The Postal Service is seeing deeper financial losses than expected this year, but does not expect to veer much from a 10-year reform plan that it is nearly midway through completing.
USPS, however, is far from the plan’s “break-even” goal, and is calling on Congress and the Trump administration to take a familiar wish list of reform efforts that are outside the agency’s control.
The agency saw a $9 billion net loss in fiscal 2025 — significantly higher than the nearly $7 billion net loss it expected.
USPS said it saw increased compensation costs, including offering early retirement incentives to more than 10,000 of its employees, which contributed to higher operating expenses this year.
]]>
The agency reported this summer that it spent $167 million in early retirement incentives to mail handlers who work in the agency’s mail processing facilities, and other USPS employees who work in a variety of support positions.
Still, USPS saw better financial results than it did the year prior. It ended fiscal 2024 with a $9.5 billion net loss.
USPS Chief Financial Officer Luke Grossman said the agency delivered 3.7 billion fewer pieces of mail in fiscal year 2025, compared to the previous year, but saw an $848 million, or more than 1% increase in revenue.
The agency has generally raised mail prices every January and July. USPS raised the price of a first-class stamp to 78 cents in July. However, the agency announced it will not raise mail rates in January 2026.
Despite the deeper-than-expected losses, Postmaster General David Steiner told the USPS Board of Governors on Friday that he does not expect USPS to deviate from the 10-year reform plan set forth by his predecessor.
“While we may change specific initiatives, as we move forward, and our execution needs improvement, I do not see the need for a fundamental reassessment of our processing of the logistic modernization strategies at this time,” Steiner said.
The Delivering for America plan led by former Postmaster General Louis DeJoy envisioned the agency reaching a “break-even” point last year.
]]>
The agency, however, continues to see multi-billion-dollar losses annually, even after Congress passed long-awaited reform legislation in 2022, eliminating a requirement to pre-fund retiree health benefits far into the future.
“Without a doubt, the Postal Service is in a better place today than it would have been without these initiatives,” Steiner said.
USPS is delivering 110 billion fewer pieces of mail than it did 18 years ago. Factoring in today’s prices, that drop in volume accounts for an $85 billion loss in revenue.
“No business could overcome that magnitude of a revenue drop. So it’s not surprising that the Postal Service has struggled,” Steiner said.
Meanwhile, a bipartisan group of lawmakers and the Postal Service’s own regulator have urged USPS not to proceed with the next phase of its reform plans.
The Postal Regulatory Commission warned in January that the next phase of the 10-year reform plan would slow mail delivery for a “significant portion of the nation,” but wouldn’t save USPS enough money to justify the changes.
Steiner said that on-time deliveries had recently fallen below “an acceptable range from our targets, with some stakeholders questioning whether the Postal Service could reliably deliver.”
Those metrics have improved. USPS delivered 88.89% of first-class mail on time in FY 2025, compared to 89.45% last year. Households in fiscal 2025 received mail in 2.5 days, on average, in fiscal 2025, compared to 2.7 days the year prior.
“While these improvements should be noted, service is still not where we expect it to be, nor is it what our customers deserve,” he said.
]]>
Most USPS customers can expect delivery of their mail and packages in less than three days on average. Nearly half of USPS packages and mail are delivered earlier than the service standard.
Steiner said USPS will continue to find ways to cut costs and increase revenue, but stressed that the agency “cannot cost-cut our way to prosperity.”
“Service is foundational to our success and enables a financially viable Postal Service. It drives business and revenue. I know that we can have both excellent service and lower costs,” he said.
Steiner said USPS will continue to rely on $3 billion in Inflation Reduction Act funds to deploy more electric vehicles. But Republican lawmakers have threatened to claw back those funds.
Grossman said the agency expects to see continued increases in first-class mail revenue, despite long-term declines in volume. He said USPS also expects to see a continued decline in international mail because of the Trump administration’s tariff policies.
In June, the United Nations’ Universal Postal Union said international mail volume coming into the United States fell by more than 80% once the Trump administration eliminated a tariff exemption for small packages went into effect. Nearly 90 postal operators across the world have suspended some or all services to the United States for now.
Grossman said USPS is seeing continued revenue growth for its standard package service, Ground Advantage, as well as lower transportation costs.
Steiner said USPS is asking Congress and the Postal Regulatory Commission “for more flexibility and common-sense modifications in how we’re regulated.” That includes a greater ability to borrow money to fund infrastructure improvements. USPS has maxed out its $15 billion borrowing limit from the Treasury Department.
Board Chairwoman Amber McReynolds said the agency’s $15 billion borrowing limit with the Treasury Department hasn’t changed since 1991, and “needs to be updated to reflect the organization’s current financial needs.”
“For the Postal Service to succeed in the long term, it is essential that Congress and the administration work together to make some of these changes and provide the Postal Service with the same tools and flexibility that are used by other organizations in both the government and private sectors. This is urgent, and it is time for action,” McReynolds said.
USPS has repeatedly called on the Office of Personnel Management and Treasury to adjust what it pays into the Civil Service Retirement System (CSRS), which covers most federal and postal employees hired before 1984.
OPM calculates what USPS must contribute every year to cover retiree benefits. USPS and its inspector general’s office both claim the agency has overpaid into the CSRS fund.
USPS is looking for great flexibility in its pension investment options. By law, it can only invest its retiree and pension funds in low-risk, low-reward Treasury bonds.
USPS has sought these legislative and administrative changes for much of DeJoy’s tenure, but Congress and the executive branch have yet to take up these requests.
McReynolds said USPS has an “urgent need” for Congress and the Trump administration to get the agency to reach long-term financial sustainability, and that the agency can’t carry many of its most impactful changes on its own.
“The Postal Service must be clear-eyed about the things the Postal Service can control and the things it cannot control,” she said.
USPS is gearing up for the peak holiday season, its best opportunity to improve its financial outlook in fiscal 2026. The agency has significantly increased its package-processing capacity in recent years, and expects to hire 14,000 seasonal employees this year.
Ron Stroman, a member of the board and former deputy postmaster general, said service performance improvements are “setting a strong foundation” for USPS heading into its peak season.
Steiner said USPS, as part of its reform plan, is looking to capture a greater share of the e-commerce industry from private-sector shippers.
“We have the capacity to meet a much larger percentage of America’s shipping needs. We just need to utilize our assets efficiently and effectively,” Steiner said.
Roman Martinez, a former chairman of the board, is stepping down from the board next month once his carryover term expires. Once he steps down, the board will only have four of its nine presidentially appointed and Senate-confirmed seats filled.
If you would like to contact this reporter about recent changes in the federal government, please email jheckman@federalnewsnetwork.com, or reach out on Signal at jheckman.29
Copyright
© 2025 Federal News Network. All rights reserved. This website is not intended for users located within the European Economic Area.
