Financial Analysis of
United States Postal Service
Financial Results and 10-K Statement
Fiscal Year 2023
June 17, 2024
Postal Regulatory Commission
Submitted 06/17/2024 02:52 PM
Filing ID: 129348
Accepted 6/17/2024
Financial Analysis Report FY 2023
i
Table of Contents
Chapter I. Overview .................................................................................................................................................................. 1
Volume Declines and Cost Increases Result in Continued Losses—Key Findings ....................................................... 1
Purpose of This Report ....................................................................................................................................................................... 4
Chapter II. Postal Service Financial Status ....................................................................................................................... 5
Introduction ................................................................................................................................................................................................. 5
Analysis of Income Statements ........................................................................................................................................................... 6
Market Dominant Revenue Compared to Prior Year ........................................................................................................... 9
Competitive Product Revenue Compared to Prior Year .................................................................................................. 10
Expense Analysis as Compared to Prior Year ....................................................................................................................... 11
Personnel Expenses .................................................................................................................................................................... 12
Non-Personnel Expenses ......................................................................................................................................................... 19
Comparison of Postal Service Actual Results to Operating Plan .................................................................................. 20
Financial Ratio Analysis .................................................................................................................................................................. 23
Operating Ratio............................................................................................................................................................................. 24
Return on Assets .......................................................................................................................................................................... 25
Analysis of Balance Sheets .................................................................................................................................................................. 27
Assets ...................................................................................................................................................................................................... 30
Liabilities ......................................................................................................................................................................................... 32
Balance Sheet Trend Analysis ...................................................................................................................................................... 33
Debt Ratio ....................................................................................................................................................................................... 33
Current Ratio ................................................................................................................................................................................. 35
Cash Ratio ....................................................................................................................................................................................... 36
Analysis of Statements of Cash Flows ............................................................................................................................................ 37
Cash Flow Ratio Analysis ............................................................................................................................................................... 38
Chapter III. Volume, Revenue, and Cost Trends .......................................................................................................... 41
Overview ..................................................................................................................................................................................................... 41
Overall Volume, Revenue, and Cost Trends ................................................................................................................................. 41
Market Dominant Products ........................................................................................................................................................... 42
Market Dominant Volume ............................................................................................................................................................. 44
Market Dominant Revenue ........................................................................................................................................................... 45
Competitive Products and Services ........................................................................................................................................... 46
Market Dominant Volume, Revenue, and Cost Trends by Class ......................................................................................... 49
First-Class Mail ................................................................................................................................................................................... 49
First-Class Mail Letters Compared with FY 2022 .......................................................................................................... 49
Trends in First-Class Mail Letters ........................................................................................................................................ 51
First-Class Mail Flats Compared with FY 2022 .............................................................................................................. 56
Trends in First-Class Mail Flats ............................................................................................................................................. 57
Financial Analysis Report FY 2023
ii
Other First-Class Mail Compared with FY 2022 ............................................................................................................ 60
USPS Marketing Mail ........................................................................................................................................................................ 61
USPS Marketing Mail Letters Compared with FY 2022 .............................................................................................. 61
Trends in USPS Marketing Mail Letters ............................................................................................................................. 62
USPS Marketing Mail Flats Compared with FY 2022 ................................................................................................... 65
Trends in USPS Marketing Mail Flats .................................................................................................................................. 66
Periodicals ............................................................................................................................................................................................ 69
Periodicals Compared With FY 2022 .................................................................................................................................. 69
Trends in Periodicals ................................................................................................................................................................. 70
Package Services ................................................................................................................................................................................ 73
Market Dominant Special Services ............................................................................................................................................ 75
Competitive Volume, Revenue, and Cost by Product .............................................................................................................. 77
Trends in Competitive Products ................................................................................................................................................. 79
Chapter IV. Cost and Profit Analysis ................................................................................................................................ 82
Introduction ............................................................................................................................................................................................... 82
Analysis of Inflationary Impact on Financial Condition ......................................................................................................... 82
Revenue from CPI Rate Authority .............................................................................................................................................. 85
Contribution Margin Income Statement ....................................................................................................................................... 85
Analysis of Cost Segments ............................................................................................................................................................. 93
Analysis of Employee Labor Cost ..................................................................................................................................................... 95
Appendix A .............................................................................................................................................................................................. 106
Appendix B: Total Factor Productivity ....................................................................................................................................... 107
Financial Analysis Report FY 2023
1
Chapter I. Overview
Volume Declines and Cost Increases Result in
Continued Losses—Key Findings
The Postal Service’s financial position worsened in FY 2023. The organization recorded a
net loss from operations of $2.3 billion, compared to a net loss of $473 million in FY 2022.
1
The increase of $1.8 billion in the FY 2023 net operating loss is the result of a $2.1 billion
increase in operating expenses. The increase in operating expenses occurred despite total
mail volume decreasing by 8.7 percent, including a 2.0 percent decrease in the volume of
Competitive products. The disconnect between workload and costs also resulted in a 4.0
percent decrease in Total Factor Productivity (TFP), the largest decrease in the measure of
the Postal Service’s efficiency since it was first calculated in 1965. The volume decreases
kept operating revenue essentially unchanged from FY 2022 even as prices for Market
Dominant products increased by more than 15 percent between the last month of FY 2022
and the end of FY 2023.
When Non-Operating Expenses (NOEs) are included,
2
the net operating loss of $2.3 billion
becomes a net loss of $6.5 billion. This is a deterioration of $5.5 billion
3
compared to FY
2022. Figure I-1 shows net income (loss) and net operating income (loss) results for the
period FY 2014 – FY 2023.
01
United Stated Postal Service Form 10-K FY 2022, November 10, 2022, at 19 (Postal Service FY 2022 Form 10-K) . Net income or loss from
operations is also referred to as net operating income (loss). The Commission’s calculation of net operating income (loss) differs from the
controllable net income (loss) reported in Postal Service Form 10-K. The Postal Service excludes the difference in the normal cost of Retiree
Health Benefits from its controllable income (loss) because it is the result of actuarial changes.
