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Ecommerce Helps USPS Grow Revenue in Recent Quarter

The US Postal Service reported first quarter results for fiscal year 2016 on Tuesday (October through December 2015). Operating revenue grew 3 percent year over year to $19.3 billion, driven by the record volume of packages delivered during the 2015 holiday season.

Shipping and Package revenue grew 13.5 percent year over year, and the agency saw an increase in package volume of 16 percent for the quarter – from 1.245 million to 1.447 million. Postmaster General Megan Brennan said revenue from Shipping and Package was particularly strong during the holiday shipping season. “We continue to grow our ecommerce business and remain focused on delivering the best value for our customers.”

The USPS delivered 660 million packages during peak in the first quarter, up 18%. When asked in a post-earnings conference call the reason why it exceeded its projected growth in package volume during peak, Brennan said it was the value proposition the agency offers. “We kept the network fluid and delivered value for our customers.”

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Brennan was also asked what impact the recent rate increase would have on earnings. She said the USPS expects revenue to significantly increase through the end of the fiscal year.

The Postmaster General also called for legislative reform, and in Tuesday’s earnings press release, said, “Despite these achievements and the best efforts of our employees, our financial condition will worsen without legislative reform. Our financial situation is serious but solvable through the enactment of prudent legislative reform.”

Net income for the quarter was $307 million compared to a net loss of $754 million for the same period last year. The change in net income was most significantly impacted by a $1.2 billion favorable change in the workers’ compensation expense as a result of interest rate changes – a factor outside of management’s control.

In the same release, USPS CFO Joseph Corbett said that excluding the favorable impact of interest rate changes and the exigent surcharge, the USPS would have reported a net loss of approximately $700 million. “Absent legislative reform, the exigent surcharge is expected to roll back in April, and our losses will increase by approximately $2 billion per year.”

More details are available on the USPS website.

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Ina Steiner

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. Send news tips to ina@ecommercebytes.com.


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