Latest news with #GroundAdvantage
Yahoo
4 days ago
- Business
- Yahoo
USPS Posts $3.1B Loss Ahead of New Chief's Tenure as Stamp Hikes, Delivery Delays Draw Fire
The U.S. Postal Service (USPS) incurred $3.1 billion losses in its fiscal third quarter, the final period before new Postmaster General David Steiner took the helm at the courier. In remarks to the USPS board of governors on Thursday, Steiner said the agency is 'on the right path,' highlighting growing volumes via the Ground Advantage parcel delivery offering, alongside improving on-time service performance. More from Sourcing Journal Canada Post Workers Reject Contract Offers, Prolonging Labor Standoff Amazon CEO on Tariffs: 'It's Impossible to Know What Will Happen' UPS China-to-US Shipments Decline More than Expected in Q2 The latter has been a major subject of criticism since a wider network overhaul began taking shape, where mail processing is currently being streamlined across some 60 regional processing and delivery centers, causing delivery delays in some major metropolitan areas and rural areas alike. Net losses widened from $2.5 billion in the year prior, with $1.6 billion of the current losses being controllable by management. The remaining $1.45 billion losses are fixed costs outside of current USPS control, including retiree pension contributions and workers' compensation claims for employees injured on the job. Total operating revenue remained flat at $18.8 million. Strategic price increases are narrowing losses for First-Class Mail, with revenue decreasing 1.4 percent to $5.8 billion on a 5.4 percent volume decline to 9.9 billion pieces. Similarly, shipping and packages revenue from parcel delivery increased 0.8 percent to $7.8 billion, on a 6.5 percent volume decline to 1.6 billion pieces. Steiner, who officially became Postmaster General on July 15, asserted that the beleaguered agency's 10-year Delivering for America plan installed by previous USPS head Louis DeJoy was a 'sound' strategy. A former FedEx board member, Steiner said the modernization efforts have brought the Postal Service closer to private sector logistics practices. 'Both the pricing and product strategies have improved our competitiveness,' Steiner said. 'We will continue to aggressively pursue those strategies.' At a congressional hearing in June, multiple industry stakeholders had agreed that public-private partnerships would help bolster USPS services and finances, but had largely called on Steiner and management to put the turnaround program on hold until a full reassessment was conducted. Nonprofit advocacy group Keep US Posted is urging Steiner to pivot away from 'DeJoy's 'tax and spend' strategy,' namely to reject the plans implemented to hike rates and focus on packages over mail. 'While the Delivering for America plan promised to grow parcel volumes, lower costs and allow the Postal Service to break even by 2023, it lost $6.5 billion that fiscal year, and it continues to hemorrhage money,' said Keep US Posted executive director Kevin Yoder in a statement. 'Steiner should free the American public from DeJoy's disastrous decisions and pursue his own strategy to help USPS recover so that it can keep delivering to every American six-days per-week' As the courier seeks ways to generate more revenue, the USPS board of governors urged the Postal Regulatory Commission (PRC) not to limit its ability to implement price hikes following criticism from Keep US Posted. The regulator proposed a rule in June that would limit the Postal Service to only raising prices once per year. The USPS already increased the price of a first-class Forever stamp from 73 cents to 78 cents on July 13 after skipping a hike in January, after raising them twice in 2024. In 2026 and 2027, the hikes will return at a twice-a-year pace. With the agency at a high risk of running out of cash in recent years, the PRC opened USPS to setting mail prices higher than the rate of inflation in 2020. As such, stamp prices have skyrocketed. Since 2019, the Forever stamp's price has increased 56 percent from a then-50 cents. Yoder said that with the latest increase, 'the situation will no doubt worsen and push even more mail from the system.' Governor Ron Stroman, a former deputy postmaster general, said during the public board meeting Thursday that the PRC would be making a mistake to undercut their pricing decisions. Stroman indicated that if the Federal Reserve lowers interest rates, the agency may decide to raise prices only once per year. 'Based on the data I have reviewed, I have concluded that twice-a-year price increases have maximized the Postal Service's revenue during the post-pandemic period of high inflation,' Stroman said. 'However, I can certainly envision future scenarios where we conclude that the factors we consider in exercising our business judgment weigh against a twice-a-year price increase.' Keep US Posted shared its support for legislation introduced in May by Congressman Sam Graves (R-Mo.) that would give the PRC the power to stop stamp hikes. The bill, called the USPS Services Enhancement and Regulatory Viability Expansion and Sustainability for the U.S. Act (or USPS SERVES US Act), would limit price increases to once per year, and institute other reforms aimed at ensuring accountability and efficiency across its delivery network. Under that legislation, the USPS would create an autonomous customer advocate office to hear Americans' concerns about the agency.