02
NOEs include all non-cash workers’ compensation costs, accruals to retirement accounts, and one-time adjustments, such as the one time
PSRA adjustment to RHBF unfunded liabilities and normal costs.
03
Excluding the one-time removal of the Retiree Health Benefits (RHB) liability.
Financial Analysis Report FY 2023
2
Figure I-1
Postal Service Net Income Trends
Source: Postal Service FY 2023 Form 10-K; Postal Service FY 2022 Form 10-K; United States Postal Service, Form 10-K FY 2021, November 10,
2021; United States Postal Service, Form 10-K FY 2020, November 13, 2020; United States Postal Service, Form 10-K FY 2019, November 14,
2019; United States Postal Service, Form 10-K FY 2018, November 16, 2018; United States Postal Service, Form 10-K FY 2017, November 14,
2017; United States Postal Service, Form 10-K FY 2016, November 28, 2016; United States Postal Service, Form 10-K FY 2015, November 13,
2015; United States Postal Service, Form 10-K FY 2014, December 5, 2014; (Collectively Postal Service Form 10-K, FY 2014-FY 2023)
As seen in Figure I-1, the Postal Service has not produced an operating profit in the last 7
fiscal years, and it has not had a positive net income since FY 2006. Even when excluding
NOEs, the Postal Service had posted a net operating income for only three of the last 10
years, FY 2014 through FY 2016, when the exigent price increase was in effect.
4
These continuing losses have negatively affected the Postal Service's financial position,
creating a substantial gap between the Postal Service’s assets and liabilities. At the end of
FY 2023, the Postal Service recorded total assets of $45.3 billion and total liabilities of
$68.4 billion.
The financial sustainability of the Postal Service is adversely impacted by insufficient
current assets to cover current liabilities.
04
From January 2014 to April 2016, an exigent price surcharge allowed the Postal Service to recover $4.6 billion in net revenue above its price
cap due to volume declines attributable to the Great Recession.
Financial Analysis Report FY 2023
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At the end of FY 2023:
• The Postal Service’s net loss was $6.5 billion.
o The net deficit was $23.1 billion, consisting of an accumulated deficit of $39.2
billion offset by capital contributions of $16.1 billion.
• The highest growth in capital assets since the start of the Postal Accountability and
Enhancement Act (PAEA)5.
• The Postal Service’s cash and cash equivalents total, including restricted cash and
short-term investments, was $18.4 billion, a decrease of $2.2 billion compared to the
previous year.
o The remaining available borrowing authority from the PAEA-mandated debt
ceiling of $15 billion was $2 billion.
o The cash ratio was 0.50, a decrease of 0.14 compared to the prior year. The
FY 2023 cash ratio was also higher than the 10-year average of 0.22.
• The Postal Service’s operating revenue was $78.4 billion, which was $0.2 billion
lower than the previous year.
o In FY 2023, revenue from Competitive products increased slightly by $0.2
billion.
o Market Dominant revenue decreased by $0.4 billion in FY 2023 despite price
increases above the rate of inflation for all Market Dominant mail classes,
resulting from volume decreases in USPS Marketing Mail.
• FY 2023 was the first full year under the enactment of the Postal Service Reform Act
of 2022
6
(PSRA). Total operating expenses stood at $81.2 billion, which were $2.1
billion higher in FY 2023 than the prior year, and $0.8 billion more than the
Integrated Financial Plan due to higher-than-expected compensation.
• Rising inflation has contributed to increases in compensation and retirement benefit
expenses. Compensation and benefits were $0.9 billion higher than expected
primarily from the inflationary effects on Cost of Living Adjustments (COLAs).
• Personnel-related expenses made up 69.3 percent of total expenses.
o Total workhours and overtime hours decreased by 28 million and 27 million
hours respectively.
o Total postal employees increased by a net of approximately 4,300. Since FY
2020 the non-career workforce has declined by approximately 33,600
employees while the career workforce has increased by 29,000 employees.
05
Postal Accountability and Enhancement Act (PAEA), Pub. L. 109-435, 120 Stat. 3198 (2006).
06
Postal Service Reform Act (PSRA), Pub. L. 117-108, 136 Stat. 1127 (2022).
Financial Analysis Report FY 2023
4
Purpose of This Report
This report provides an in-depth analysis of the Postal Service’s financial performance
primarily using information reported in its Fiscal Year(FY) 2023 Form 10-K
7
measured
against its FY 2022 and its FY 2023 Integrated Financial Plan (IFP).
8
Additionally, data filed
with the FY 2023 Annual Compliance Report (ACR)
9
, such as the Cost and Revenue Analysis
report (CRA), the Cost Segments and Components (CSC) report, and the Revenue, Pieces, and
Weight (RPW) report, are utilized in developing this report.
This chapter provides a summary of the Commission’s findings.
Chapter 2 analyzes the Postal Service’s overall financial status, with a focus on key figures
in the Income Statement, Balance Sheet, and Cash Flow Statement. The Commission
evaluates relationships between the essential components of the Postal Service’s financial
statements to understand the Postal Service’s profitability, stability, and long-term
viability.
Chapter 3 describes the calculation of attributable and institutional cost and examines the
overall trends for Market Dominant and Competitive products and services. It includes
comparisons of volume, revenue, and cost between FY 2022 and FY 2023, as well as trend
analyses that highlight changes in volume, revenue, and cost that have occurred over time.
Chapter 4 disaggregates broad categories of costs into segments categorized by function
and includes a discussion of labor costs and workhours. The Commission also develops a
contribution margin income statement that facilitates analysis of the relationships between
revenue, attributable costs, institutional costs, and overall net income or loss. This year, the
Commission also analyzes the effects of recent high inflation on the costs and revenue of
the Postal Service and finds that although inflation has significantly increased costs,
revenue generated from CPI-based rate authority has offset most of these increases over
the past two years.
