April USPS financial results show impact of COVID19

Earlier this week the US Postal Service reported its unofficial financial results for April, the first full month of COVID-19 impacts for the service.

It wasn’t pretty.

First class mail, the USPS’s most profitable (and easiest to process and deliver) product, showed a drop in revenue of $165 million, or -8.1%.

But it was the drop in advertising mail revenue that was really shocking- it dropped from $1.4 billion to $754 million- a drop of 45% compared with April 2019.

The good news in the report was the huge increase in competitive packages. That sector produced a whopping $694 million increase in revenue, or 38% compared to SPLY.

But that windfall wasn’t enough to make up for the total drop in first class and marketing mail, a decline of $853 million.

As a result, total USPS revenue came to about $5.7 billion for the month, a net decrease of $705 million from last year.

Another cause for concern in April’s numbers is the shift in revenue sources. Competitive products (mainly packages) accounted for 46% of revenue- almost half. A year ago, that share was less than a third of the total.

If current trends continue, that suggests that most of the USPS’s revenue may soon be coming from packages in a competitive market, not from its first class mail monopoly. How does the USPS stay competitive in a market where regular mail volume (and revenue) no longer justifies visiting every address every day?

Delivering packages to residential customers used to be something that made perfect economic sense- you’re going to every house anyway, why not drop off a package or two in between all the letters and bills and magazines.

How quickly things can change…