Yahoo
09-08-2025
- Business
- Yahoo
US Postal Service loss widens to $3.1 billion as inflation bites
The U.S. Postal Service's adjusted operating loss widened by $522 million to $1.6 billion for the fiscal year third quarter as expenses increased nearly 3% and first-class mail revenue fell $86 million on a 5.4% decline in volume. The agency posted a net loss of $3.1 billion compared to $2.5 billion for the same quarter last year, according to the latest financial report. It previously projected a full-year loss of $6.9 billion after posting a rare net profit in the first quarter. A highlight for the Postal Service was the 39.6% growth in volume for the new Ground Advantage budget product, which replaced first-class package services in 2023 and offers two-to-five day service standards for packages up to 70 pounds. Ground Advantage revenue increased 31% to $4.1 billion. During the first nine months of the fiscal year, Ground Advantage volumes were up 25.7% to 2.9 billion pieces. Postmaster General David Steiner, who has been in his post for three weeks, told the board of governors on Thursday that Delivering for America, the 10-year modernization and cost-reduction strategy created by predecessor Louis DeJoy, is sound and just requires good execution to achieve its goals. 'We will strive to align our costs to revenue on a consistent, long-term basis. To do so, prioritizing strategies to drive operational efficiencies and generate sustained revenue growth will be key,' he said. 'Service improvement will be a top priority for me and the management team and we will remain committed to continuous improvement in our operational performance. Our recent transformation and modernization efforts have brought the Postal Service closer to private sector logistics practices. Both the pricing and product strategies have improved our competitiveness. We will continue to aggressively pursue those strategies, but we'll need to do more to fully unlock the strong revenue growth for the long term.' Management said that first-class mail performance improved during the third quarter. The Postal Service delivered 90.6% of all first-class mail on time, up from 86.4%, with delivery taking an average of 2.6 days compared to 2.8 days during the same period last year. Non-cash workers' compensation adjustments of $237 million, due to actuarial recalculations and other factors, contributed to the bigger net loss. The Postal Service, which is celebrating its 250th anniversary, has lost more than $6.2 billion through the first nine months of the fiscal year, or $144 million more than last year for the same period. Many employee and retiree benefit costs are mandated by law and cannot be altered without legislative change, and some of these costs have historically increased at a higher rate than inflation, resulting in years of losses. Operating revenue was essentially flat year over year at $18.8 billion. Losses were $1.6 billion when excluding expenses not controllable by management. 'America needs a financially strong Postal Service to continue to meet the needs of the nation far into the future. To restore our financial strength, we must continue to evolve amid a changing business environment so that we can provide high-quality service at a reasonable cost. Growing our revenue and cutting our costs to serve is the only path to financial health,' Steiner said in a news release accompanying the financial report. Shipping and packages revenue increased $58 million, or 0.8%, despite a volume decline of 114 million pieces, or 6.5%, thanks to higher rates. Lower volumes are partly related to large customers like UPS insourcing last-mile delivery. Through three quarters, parcel volumes are down 4.6% year over year. Bulk advertising mail revenue decreased $29 million, less than 1%, even as volume increased 0.5%. First-Class mail revenue declined 1.4%, with price increases offsetting the full impact of the volume decline. In mid-July, the Postal Service raised prices for stamps and packages by about 7%, depending on the type of product. Mail volumes, representing first-Class mail and marketing mail, have declined 49% between 2007 and last September, the end of the 2024 fiscal year. Marketing mail has been challenged by commercial mailers' increasing use of digital and mobile advertising and higher prices for print media production. Inflation