In brief: The U.S. Postal Service has reported first-quarter results for the government fiscal year, while President Biden has nominated his former labor secretary to a seat on the Board of Governors. In logistics, the March 26 collapse of the Francis Scott Key Bridge in Baltimore is prompting official warnings of “a major and protracted impact to supply chains.” Abroad, though Houthi rebel attacks have eased, many container ships continue to choose longer and safer routes. Meanwhile, paper markets continue experiencing changes in pricing and capacity.
Built on our roots as a printer, mail industry partner and logistics leader, Quad is a marketing experience company focused on delivering streamlined solutions at scale to our clients. As the largest USPS customer, we are uniquely positioned to provide clients with best practices and insights on the latest postal, paper and logistics topics. If you have any questions or concerns during these challenging times for our industry, contact your Quad representative. We’ll tap our in-house experts to investigate and get you the answers you need.
Postal
The U.S. Postal Service generated slightly more revenue but lost more money in the first quarter of government fiscal year 2024 than it did a year ago. The service cited the continued effects of rising inflation along with non-cash workers’ compensation expenses and unfunded retiree pension liabilities as factors in its reported $2.1 billion net loss. The bottom-line result compares to a net loss of $1 billion in the October-to-December period in fiscal year 2023.
Total operating revenue grew 0.5% during the first quarter, to $21.6 billion, helped by increasing revenue from the Shipping and Packages category. The Postal Service delivered 98 million more shipments and packages during the period, an increase of 5.1% over 2023’s first fiscal quarter.
Those gains, however, were more than offset by significant volume declines in Market Dominant mail — primarily in the marketing mail category. Marketers sent 2.4 billion fewer pieces of mail during the first quarter compared to a year ago, a decline of 13.5%, which the Postal Service attributed to a drop-off in political and election mail as voters chose local rather than federal candidates. While First Class mail volumes fell by 704 million pieces, or 5%, revenue increased by 2.6% or $171 million.
Factoring out the cyclical impacts, the Postal Service said that Marketing Mail would have swung to a revenue increase of $40 million, though volume declines would still have shown a reduction of 1.1 billion pieces or 6.2% over 2023’s fiscal first quarter.
A summary of the first quarter fiscal year 2024 results:
- Overall revenue grew $115 million or 0.5%.
- First Class Mail volume decreased by 704 million pieces, a 5.6% reduction, while revenue grew by $171 million to $6.7 billion.
- Marketing Mail volume decreased by 2.4 billion pieces, down 13.5%, as revenue fell $235 million to $4.1 billion.
- Periodicals volume decreased 69 million pieces, an 8.6% drop, with revenue falling by $2 million to $238 million.
- Shipping and Packages volume increased by 98 million pieces, or 5.1%, helping revenue grow $240 million or 2.7%.
The USPS said it reduced work hours by 8 million during the first quarter in a continuing effort to control expenses. However, the USPS reported an increase in expenses of $1.1 billion, or 4.9%, to $23.8 billion. Postal leaders attributed the increases to “uncontrollable costs” such as retiree pension benefits and workers’ compensation expenses. Without those costs, the Postal Service says it would have reduced costs by $218 million or 1%.
In prepared remarks to the Postal Service Board of Governors, Postmaster General Louis DeJoy cited other cost initiatives, such as “minimizing peak season staffing, continuing to shift … air volume to ground transportation, the elimination of unnecessary or underutilized transportation trips, the closing of annexes rather than the adding of ones, and substantial reduction of redundant processes deployed in the past to muscle through activities.”
He also said the Postal Service was impacted during the period by a hazardous materials incident that shut down a “major gateway processing plant” for almost two weeks.
DeJoy also highlighted:
- Continued rollout of new Regional Processing and Distribution Center regions, ongoing in Richmond, Atlanta, Charlotte, Chicago, Portland and Boise, with three more planned for 2024 in Indianapolis, Jacksonville and Houston.
- Progress toward the opening of 40 Sorting and Delivery Centers by the end of 2024; about three-quarters of those went active in 2023.
- Initiation of plans for modernizing the Postal Service fleet of vehicles. DeJoy said the Postal Service expects to acquire 30,000 new vehicles this year, with a third of them being electric.
More information on the Postal Service’s financial results for Q1 of FY 2024 is available here. Click here to read Postmaster General DeJoy’s remarks.
Miscellaneous updates
President Biden has nominated Marty Walsh, former U.S. Secretary of Labor and Mayor of Boston, as a member of the Board of Governors for the U.S. Postal Service. Walsh currently serves as Executive Director of the National Hockey League Players’ Association and served as a labor leader in Boston before his election to the Massachusetts House of Representatives in 1997.
USPS delivery performance
| Week of 2/5 | Week of 2/12 | Week of 2/19 | Week of 2/26 | |
| Early | 19% | 32% | 23% | 31% |
| Day 1 | 44% | 60% | 63% | 60% |
| Day 2 | 74% | 81% | 79% | 80% |
| Day 3 | 89% | 90% | 87% | 90% |
| Day 4 | 96% | 95% | 93% | 96% |
| 1 Day Late | 97% | 98% | 94% | 98% |
No postal facilities were delayed in any significant way in the processing of letter mail over the last month. NDC and SCF St. Louis and Cheyenne, Wyoming, were delayed in processing “flat mail” throughout February.
More recently, we have seen some serious delays in the Atlanta area. The NDC closed Feb. 24 with operations moving to the new RPDC (Regional Processing Distribution Center). Some mail delivered just before and just after the move has been delayed for up to three weeks. Mail delivered to the RPDC March 1 and later is also delayed, but only by a few days. We have also seen some delays out of the SCFs in that area: Atlanta, North Metro and Macon.
The USPS plans to continue to transition to its new operational structure of RPDCs and LPCs (Local Processing Centers) throughout 2024 and into 2025. We will monitor USPS performance as these changes occur and try to work with the USPS to correct any delays that we detect. The South Houston LPC is set to open March 23, taking on processing of some of the mail that is currently handled by North Houston. The software that drives mail preparation, though, will not be updated by the USPS until April 1. We fear that this may cause processing delays in the facilities in late March and early April.
