New parcel surcharge helps Postal Service reach $20B in revenue

The integration of distribution centers, technology and equipment is occurring without glitches that occurred in the past, he added. 

Cash-conservation measures, such as deferring payments to employee pension and retirement funds, have given the Postal Service sufficient liquidity to continue operating through at least August 2027. The timeline appears to be a rollback from the 2031 liquidity cliff laid out in Steiner’s testimony to Congress in June.

But Steiner reiterated that the quasi-public agency needs legislative and regulatory reforms that give the agency freedom to operate like a private enterprise and shed onerous statutory obligations for managing pension and retirement funds.

The mandate for universal mail coverage is a major structural impediment. Mail volumes have declined more than 50% since 2007 as the number of delivery points continues to grow. Last year, the USPS added 1.8 million new stops to its route network — adding to delivery costs. The extra workload, combined with lower mail volume, has resulted in a drop in the average number of pieces delivered per stop from 5.5 in 2007 to 2.4 pieces in 2025. 

Steiner called on Congress to provide temporary investments and eliminate unfunded mandates so it can maintain current service levels. If Congress doesn’t want to help the Postal Service grow then it will have to consider reducing service levels and closing thousands of post offices, as well as raising prices, to break even, the postal chief said. 

“The bottom line is that we need to fix the business model that has produced the 17-year-long imbalance in costs and revenue,” Steiner said, later adding, “As  we reduce costs and improve revenue, we believe we will become more profitable, and the appropriation could be reduced.”

Steiner said the Postal Regulatory Commission’s decision to limit price increases to once a year cost the Postal Service $700 million in lost revenue. The organization recently filed a request to raise stamp rates in January using a different methodology it says will raise more money.

Steiner has made it a priority to improve revenues, including through more aggressive pricing on letters and bulk mail. 

“Use of our pricing authority is absolutely necessary to improve our financial sustainability and we need to be given more flexibility if we are expected to cover our costs,” he said. “Obviously, we would like to both grow volumes and grow revenue, but if we can only do one, we want to do it in a way that maximizes total revenue. That is what all companies do — from airlines to grocery stores, they apply revenue management principles to maximize profitability. Thus far, applying those basic principles has favored raising prices even though there has been a modest decrease in volumes.

“All of the statistics and results show that we have yet to cross the point that we should be changing our pricing strategy, and that we have more price to take in the marketplace. It would be financially irresponsible of us not to do so,” Steiner said in remarks to the board of governors. 

The 8% parcel surcharge drove up parcel shipping revenue by 7.7% despite a 3.4% decline in volume. Parcel volume for the first nine months of the fiscal year were down 6.2% to 4.9 billion pieces.

Operating expenses increased 2% due to a rise in payment levels for retiree health benefits, wages and fuel costs since the start of the Iran war. 

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

Write to Eric Kulisch at ekulisch@freightwaves.com.

RELATED STORIES:

Postal Service moves half of long-distance mail by air just to satisfy UPS contract

DHL outsources last-mile parcel delivery to US Postal Service for $10B

USPS quarterly parcel volumes fall 12% as e-commerce plan implemented