Postal Trendwatch – May 2015

Executive Summary
The U.S. Postal Service (USPS) lost $754 million in Q1 FY 2015 despite an increase in revenue. The loss is more than double the agency’s $354 million deficit in Q1 FY 2014. However, it is significantly better than the $1.3 billion loss posted in the same period two years ago.
The Service’s quarterly revenue grew $767 million, or 4.3 percent, relative to Q1 FY 2014. The growth was driven by increased holiday season package deliveries and higher prices. Standard Mail volume was 3.5 percent greater than during the same period last year. Standard Mail and First-Class Mail revenues increased 7.6 percent and 3.7 percent, respectively.

Other topics addressed in this analysis:

• Priority Mail volume continues to grow, but revenue is growing at a much slower rate. That’s thanks in part to an increase in the volume of heavily subsidized small packages from China.
• An analysis published by economist Robert Shapiro shows that the implicit and explicit subsidies the Postal Service receives could be far greater than previously reported.
• The Postal Regulatory Commission (PRC) for the first time rejected a Negotiated Service Agreement, proposed by the Postal Service with Discover Financial Services, finding that it “would not improve the net finances of the Postal Service.”

To read the full Postal Trendwatch, please visit the Lexington Institute’s website.