USPS Racks Up $3.1B Quarterly Loss, Faces Calls To Abandon Delivering For America Plan
USPS posts $3.1 Billion loss in fiscal Q3 2025, prompting calls for new Postmaster General David Steiner to abandon Delivering For America plan.
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US Postal Service loss widens to $3.1 billion as inflation bites
The U.S. Postal Service is trying to fix its finances by raising revenues and cutting costs. It hasn’t been easy so far, but leadership sees signs of progress. (Photo: Eric Kulisch/FreightWaves)
Eric Kulisch
Fri, August 8, 2025 at 8:49 AM EDT 6 min read
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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.
David Steiner (Photo: USPS)
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.
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