07
United Stated Postal Service, Form 10-K FY 2023, November 14, 2023 (Postal Service FY 2023 Form 10-K)
08
The Integrated Financial Plan is a Postal Service report that includes the operating plan, capital investment plan, and financing plan for the
fiscal year. This document is required to be filed as a periodic report pursuant to the 39 C.F.R. § 3050; United States Postal Service, Integrated
Financial Plan, Fiscal Year 2022, November 18, 2021 (Postal Service FY 2022 IFP); United States Postal Service, Integrated Financial Plan, Fiscal
Year 2023, November 29, 2022 (Postal Service FY 2023 IFP)
09
Docket No. ACR2023, United States Postal Service FY 2023 Annual Compliance Report, December 29, 2023 (FY 2023 ACR)
Financial Analysis Report FY 2023
5
Chapter II. Postal Service Financial Status
Introduction
The Commission evaluates the relationships of the essential components of the Postal
Service’s financial statements to analyze the Postal Service’s profitability, stability, and
long-term viability.
The Commission’s analysis, primarily based upon the Postal Service’s Form 10-K financial
statements, provides a basis for comparing FY 2022 and FY 2023. The Commission also
incorporates select key financial data from various relevant periods to support this
analysis.
The Postal Service’s Form 10-K report consists of:
• Income Statements, which measure the Postal Service’s financial performance
(profit and loss) over the fiscal year.
• Balance Sheets, which summarize the Postal Service’s assets and liabilities held at
the end of the fiscal year.
• Statements of Changes in Net Deficiency, which combine the accumulated net deficit
from operations and initial capital contributions.
• Statements of Cash Flows, which measure the Postal Service’s inflows and outflows
of cash during the fiscal year.
This chapter is divided into the following sections:
Analysis of Income Statements: This section reviews overall income and expenses and
compares actual revenue and expenses with those forecasted for the current year and
reported during the prior fiscal year. It also includes an analysis of key financial ratios that
help the Commission further assess the Postal Service’s profitability.
Analysis of Balance Sheets: This section begins with a summary of the Postal Service’s
assets and liabilities at the end of the fiscal year. The section also discusses changes in net
deficiency, which occur because Postal Service liabilities exceed its assets. The remainder
of the section provides a financial ratio analysis to assess both the short-term and long-
term stability of the Postal Service.
Analysis of Statements of Cash Flows: This section analyzes the Postal Service’s inflows and
outflows of cash and debt during the year.
Financial Analysis Report FY 2023
6
Analysis of Income Statements
To facilitate a detailed financial analysis of the Postal Service’s Income Statements, the
Commission separately identifies elements of reported operating revenue and operating
expenses. Net operating revenue includes mail and services revenue, miscellaneous item
revenue, and government appropriations revenue.
10
Net operating expense is calculated as
total expenses minus accruals for certain unfunded retirement liabilities and the non-cash
adjustments to the workers’ compensation liability.
11
The PAEA established the Retiree Health Benefit Fund (RHBF) to fund the long-term retiree
health benefits for postal employees, retirees, and their survivors. From FY 2007 through
FY 2016, the PAEA required the Postal Service to make specified annual payments into the
RHBF. The Postal Service defaulted on its annual payments from FY 2012 through FY 2017,
leaving a $33.9 billion unfunded balance in the RHBF. In addition, the Postal Service
defaulted on $18.8 billion of retiree health benefit normal cost payments from FY 2017
through FY 2021.
12
In April 2022, the PSRA cancelled the outstanding retiree health benefit
liability along with the FY 2022 retiree health benefit normal costs resulting in a $57 billion
adjustment.
In addition, the PSRA requires OPM to establish the Postal Service Health Benefits Program
within the existing Federal Employees Health Benefits program (FEHB), under which OPM
may contract with carriers to offer health benefit plans for Postal Service employees and
retirees. It also requires future retirees to enroll in Medicare.
13
These changes were
reflected on the FY 2022 Statement of Operations as a $57 billion non-cash adjustment to
total net income and on the Balance Sheet as a reversal to current liabilities. For analysis
purposes, the Commission excluded the $57 billion adjustment when appropriate in order
to accurately compare with FY 2023 financial results.
FY 2023 was the first full fiscal year under the enactment of the PSRA. The Postal Service is
still required to make annual amortization payments for unfunded Federal Employees
Retirement System (FERS) and Civil Service Retirement System (CSRS) liabilities. The PAEA
010
In FY 2023, $77 billion (97 percent) of total Postal Service revenue came from the sale of postage and mail services. Miscellaneous revenue
includes adjustments and revenue for miscellaneous items. The Postal Service also received a small governmental appropriation for providing
free mail for the blind and overseas voting and a few other programs.
11
These adjustments and expenses are properly recognized as accrual entries on the Postal Service’s Income Statements and are disaggregated
by the Commission to provide an in-depth analysis of the financial results for FY 2023. The Postal Service considers these expenses non-
controllable.
12
Beginning in FY 2017, the Postal Service’s share of healthcare premiums for retired employees was paid from the RHBF. The Postal Service
was required to make annual contributions to the RHBF for the normal costs of retiree health benefits.
13
Postal Service FY 2023 Form 10-K at 69.
Financial Analysis Report FY 2023
7
suspended the Postal Service’s contributions for CSRS until after FY 2016. Beginning in FY
2017, OPM annually revalues the CSRS liability and assesses installment payments in order
to liquidate the unfunded liability by FY 2043. In FY 2023, the Postal Service did not pay its
annual installment of $3 billion. Postal Service FY 2023 Form 10-K at 58. As of September
30, 2023, the Postal Service had a total of $13.8 billion in unpaid CSRS liabilities for years
FY 2017 through FY 2023. Id. at 38.
