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USPS Struggles to Snag E-Commerce Shipping Share, Losses Persist

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USPS price hike

Despite a higher volume of packages shipped, higher costs helped the United States Postal Service pile on the losses in the third quarter.

USPS reported revenue up 0.7% to $16.6 billion for the period ended June 30 compared to last year’s third quarter, but losses mounted.

The net loss for the quarter was $1.57 billion, compared with a much lower $586 million loss the same time last year.

And because of the expiration of the exigent surcharge (a surcharge that had been in place for mail and shipping services which made prices for consumers and businesses higher, but helped the USPS amass $4.6 billion in added revenue), revenues for the quarter were roughly $450 million less than they might otherwise have been.

According to USPS, the removal of the exigent surcharge will likely reduce revenue by an addition $500 million in the fourth quarter and by close to $2 billion annually, putting the shipper in a worse financial position than it’s currently in.

“We continue to post double-digit gains in package volume and are well-positioned operationally for further growth. Our capital investments are enabling increased efficiencies across the enterprise and improving experiences for our customers,” Postmaster General and CEO Megan J. Brennan, said in a statement. “Despite the encouraging numbers, net losses continue to mount.”

The Postal Service’s shipping and packages business saw strong performance, with revenue up 18 percent to $645 million, though the boon was offset by a 5.5% fall in First-Class Mail revenue.

As a result of that boost in volume of shipping and packages as USPS tries valiantly to snag its share of the e-commerce market from the United Parcel Service and FedEx, costs took off.

Workers’ compensation went up, as did labor costs, which increased by $387 million in the quarter, due largely to the increase in shipping volume. Transportation costs—partially owed to airing more orders to meet customers’ demands—jumped $97 million.

“Our results in the quarter further underscore the need for legislative reform that provides the organization with greater financial stability,” Brennan said, and that reform may come in the form of new price hikes for the Postal Service.

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