Both the U.S. Postal Service (USPS) and United Parcel Service (UPS) have each reported total revenue growth was close to flat in their respective fiscal quarters, which ended June 30.
USPS revenue grew 1% while UPS’ dipped by about the same amount. Inversely, UPS package volume increased while USPS’ declined.
“We are making solid progress in generating a sustained revenue growth trajectory in our mailing and shipping businesses, which is validation of the product and pricing strategies and network capabilities enabled by our Delivering for America plan,” said Louis DeJoy, U.S. postmaster general, in a statement about USPS revenue.
UPS and USPS provide the most shipping carrier services to retailers in the Top 2000. The database ranks North America’s largest ecommerce retailers by annual web sales.
Earlier this year, USPS selected UPS for its new air cargo contract. FedEx previously held that contract for more than 20 years. The current deal between USPS and FedEx expires Sept. 29, 2024. The USPS and UPS contract takes effect the following day, covering First-Class Mail, Priority Mail Express and Priority Mail.
Switching air cargo carriers is part of a larger USPS initiative to cut costs. The organization plans to cut at least $3 billion in costs in the next two years, including the $1 billion already saved in air transportation costs earlier this year by moving more packages through its ground transportation network.
UPS and USPS each serve 1,000+ online retailers in North America
UPS vs. USPS revenue
The Postal Service’s revenue increased 1% year over year in its fiscal Q3, which ended June 30. And USPS total package volume decreased 1.6%, to 26.6 billion pieces in the quarter.
USPS total revenue was $18.8 billion, while UPS generated $21.8 billion in consolidated revenue in its fiscal Q2. That’s down from $22.1 billion in the year-ago period for the Parcel Service.
Meanwhile, UPS revenue decreased 1% while its average daily volume of packages decreased 2.9% in its fiscal Q2, which also ended June 30.
“This quarter was a significant turning point for our company as we returned to volume growth in the U.S., the first time in nine quarters,” said Carol Tome, UPS CEO, in a statement. “As expected, our operating profit declined in the first half of 2024 from what we reported last year. Going forward we expect to return to operating profit growth.”
UPS revenue by segment
Also in its fiscal Q2, UPS revenue from its domestic segment decreased 1.9% year over year, to about $14.12 billion. Its package volume grew in the United States.
“In the U.S., volume inflected positively, and it was the last full quarter of the high wage growth rate associated with the first year of our new Teamsters contract,” said Brian Dykes, UPS chief financial officer, in an earnings call with investors. “Outside the U.S., we saw pockets-of-demand improved in each export region.”
UPS reached a tentative agreement in July last year to renew a five-year labor contract with the Teamsters union, staving off a possible strike as soon as next week that could have paralyzed shipments throughout the U.S. and beyond. UPS package volume had decreased that quarter, partially due to “noise levels around our labor negotiations,” then-chief financial officer Brian Newman had told investors in an earnings call.
As a result, the lowered package volume in Q2 last year helped UPS mark year-over-year package volume growth in Q2 2024.
International revenue also decreased for UPS, falling 1.0% to $4.37 billion. UPS said a 2.9% decrease in average daily volume within the segment drove that revenue decrease. Meanwhile, UPS Supply Chain Solutions revenue grew 2.6% to about $3.33 billion.
USPS revenue by segment
“We continue transforming and modernizing our processing, transportation and delivery networks, which will enable the Postal Service to operate more efficiently and effectively and at lower cost,” DeJoy said in the statement. “Despite inflationary headwinds impacting our costs, we remain committed to finding a path to return the Postal Service to long-term financial sustainability.”
The three largest revenue sources for USPS were its First-Class Mail, Marketing Mail, and Shipping and Packages segments.
First-Class Mail brought in $5.94 billion. That’s up from about $5.82 billion in the same quarter last year despite a 3.4% decline in volume.
Marketing Mail revenue also grew year over year for USPS despite a 0.3% dip in volume. The USPS segment’s revenue grew to $3.55 billion in Q2 2024 from $3.44 billion.
Shipping and Packages was the only top-three segment to experience a revenue drop, to about $7.70 billion from $7.52 billion. However, its package volume was also the only one of the top three to increase (2.7%).
International revenue for the primarily domestic postal service also decreased, to $320 million from $363 million. Revenue from periodicals fell to $228 million this quarter from $232 million the year before.
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