The FERS is a fully funded defined benefit plan. Beginning in FY 2013, the Postal Service is
required to make annual amortization payments as calculated by OPM. OPM calculates
these payments annually to liquidate the unfunded liability over a 30-year period on a
rolling basis. In FY 2023, the Postal Service paid $0.6 billion of the total $2.3 FERS
obligation, leaving $1.5 billion outstanding. Id. At 58. Since FY 2013, the Postal Service has
accumulated a total of $8.8 billion of unpaid FERS liabilities. Id. at 38.
Disaggregating the expenses in the Income Statement highlights the Postal Service’s
income with and without these statutorily required payments and the non-cash
adjustments to the workers’ compensation liability.
14
Table II-1 illustrates the
Commission’s disaggregated version of the Income Statements.
14
For FY 2022 results, the Commission also separately states the one-time PSRA adjustment to retiree health benefits.
Financial Analysis Report FY 2023
8
Table II-1
Analysis of Postal Service Income Statements, FY 2022 and FY 2023 ($ in Millions)
Decrease in revenue and expense is denoted by (). Increase in net loss is denoted by ().
N
umbers may not add across due to rounding.
Source: Docket No. ACR2023, Library Reference USPS-FY23-5, December 29, 2023( USPS-FY23-5); Docket No. ACR2022, Library Reference USPS-
FY22-5, December 29, 2022(USPS-FY22-5); United States Postal Service, USPS Preliminary Financial Information (Unaudited), September 2023,
November 14, 2023, FY 2023 Plan data from file "2023.11.14 September FY2023 Monthly Financial Report to the PRC.pdf”, (Postal Service
September 2023 PFI).
Net operating loss occurs when
the costs of running a business
are not covered by revenue.
Sustained net operating losses
can indicate deterioration of the
business. The Postal Service’s FY
2023 net operating loss is $1.8 billion more than the FY 2022 net operating loss,
representing an increase in operating losses and a decrease in profitability. The primary
reason for the deterioration is an increase in operating expenses of $2.1 billion in FY
2023.
15
This increase was largely caused by increases in compensation and other expenses,
partially offset by the decline in purchased transportation. Contributing factors were wage
increases (which include inflationary impacts on COLAs, increases in FERS and CSRS
unfunded expenses, increases in vehicle maintenance service, increases in information
15
The Commission excludes the $57 billion PSRA adjustment when comparing FY 2023 operating expenses to the prior year. When the $57
billion PSRA adjustment is included, FY 2022 operating expenses equal $79.6 billion.
IN FY 2023, THE POSTAL SERVICE’S LOSS
INCREASED BY $1.8 BILLION COMPARED TO FY
2022, REPRESENTING A FURTHER DECREASE IN
PROFITABILITY.
Financial Analysis Report FY 2023
9
technology for system upgrades, and facility rent increases. Postal Service FY 2023 Form
10-K at 23, 36.
Operating revenue decreased by approximately $0.2 billion compared to FY 2022.
Competitive revenue increased by $0.2 billion to partially offset the Market Dominant
revenue decline of $0.4 billion. The decrease in revenue was driven primarily by volume
declines in USPS Marketing Mail.
Market Dominant Revenue Compared to Prior Year
The discussion in this section summarizes the overall revenue by class for Market
Dominant products. Chapter 3 disaggregates revenue by class and product. Table II-2
compares FY 2023 with FY 2022 revenue by class.
Table II-2
Revenue by Market Dominant Class,
16
FY 2022 and FY 2023 ($ in Millions)
Decrease in revenue is denoted by ().
Numbers may not add across due to rounding.
Source: Docket No. ACR2023, Library Reference PRC-LR-ACR2023-1, March 28, 2024 (PRC-LR-ACR2023-1); Docket No. ACR2022, Library
Reference PRC-LR-ACR2022-1, March 29, 2023 (PRC-LR-ACR2022-1); Docket No. ACR2023, Library Reference USPS-FY23-42, December 29,
2023.(USPS-FY23-42)
Market Dominant mail and services revenue decreased by 0.7 percent from the prior
year.
17
As shown in Table II-2, USPS Marketing Mail (5.7%) and Periodicals (3.8%) declined
when compared to SPLY. Partially offsetting those declines were revenue increases in First-
Class Mail (2.3%) and Package Services (4%).
Changes in revenue per piece resulting from rate increases, volume changes, and migration
between classes, products, and rate categories (known as mail mix fluctuations) affect total
16
Other Market Dominant revenue includes appropriations, miscellaneous item revenue, and revenue foregone.
17
Total Market Dominant Mail includes Other Revenue which includes appropriations, mail in transit, and other miscellaneous items.
Financial Analysis Report FY 2023
10
revenue. Figure II-1 isolates the change in Market Dominant revenue due to mail volume
changes, mail mix, and average revenue per piece for each year since FY 2016. For overall
Market Dominant products, decreases in volume partially offsets increases in revenue per
piece and revenue increases from mail mix fluctuations.
Figure II-1
Change in Market Dominant Revenue Due to Changes in Mail Volume, Mail Mix,
and Average Revenue per Piece, FY 2017-FY 2023 ($ in Millions)
Source: PRC derived from Docket No. ACR2017, Library Reference USPS-FY17-42, December 29, 2017; Docket No. ACR2018, Library Reference
USPS-FY18-42, December 28, 2018; Docket No. ACR2019, Library Reference USPS-FY19-42, December 27, 2019; Docket No. ACR2020, Library
Reference USPS-FY20-43, December 29, 2020; Library Reference USPS-FY21-43, December 29, 2021; Docket No. ACR2022, Library Reference
USPS-FY22-43, December 29, 2022; Docket No. ACR2023, Library Reference USPS-FY23-43, December 29, 2023 (collectively, Postal Service RPW
Report, FY 2016–FY 2022).
