Following the 2023 peak holiday season, USPS reported that package volume in its network increased by 130 million units during Q1 of fiscal year 2024 compared to Q1 in FY 2023. This figure marks a 7% increase in total package volume compared to the same period last year, which eclipsed 1.9 billion units (the Postal Service’s Q1 covers October 1 – December 31). Despite the uptick in package volume, USPS leadership reportedly expects the agency to lose billions in 2024.
Postmaster General DeJoy Attributes the Increased Package Volume to USPS Ground Advantage
When speaking on the increased package volume, Postmaster General Louis DeJoy said that the rollout of USPS Ground Advantage service contributed to the rise.
USPS introduced Ground Advantage in July 2023 as its most affordable package delivery service. It is strictly a ground-based service, with estimated delivery timeframes taking place between 2-5 business days to any of the lower 48 states. The service captures package volume that would have gone to the previously offered Retail/Parcel Select Ground (ground-based) and First Class Package (air-based), which shippers can no longer access.
With the rollout of Ground Advantage, USPS not only captures more revenue from competitive package volume but also lowers costs by relying on its ground-based logistics network rather than commercial flights. The agency previously relied on commercial flights for First Class Package volume, which resulted in costs that the agency could no longer justify for lightweight parcels.
The air-based services that USPS still offers are Priority Mail and Priority Mail Express.
USPS Still Operating at a Net Loss Despite Increases Parcel Volume
In a video message sent to USPS employees, DeJoy reportedly stated that growing the Postal Service’s package business is paramount to its 10-year “Delivering for America” plan to turn the agency into a sustainable financial operation. DeJoy added that USPS needs to cut costs by roughly $3 billion over the next 18 months and grow its revenue by a similar amount to stay on track with the plan’s goals.
USPS incurred a $6.5 billion loss in fiscal year 2023 and expects to see a similar loss in FY 2024, according to DeJoy. The agency saw a profit of $56 billion in fiscal year 2022. However, that was attributed to a one-time cash injection from policies enacted in the Postal Service Reform Act—specifically, the repealing of the 2006 Congressional mandate that required USPS to pre-fund its retiree health benefit liabilities and relief of the $57 billion in debt that USPS had not paid since 2012.