played a large role in operating expenses increasing by $613 million, year over year, to $22 billion, the Postal Service said. Transportation expenses were flat during the quarter and decreased 6.6% during the nine months ended June 30, as the agency reaps the benefits of its transformation plan. A 5.8% increase in quarterly trucking expenses was offset by the decline in air cargo after the Postal Service shifted from FedEx to UPS as the primary provider of domestic air transport. The state-owned company shipped fewer packages and letters by air and reduced spending by 43% in the first three months after UPS took over a primary air cargo contract from FedEx, the Office of Inspector General recently reported. Air transportation expenses decreased 13.5% and 20% for the three and nine months ended June 30, primarily due to lower service standards enabling the Postal Service to shift more volume to less-expensive highway transportation, along with lower jet fuel prices. Trucking costs increased in the third quarter as the postal operator relied more heavily on freight auctions, which offer more flexibility amid a major network realignment of processing centers but also have a higher average rate per mile than contract rates. The decrease in highway costs for the nine-month period reflects how the streamlining effort has reduced facilities, which in turn has eliminated underutilized transportation trips and improved truck fill rates. The Postal Service said it is also benefiting from lower average diesel fuel prices compared to the prior year, and optimization of peak-season contracts. Keep US Posted, an advocacy group of nonprofits, newspapers, greeting card publishers and other interests, said the Postal Service's losses demonstrate the Delivering for America plan needs a major correction. 'Today's financial results provide even more proof that new Postmaster General David Steiner needs to lead the U.S. Postal Service away from DeJoy's 'tax and spend' strategy. Steiner should take the losses as an opportunity for meaningful change, and discard massive and frequent rate hikes, service reductions and the prioritization of packages over mail,' the group said in a statement. Amber McReynolds, chair of the board of governors, urged policymakers to address the systemic financial imbalances — constrained liquidity, inflexible pension and benefit frameworks, a statutory debt ceiling, and an outdated workman's compensation system — that impede the Postal Service from operating more nimbly and profitably. The board of governors has five members and four vacancies. Governor Roman Martinez urged President Donald Trump to nominate more individuals to serve on the board so it can properly handle its duties. Trump withdrew his nomination of John LaValle, who previously served as White House liaison to the Energy Department, on Aug. 1. He has also nominated waste and recycling executive Anthony Lomangino to serve on the Postal Service board. Click here for more FreightWaves/American Shipper stories by Eric Kulisch. RELATED READING: Is Canada Post too big to fail? New US postmaster faces heavy lift stabilizing finances USPS hikes parcel rates and stamps by 7% The post US Postal Service loss widens to $3.1 billion as inflation bites appeared first on FreightWaves.
Yahoo
18-07-2025
- Business
- Yahoo
FedEx and UPS cease parcel discounts, ‘weaponize' fuel surcharges: report
Legacy parcel carriers FedEx and UPS have begun to discontinue commercial discounts, previously offered in response to increased market competition, prioritizing instead high-yield shipments and profitability to better meet Wall Street expectations, according to the TD Cowen/AFS Freight Index published this week. Businesses are paying more per package shipped with FedEx (NYSE: FDX) and UPS (NYSE: UPS) as the couriers' ground networks lose volume at the bottom end and replace some of that with express volume as customers trade down in service levels. The shift of cost-conscious shippers to alternative providers with slower, cheaper services is reflected in the ground parcel cost per package reaching a record high of 32% above the index's 2018 baseline during the second quarter. The loss of lightweight volume resulted in a higher average billed weight per package that in turn drove up the cost per package, the report from AFS Logistics and financial