Competitive Product Revenue Compared to Prior Year
Total revenue from Competitive products increased by $0.2 billion or 0.7 percent
compared to FY 2022 resulting from January 2023 rate increases and a time-limited price
increase in effect during the first quarter (peak season) of FY 2023.
18
Table II-3 compares
revenue for Competitive products between FY 2022 and FY 2023.
18
Postal Service FY 2023 Form 10-K at 22.
Financial Analysis Report FY 2023
11
Table II-3
Competitive Product Revenue, FY 2022 and FY 2023 ($ in Millions)
a
Total Ground consists of Parcel Select, Parcel Return & USPS Ground Advantage
Decrease in revenue denoted by ().
Numbers may not add across due to rounding.
Source: PRC-LR-ACR2023-1; PRC-LR-ACR2022-1.
Expense Analysis as Compared to Prior Year
As noted earlier, for purposes of
analyzing the Postal Service’s
financial position, the Commission
differentiates between operating and
total expenses. As shown in Table II-
4, in FY 2023, total expenses
increased by $5.8 billion (7.3 percent), while operating expenses increased by
approximately $2.1 billion (2.6 percent). The increase in operating expenses was the result
of increases in salaries and benefits, supplies and services, information technology, and
other expenses.
TOTAL EXPENSES INCREASED BY $5.8
BILLION (7.3%), WHILE OPERATING
EXPENSES INCREASED BY
APPROXIMATELY $2.1 BILLION (2.6%).
Financial Analysis Report FY 2023
12
Table II-4
Total Expenses, FY 2022 and FY 2023 ($ in Millions)
19
Decrease in expenses is denoted by (). NMF denotes not meaningful.
Numbers may not add across due to rounding.
Source: September 2023 PFI, file"2023.11.14 September FY2023 Monthly Financial Report to+ the PRC.pdf”; September 2022 PFI Report
(unaudited), file "2022.11.10. Sept FY2022 Monthly Fin Rep.pdf," November 11, 2022.
PERSONNEL EXPENSES
The majority of Postal Service expenses are personnel related. In FY 2023, operating
personnel expenses which exclude the non-cash adjustment to workers’ compensation and
amortization costs of unfunded retirement liabilities,
made up 69.3 percent of total expenses.
20
Including
the non-cash adjustments, labor costs account for 74.2
percent of total expenses.
Table II-5 shows that total personnel operating expenses for FY 2023 increased by $1.9
billion from FY 2022, resulting from increases in salaries, retirement, and employee health
benefits. When systemwide personnel expenses were included, total personnel expenses
increased by $5.6 billion. The net non-cash increase in the workers’ compensation
liability
21
and other non-operating retirement expenses all increased from FY 2022.
19
The PSRA adjustment of RHB Unfunded Liability is excluded from the calculation of percentage of total costs.
20
Subtotal personnel expenses ($59.2 billion) as a percentage of total operating expenses ($85.4 billion).
21
Workers’ compensation expense consists of cash payments, miscellaneous expenses, and the net increase (decrease) in the workers’
compensation liability.
LABOR COSTS ACCOUNT FOR
74.2 PERCENT OF POSTAL
SERVICE’S TOTAL EXPENSES.
Financial Analysis Report FY 2023
13
Table II-5
Breakdown of Total Personnel Expenses, FY 2022 and FY 2023 ($ in Millions)
Decrease in expenses is denoted by (). NMF denotes not meaningful figures.
Numbers may not add across due to rounding.
Source: PRC derived from United States Postal Service, National Trial Balance and Statement of Revenue Expenses, September 2023, November
14, 2023 (Postal Service National Trial Balance September 2023); Postal Service National Trial Balance September 2022, November 14, 2022.
Total compensation is comprised of
salaries for employees (full-time career,
part-time career, and non-career),
overtime and leave pay, and performance
or arbitration awards. There are several
cost drivers for compensation, including
contractual pay increases, inflation used to
calculate semi-annual COLAs, the number
of overtime workhours, and the composition of the workforce. The total compensation in
FY 2023 increased by approximately $0.9 billion compared to FY 2022 primarily due to
contractual wage increases partially offset by a decline in workhours. Collective bargaining
agreements include provisions for mandatory COLAs linked to the Consumer Price Index
for Urban Wage Earners and Clerical Workers (CPI-W). Beginning in FY 2021 COLAs
increases have been larger than the historical increases over the past decade. Postal Service
FY 2023 Form 10-K at 13. Overtime hours declined by approximately 27 million while
straight time hours declined by 1 million. Id. at 24. Impacts of inflation on FY 2023 postal
finances are discussed further in Chapter 4.
Figure II-2 illustrates the change in overtime workhours by craft. Overtime hours
decreased for all crafts except for postmasters, supervisors, rural carriers, vehicle
maintenance, and headquarters. According to the Postal Service, total overtime workhours
THE TOTAL COMPENSATION IN FY
2023 INCREASED BY APPROXIMATELY
$0.9 BILLION COMPARED TO FY 2022
PRIMARILY DUE TO CONTRACTUAL
WAGE INCREASES PARTIALLY OFFSET
BY A DECLINE IN WORKHOURS.
Financial Analysis Report FY 2023
14
decreased by approximately 16 million hours resulting in part from lower First-Class mail
and Shipping and Packages volume. Id.
Figure II-2
Change in Overtime Workhours, FY 2022 and FY 2023
22
Source: PRC derived from United States Postal Service, National Payroll Hours Summary Report, Pay Period 20, 2023, September 29, 2023 (2023
National Payroll Hours Summary PP20); United Stated Postal Service, National Payroll Hours Summary Report, Pay Period 20, 2022, October 4,
2022 (2022 National Payroll Hours Summary PP20). (Collectively National Payroll Hours Summary PP20 2022-2023)
The Postal Service’s workforce is comprised of career (full-time and part-time) and non-
career employees, including Postal Support Employees (PSE), City Carrier Assistants (CCA),
Mailhandler Assistants (MHA), and Other Non-Career Employees. Table II-6 shows the
number of employees by type for FY 2021-FY 2023.
