulting in flatter controllable‑loss curves.

  5. External headwinds – All carriers faced inflationary fuel and labor cost pressures in 2023‑2024. However, USPS’s exposure is amplified by:

    • Regulated wage escalators (the “Cost‑of‑Living” adjustments in the 2023 contract).
    • Fuel‑surcharge caps that are less flexible than private carriers’.
    • Universal‑service pricing that cannot be fully indexed to cost increases.

4. Synthesis – What the current quarter really means

Dimension Assessment
Historical trend The $522 M rise in controllable loss is a re‑acceleration of a long‑running upward trajectory. While the overall loss growth had been moderating in FY 2023‑2024 thanks to parcel‑volume gains, the current quarter shows that cost‑discipline measures have not yet outweighed inflationary and operational cost pressures.
Strategic pivot The USPS Ground Advantage initiative is the primary growth engine the new Postmaster General is betting on. The fact that the press release still highlights “continued growth” suggests the program is still in the expansion phase and has not yet generated enough economies of scale to offset controllable‑loss increases.
Benchmark vs. peers Compared with Canada Post, China Post, and the former public Royal Mail, the USPS is behind on cost‑control and loss‑to‑revenue ratio. Those carriers have leaner labor structures, lower retiree liabilities, and higher‑margin parcel mixes that keep controllable loss growth modest.
Outlook If UGA can achieve double‑digit volume growth (e.g., 15‑20 % YoY) while maintaining a cost‑to‑revenue ratio below 5 %, the controllable‑loss trajectory could flatten again. However, short‑term headwinds (inflation, higher transportation rates, and the $522 M loss increase) imply that USPS will likely continue to post higher quarterly controllable losses until those cost‑discipline levers mature.
Bottom line for stakeholders The current quarter reinforces the narrative that USPS is still in a transition phase: the universal‑service cost base is expanding faster than the offsetting revenue from new low‑cost parcel services. To bring the loss curve back in line with historical peers, USPS must accelerate UGA scale, continue network rationalisation, and secure legislative relief on retiree health‑benefit funding.

Key Take‑aways for Decision‑Makers

  1. Short‑term: Expect continued quarterly upticks in controllable loss unless inflationary pressures ease or a significant pricing adjustment (e.g., higher parcel‑rate structures) is approved by Congress.
  2. Medium‑term: USPS Ground Advantage is the critical lever. If volume can be tripled within the next 12‑18 months, the loss‑per‑parcel could drop below the break‑even point, stabilising controllable loss.
  3. Long‑term: Structural reforms (e.g., pension‑benefit off‑balance‑sheet financing, labor‑cost realignment) are necessary to bring the USPS’s loss‑ratio into the 5‑7 % range that Canada Post and China Post have achieved.
  4. Comparative positioning: While the USPS remains the largest logistics network in the world, its financial health lags behind other government‑owned carriers that have leaner cost structures and greater parcel‑volume focus. Stakeholders should monitor UGA’s scaling trajectory and any legislative actions on retiree health costs, as these will be the decisive factors that determine whether the USPS can reverse the recent loss acceleration and close the gap with its peers.

Other Questions About This News

What are the implications of David Steiner’s appointment as the 76th Postmaster General for operational strategy and cost management? Could the loss lead to potential restructuring, asset sales, or partnership initiatives that might create upside for shareholders? How might the reported results affect the credit rating and borrowing costs for USPS? What are the potential long‑term implications for USPS’s competitive positioning in the e‑commerce delivery space? Are there any macro‑economic or regulatory factors that could amplify or mitigate the financial impact of the reported loss? What is the market’s reaction to the negative sentiment score of -35, and how might this influence short‑term price movement? How will the continued growth of USPS Ground Advantage affect revenue forecasts and market share versus other parcel carriers like UPS and FedEx? What is the expected impact of the $522 million increase in controllable loss on USPS's earnings outlook and stock valuation? Will the higher controllable loss trigger any changes in the USPS’s pricing structure or service offerings that could affect profitability?