services firm TD Cowen said. Parcel volumes for the two delivery powers soared during the pandemic, but began declining in 2023 as e-commerce sales normalized, Amazon expanded and new couriers entered the market. FedEx and UPS engaged in a pricing war with startup delivery companies and retailers like Walmart for about 18 months. Management at both companies has signaled to investors this year that the focus is now on profitable parcel freight. UPS's decision in January to give up half of its business with Amazon over the next two years underscores the interest in boosting profitability. Data analytics and consulting firm LJM Group echoed the index's findings in an investor briefing this week, saying that parcel pricing is more stable today than it was in 2023-24, but is not back to pre-pandemic predictability, according to a readout of the call from Susquehanna Investment Group. It said many clients are making the shift to use the U.S. Parcel Service because of Ground Advantage, a product introduced two years ago as a low-cost option for packages up to 70 pounds with transit times of two to five business days. 'The challenge for smaller and mid-sized shippers is that saving $3 to $5 per package by shifting some of their business to USPS or a regional carrier from FedEx or UPS must be weighed against the loss in savings from FedEx/UPS's volume-driven pricing structure when some of that volume is shifted away. This can effectively trap small and/mid-sized shippers with limited volume in a sole-sourcing parcel strategy with one of the legacy national providers,' Susquehanna equity analyst Bascome Majors wrote. The parcel giants have also been busy tacking on service fees to their base shipping rates, usually matching any surcharge imposed by their rival. Memphis, Tennessee-based FedEx earlier this month notified U.S. customers of peak season surcharges that are higher than those imposed last year. The extra fees begin phasing in on Sept. 29, based on the handling needs or service levels, and run through Jan. 18. FedEx also imposed similar handling, oversize and unauthorized package surcharges on July 14 for international packages. UPS has been the most aggressive of the two in overhauling its rating model and rolling out new surcharges, according to the TD Cowen/AFS Freight Index. The manipulation of surcharges by the integrated network carriers is most notable with fuel. Fuel surcharges, based on opaque formulas pegged to the price of fuel, have long been considered a way for carriers to pad profits beyond simply being a cost-recovery mechanism, but FedEx and UPS have 'weaponized fuel surcharge as a revenue tool,' the authors said. During the past year, domestic ground shippers have experienced a cumulative increase in fuel surcharges of 30% when compared to a constant diesel fuel price level, indicating that the fees are because of carrier actions rather than fuel price fluctuations, according to TD Cowen and AFS data. Express shippers saw a modest 0.6% increase due to carrier adjustments even though the U.S. Gulf Coast jet-fuel index fell 10.3% in the second quarter. 'Low demand and competition from other players have pushed both FedEx and UPS to focus on right-sizing networks to hold onto the volumes they can profitably serve,' said Mingshu Bates, AFS Logistics' chief analytics officer and president of parcel, in the report. FedEx has recently accelerated the consolidation of its separate Ground and Express networks. UPS is also closing terminals and moving activity into larger, automated sortation centers to reduce overhead and improve efficiency. The TD Cowen/AFS Ground Parcel Freight Index is expected to reach 29.2% in the third quarter, representing a 7% year-over-year increase and a 2.2% decrease from the second quarter. AFS Logistics provides managed transportation, freight audit and cost management services to freight buyers. It has visibility into more than $39 billion in annual freight spending. Click here for more FreightWaves/American Shipper stories by Eric Kulisch. Write to Eric Kulisch at ekulisch@ RELATED STORIES: LTL pricing index to hit record high in Q3 FedEx, UPS lose market share to big retailers, small couriers US parcel market to grow 36% by 2039, Pitney Bowes says The post FedEx and UPS cease parcel discounts, 'weaponize' fuel surcharges: report appeared first on FreightWaves.