22
“Other” includes Postmasters, Professional and Administrative, Vehicle Operators, and Headquarters.
Financial Analysis Report FY 2023
15
Table II-6
Postal Service Employee Complement, FY 2021–FY 2023
Decrease in amounts is denoted by ().
Numbers may not add across due to rounding.
Source: United States Postal Service, On-Roll and Paid Employee Statistics, Pay Period 20, 2023, September 29, 2023; United States Postal
Service, On-Roll and Paid Employee Statistics), Pay Period 20, 2022, September 29, 2023; United States Postal Service, On-Roll and Paid
Employee Statistics, Pay Period 20, 2021, September 29, 2021 (Collectively Postal Service ORPES PP 20 2021-2023)
In FY 2023, the Postal Service’s total workforce increased by 4,346 employees. Increases in
career employees (8,332) were partially offset by declines in non-career workforce
employees (4,000).
23
Postal Service FY 2023 Form 10-K at 24.
In March 2022, the Postal Service reached an agreement with the National Rural Letter
Carriers Association (NRLCA),
24
which covers a 3-year period from May 2021 to May 2024.
The contract covers 132,000 rural letter carriers and includes a 1.3 percent general wage
increase for November 2023 and COLAs increases for January 2023 and July 2023.
25
In February 2022, the Postal Service reached a final agreement with the American Postal
Workers Union, AFL-CIO (APWU), that expires in September 2024. The contract covers
over 200,000 Postal employees and includes general wage increases for November 2022
and COLAs increases in March and September of each year. The contract will also convert
PSEs to career status depending on the size of their respective post offices.
26
23
Other non-career positions include casuals, non-bargaining temporary positions, rural carrier substitutes, postmaster relief and postal
support employees.
24
Postal Service FY 2022 Form 10-K at 75.
25
National Rural Letter Carrier Association, Agreement between the United States Postal Service and the National Rural Letter Carriers’
Association 2021-2024 (2022), Handbook EL-902 - Agreement between the United States Postal Service and the National Rural Letter Carriers’
Association (ncrlca.org)
26
American Postal Workers Union, AFL-CIO,2021-2024 Tentative Collective Bargaining Agreement, February 28, 2022,
https://apwu.org/contracts/2021-2024-apwuusps-collective-bargaining-agreement.
Financial Analysis Report FY 2023
16
In March 2023, the Postal Service
finalized its negotiations with the
National Postal Mail Handlers
Union, AFL-CIO (NPMHU), on a
new collective bargaining
agreement. The new contract will expire in September 2025 and includes six COLAs
payments during the term of the agreement and general wage increases of 1.3 percent.
27
During FY 2023, total workhours decreased by approximately 28 million. This was the
second year in a row that workhours decreased.
28
Figure II-3 illustrates the change in total
workhours since FY 2007.
Figure II-3
Change in Total Workhours, FY 2007–FY 2023
Source: Postal Service Form 10-K, FY 2014–FY 2023; United States Postal Service, Form 10-K FY 2013, November 15, 2013; United States Postal
Service, Form 10-K FY 2012, November 15, 2012; United States Postal Service, Form 10-K FY 2011, September 30, 2011; United States Postal
Service, Form 10-K FY 2010, September 30, 2010; United States Postal Service, Form 10-K FY 2009, September 30, 2009; United States Postal
Service, Form 10-K FY 2008, September 30, 2008; United States Postal Service, Form 10-K FY 2007, November 20, 2007 (Collectively Postal
Service Form 10-K FY 2007-FY 2023)
27
National Postal Mail Handlers Union, 2022-2025 NPMHU National Agreement, March 13, 2023,
https://m.npmhu.org/media/news/body/2022-2025-NPMHU-National-Agreement-2.pdf.
28
Postal Service FY 2023 Form 10-K at 24.
(120.0)
(100.0)
(80.0)
(60.0)
(40.0)
(
20.0)
0.0
20.0
40.0
FY 2007
FY
2008
FY 2009
FY
2010
FY 2011
FY 2012
FY 2013
FY 2014
FY 2015
FY 2016
FY 2017
FY 2018
FY 2019
FY 2020
FY 2021
FY 2022
FY 2023
Change in Number of Workhours (in Millions)
Fiscal Year
DURING FY 2023, TOTAL WORKHOURS
DECREASED BY APPROXIMATELY 28 MILLION.
THIS WAS THE SECOND YEAR IN A ROW THAT
WORKHOURS DECREASED.
Financial Analysis Report FY 2023
17
An analysis of workhours by function shows that in FY 2023, workhours decreased in Mail
Processing (8.6 percent ), Customer Service (3.9 percent), City Delivery (1.1 percent ), and
Rural Delivery (0.7 percent ). Workhours increased in Plant & Equipment (1.6%), Vehicle
Maintenance (2.2 percent ), and Other (1.8 percent ).
29
Table II-7
Workhours by Function (Thousands of Workhours), FY 2021–FY 2023
Decrease in amounts is denoted by ().
Numbers may not add across due to rounding.
Source: Docket No. ACR2023, Library Reference USPS-FY23-7, December 29, 2023 (USPS-FY23-7); Docket No. ACR2022, Library Reference USPS-
FY22-7, December 29, 2022 (USPS-FY22-7); Docket No. ACR2021, Library Reference USPS-FY21-7, December 29, 2021 (USPS-FY21-7).
The Postal Service defines productive hourly wage rates as the labor costs per work hour
by cost segment/craft.
30
This metric reflects the effect of wage levels, the composition of
workers, overtime, pay premiums, and leave usage on hourly labor costs. Table II-8 shows
the productive hourly wage rates.
31
The productive hourly wage rate for all categories
increased compared to the prior year.
