USPS Makes a 4th Quarter Profit

Two terms we do not often hear in the same sentence are, “US Postal Service” and “Profit.”  However, in the fourth Quarter of last year, the USPS actually did end up with a profit of $318 Million.  This was a result of an increase in sales of $2.8 Billion.  The profit however was calculated after excluding non-cash workers’ compensation adjustments, (the noose around the neck of the USPS), and a time-limited peak surcharge.  Without those calculations, the USPS would have lost approximately $650 million.

Due to the Covid-19 Pandemic, all parcel carriers have been inundated with additional package volumes which created delays in 4^th quarter deliveries for all of them.  The USPS additional revenue came solely from their Shipping and Packaging business sector with an increase of some 435 million packages.  The profit in the 4^th quarter of 2020 represented a 42.1% increase over the fourth quarter of 2019.  In addition, the USPS benefitted from the imposition of Peak Season Shipping Surcharges to increase its revenues.

So the real question is, will this trend of tremendous increases in consumer home deliveries continue in 2021 at the same pace it did in 2020?  Once the country opens up (whenever that is), will consumers abandon their on-line shopping habits and go back to the retail establishments to look at, feel, and carry those goods home themselves?  Obviously, no one has a crystal ball, however the USPS does expect package volumes to decrease to some degree in 2021.  To what extent that reduction actually ends up looking like is anyone’s guess.  One thing we are sure will happen in 2021 is that the USPS will once again impose Peak Season Shipping Surcharges on its customers, including UPS and FedEx to improve its revenue for Peak Shipping Season 2021.