Yahoo
15-07-2025
- Business
- Yahoo
USPS hikes parcel rates and stamps by 7%
The price of sending packages, letters and bulk mail through the U.S. Postal Service went up on Sunday, to the dismay of mass mailers and e-commerce sellers. The product and service price increases were telegraphed earlier this year and received approval from the Postal Regulatory Commission. The price for domestic shipping service increased about 6.3% for Priority Mail service, 7.1% for USPS Ground Advantage and 7.6% for Parcel Select. Ground Advantage, introduced two years ago, is an economical service for shipping packages up to 70 pounds in two to five business days. It replaced three other parcel delivery products. The minimum charge for small packages now exceeds $4. Meanwhile, the price of a first-class mail stamp increased to 78 cents from 73 cents. Letter and postcard rates on average increased 7.4%. Single-piece letters weighing more than an ounce increased a penny to 29 cents for each additional ounce. The new prices lists are available here. Price increases for mailing services are based on the consumer price index, while shipping services are adjusted according to market conditions. The board of governors said the new rates will keep the Postal Service competitive while providing the agency with needed revenue. The higher shipping rates will impact small-and-medium companies that sell goods online and some could go out of business, said Lucas Zheng, founder of San Jose, California-based startup Samezip. 'Although many companies also provide services cheaper than USPS, only USPS can cover the entire United States and can provide free delivery at home, which is something that no other company can do. In addition, it is still very difficult for small and medium-sized shippers to do pre-sorting because they don't have many packages. For large customers, the price increase of USPS may still be a good thing, because they can do pre-sorting, use multiple package channels, and finally throw the packages that other companies cannot cover to USPS,' he wrote on LinkedIn. Bulk mailers say the rate increases are unwelcome. Keep US Posted, which advocates for greeting card publishers, magazines, catalogs, and printing and paper interests, this month urged incoming Postmaster General David Steiner to call on the board to freeze the mailing rates until after he takes office. 'We believe it is counterproductive for another postage surge to take place immediately before you undertake leadership of the Postal Service, as it will deprive you of the ability to thoroughly assess, and potentially rectify, one of the most destructive policies in DeJoy's Delivering for America plan,' Executive Director Kevin Yoder said in a letter to Steiner. Delivering for America is a 10-year turnaround strategy aimed at improving transportation efficiency and returning the Postal Service to financial viability, including by raising revenue. The Postal Service this month reduced service to remote post offices as part of an effort to streamline inefficient routes and consolidate distribution facilities. Louis DeJoy left as postmaster general in March under pressure from White House, which encroached on the agency's independence. The mail system lost $16 billion in the past two years, partly due to congressional mandates on how to account for worker benefits. The Alliance of Nonprofit Mailers says record rate hikes the past three years have worsened the Postal Services finances. The Association for Postal Commerce, which includes the Alliance of Nonprofit Mailers, last month requested that the Postal Service delay implementation of the rate hikes to Sept. 28 so businesses would have enough time to adjust their own customer pricing. In a June 6 letter to the board of governors, the trade group complained that documentation needed for developers to update commercial mailing software should have been available no later than mid-April, but was not provided until May 1 and is not expected to be finalized until mid-June. 'Software companies, corporate mail centers, and mail service and logistics providers will therefore be forced to take shortcuts to meet an unrealistic deadline as well as seek exceptions for their clients who will otherwise fail to comply with preparation and entry requirements. Either way, July 13 implementation of the new rates is likely to result in misdirected mail, operational bottlenecks, postage payment adjustments, and severe service disruptions,' wrote Michael Plunkett, president of the Association for Postal Commerce. The APC said it didn't receive a response from the board. Click here for more FreightWaves/American Shipper stories by Eric Kulisch. Write to Eric Kulisch at ekulisch@ US parcel market to grow 36% by 2039, Pitney Bowes says Postal Service board names FedEx official as CEO before vetting complete Accounting change, higher labor costs drive $3.3B Postal Service loss The post USPS hikes parcel rates and stamps by 7% appeared first on FreightWaves. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Miami Herald
08-07-2025
- Business
- Miami Herald
The price of stamps is going up soon. How much will you pay?
New prices on stamps and other postage will roll out soon, marking the first of multiple rate hikes planned by the U.S Postal Service. The changes, announced in April, would raise the cost of a first-class stamp by a nickel from 73 cents to 78 cents starting July 13, according to the USPS. Pricing on letters, postcards and international mail will see similar increases. The adjustments will increase the cost of mailing services by approximately 7.4 percent, according to the agency's website. The USPS has proposed similar hikes on shipping services including Priority Mail and USPS Ground Advantage. Those changes will also take effect July 13, raising the cost of each by 6.3 percent and 7.1 percent, respectively, officials said in a May 9 news release. The cost of Priority Mail Express won't change, however. 'The USPS governors believe these new rates will keep the Postal Service competitive while providing the agency with needed revenue,' officials said. The adjusted postal rates are the first in a series of planned price hikes — five in all — on first-class 'forever' stamps set to roll out over the next two years, McClatchy News reported. Pricing changes will occur 'each January and July thereafter' through December 2027, the USPS said. The latest adjustments will include a 6-cent increase on domestic postcards and a 5-cent hike on international letters, according to the agency's website. Despite the changes, the Postal Service said its mailing and shipping rates 'remain among the most affordable in the world.'