29
The “Other” category represents Operations Support, Finance, Human Resources, Administration, Training, and Rehabilitation workhours.
30
Docket No. ACR2023, Library Reference USPS-FY23-17, December 29, 2023, PDF file “USPS-FY23-17.pdf,” at 1(USPS-FY23-17).
31
The productive hourly wage rate is a measure of total compensation and benefits costs per hour worked. Compensation includes overtime,
annual, sick, or holiday pay and any other hourly pay premiums.
Financial Analysis Report FY 2023
18
Table II-8
Productive Hourly Wage Rates ($ per Workhour), FY 2021–FY 2023
Decrease in amounts is denoted by ().
Numbers may not add across due to rounding.
Source: USPS-FY23-7; USPS-FY22-7; USPS-FY21-7.
Workers’ compensation expenses increased by $2.7 billion in FY 2023. Workers’
compensation expenses consist of a cash payment and a non-cash change in long-term
workers’ compensation liability. The cash payment is paid to the U.S. Department of Labor
for the current year’s cost of medical and compensation benefits and an administrative
fee.
32
The non-cash change in long-term workers’ compensation expenses includes
actuarial revaluations of existing cases and new cases, initial costs of new cases for the
year, and any changes in the discount rate used to estimate the amount of current funds
needed to settle all claims in the current year. These factors cause the non-cash portion of
workers’ compensation to fluctuate year to year. In FY 2023, the non-cash component of
long-term workers’ compensation expenses increased by $2.5 billion compared to the prior
year. Table II-9 disaggregates components factoring into the workers’ compensation
expense for the past 2 years.
32
The workers’ compensation program is administered by the Department of Labor which makes all decisions regarding injured workers’
eligibility for benefits. The Postal Service reimburses the DOL for all workers’ compensation benefits paid on behalf of its employees, plus an
administrative fee. Postal Service FY 2023 Form 10-K at 33.
Financial Analysis Report FY 2023
19
Table II-9
Components of Workers’ Compensation Expense, FY 2022 and FY 2023 ($ in Millions)
Decrease in expenses is denoted by ().
Numbers may not add across due to rounding.
NMF = Not Meaningful Figure
Source: PRC derived from Postal Service FY 2023 Form 10-K at 34, 70.
NON-PERSONNEL EXPENSES
Transportation is the largest non-personnel expense. It accounts for 11.8 percent of total
expenses. Table II-10 shows transportation expenses by category.
Table II-10
Transportation Expenses by Category, FY 2022 and FY 2023 ($ in Millions)
Decrease in expenses is denoted by ().
Numbers may not add across due to rounding.
Source: PRC derived from Postal Service FY 2023 Form 10-K at 34-35.
Total purchased transportation expenses
decreased for the first time since FY 2016, by
1.7 percent from FY 2022. Highway
transportation increased by 7.1 percent
compared to last year. Postal Service FY 2023
Form 10-K at 35. Air transportation expenses
decreased by 16.3 percent compared to last
year resulting from a shift in package volume
AIR TRANSPORTATION EXPENSES
DECREASED BY 16.3%
COMPARED TO LAST YEAR
RESULTING FROM A SHIFT IN
PACKAGE VOLUME FROM AIR TO
HIGHWAY TRANSPORTATION AS
PART OF THE DELIVERING FOR
AMERICA PLAN.
Financial Analysis Report FY 2023
20
from air to highway transportation as part of the Delivering for America plan. Id. at 35.
Table II-11 shows all other non-personnel-related expenses increased by $0.3 billion in FY
2023 resulting from higher vehicle maintenance for an aging vehicle fleet, increases in
supplies and services, higher information technology costs associated with system
upgrades, and increasing facility rents and utilities. Id.
Table II-11
Other Non-Personnel Expenses, FY 2022 and FY 2023 ($ in Millions)
Decrease in expenses is denoted by ().
Numbers may not add across due to rounding.
Source: PRC derived from Postal Service FY 2023 Form 10-K at 35.
Comparison of Postal Service Actual Results to Operating Plan
Each year the Postal Service develops an integrated financial plan that includes forecasts of
volume, revenue, and expenses for the following year. This section compares the Postal
Service’s forecasts with actual results. The Postal Service’s FY 2023 Operating Plan, as
outlined in its 2023 Integrated Financial Plan (IFP), projected a net loss of $4.5 billion in FY
2023.
33
The actual total net loss of $6.5 billion was $1.9 billion more than the Postal Service
estimated. Total revenue was $1.8 billion less than planned. Total operating expenses were
$0.9 billion more than planned, resulting primarily from higher than expected
compensation. Table II-12 compares actual FY 2023 results with the estimated results in
the Operating Plan.
33
United States Postal Service, Revised Integrated Financial Plan, Fiscal Year 2023, December 1, 2022, at 1 (Postal Service FY 2023 IFP); USPS
Preliminary Financial Information (unaudited), September 2023, November 14, 2023 (September 2023 Revised PFI). Excluding the retiree
health benefit prefunding adjustment.
Financial Analysis Report FY 2023
21
Table II-12
Actual and Operating Plan Income Statements, FY 2023 ($ in Billions)
Decrease in revenue and expense is denoted by (). Increase in net loss is denoted by ().
Numbers may not add across due to rounding.
Source: Postal Service September 2023 PFI, file “2023.11.14+September+FY2023+Monthly+Financial+Report+to+the+PRC.pdf”.
As seen in Table II-13, total revenue was $1.9 billion less than anticipated. First-Class Mail,
USPS Marketing Mail, Periodicals and Competitive and Other Parcels
34
were less than
projected while Other Mail revenues were more than projected.
Table II-13
Actual and Operating Plan Revenue by Categories Shown in IFP,
35
FY 2023 ($ in Billions)
36
Decrease in revenue is denoted by ().
Numbers may not add across due to rounding.
Source: United States Postal Service, Integrated Financial Plan FY 2024, November 11, 2023, at 2 (Postal Service FY
2024 IFP); Postal Service FY 2023 IFP at 3.
34
Competitive and Other Parcels mail includes Competitive packages and Market Dominant Package Service mail.
35
The Postal Service FY 2023 IFP isolates volume from International and Parcels from the other categories. See Postal Service FY 2022 IFP at 3.
36
“Other” includes special services and other miscellaneous revenue including Federal Interagency Agreements, Appropriations and Investment
Income. The Commission includes other miscellaneous revenue for comparison to the Postal Service’s IFP report which includes all sources of
revenue in its FY 2023 estimates.
Financial Analysis Report FY 2023
22
Total volume was less than expected, primarily due to lower-than-expected volume in
First-Class Mail and USPS Marketing Mail. Table II-14 compares volumes for FY 2023 with
the volume projected in the Operating Plan.
Table II-14
Actual and Operating Plan Volume by Categories Shown in IFP,
37
FY 2023 ($ in Billions)
Decrease is denoted by ().
Numbers may not add due to rounding.
Source: Postal Service September 2023 PFI at 2; Postal Service FY 2023 IFP at 3.
Total operating expenses were $0.8 billion more than anticipated as a result of higher than
anticipated compensation and benefits and transportation. Compensation and benefits
were $0.9 billion higher resulting from inflationary effects on COLAs. Postal Service FY
2023 Form 10-K at 23. Salaries and benefits were expected to increase by $1.2 billion in FY
2023; actual salaries and benefits were $1.7 billion higher despite a decline in workhours
of approximately 28 million.
The increase in salaries and benefits costs was the result of higher than expected inflation
linked to CPI-W. Actual and projected COLAs increases, beginning in FY 2021, have been
larger than the historical increases over the past decade. Id. at 13.
Excluding the non-cash workers’ compensation adjustment,
38
non-operating expenses
were $0.1 billion more than expected resulting from inflationary impacts on the actuarially
determined liabilities and an increase in FERS normal costs due to the changing workforce
composition. Postal Service FY 2023 Form 10-K at 25.
37
The Postal Service FY 2023 IFP isolates revenue and volume from International and Parcels from the other categories. See Postal Service FY
2023 IFP at 3.
38
The Postal Service excludes the non-cash adjustment to workers’ compensation from plan because it is dependent on actuarial assumptions,
interest rates, and other factors outside of Postal Service management’s control. See Postal Service FY 2023 IFP at 1.
Financial Analysis Report FY 2023
23
Total non-personnel expenses were $0.1 billion less than projected from the result of
higher than anticipated transportation and other expenses.
Table II-15
Actual and Operating Plan Expenses, FY 2023 ($ in Billions)
Decrease in amounts is denoted by ().
Numbers may not add across due to rounding.
Source: Postal Service September 2023 PFI Report at 3; Postal Service FY 2023 IFP at 1.
Financial Ratio Analysis
Financial ratios assist in interpreting accounting information. The Commission calculated
key financial ratios to facilitate its analysis of the Postal Service’s financial performance
between FY 2006 and FY 2023. These ratios provide a concise and systematic way to
organize financial data into meaningful information. The historic accounting information
used in ratio analysis is not adjusted for inflation in order to maintain consistency with
Generally Accepted Accounting Principles (GAAP) and comparability over time and also
because some postal expenses, such as labor, retirement, and workers’ compensation are
impacted by cost indexes other than inflation.
Financial Analysis Report FY 2023
24
OPERATING RATIO
The operating ratio measures how well an organization can control operating expenses
while generating revenue. The Commission measures this by comparing the Postal
Service’s total operating expenses to its total operating revenue. An operating ratio greater
than 1.0 indicates a net operating loss, and a ratio less than 1.0 indicates a net operating
profit.
39
In the period reflected in Figure II-4, the Postal Service had a net operating profit
in FY 2006 through FY 2008 and FY 2014 through FY 2016. An operating ratio below 1
indicates an operating profit and an improvement in the Postal Service’s ability to reduce
its operating expenses while generating
revenue. In FY 2020, operating revenue
and operating expenses were the highest
in more than a decade. In FY 2021 and FY
2022, the operating ratio declined as
operating revenue grew at a higher rate
than operating expenses. In FY 2023 the
operating ratio increased to 1.04 as
revenue declined and operating expenses
increased. In FY 2023 operating revenue declined by 0.3 percent while operating expenses
increased by 2.6 percent. Rising inflation has contributed to increases in compensation and
retirement benefit expenses while also causing volatility in supplies and services, fuel and
energy costs.
39
The Commission calculates the operating ratio by dividing total operating expenses by total operating revenue.
RISING INFLATION HAS
CONTRIBUTED TO INCREASES IN
COMPENSATION AND
RETIREMENT BENEFIT EXPENSES,
WHILE ALSO CAUSING VOLATILITY
IN SUPPLIES AND SERVICES, FUEL
AND ENERGY COSTS.
Financial Analysis Report FY 2023
25
Figure II-4
Operating Ratio Trend FY 2006–FY 2023
Source: PRC derived from Postal Service Form 10-K, FY 2007–FY 2023; United States Postal Service, FY 2006 United States Postal Service
Annual Report, September 30,2006 (Postal Service FY 2006 Annual Report).
RETURN ON ASSETS
The return on assets ratio is a measure of how efficiently an organization uses its assets to
generate profits. It compares total assets to net income (loss) for each year. A negative
return on assets indicates net losses and/or low capital investment. Figure II-5 shows the
Postal Service’s return on assets since FY 2006.
0.90
0.92
0.94
0
.96
0.98
1
.00
1
.02
1.04
1.06
Operang Rao
Fiscal Year
Operang Rao
Threshold
Financial Analysis Report FY 2023
26
Figure II-5
Return on Assets Trend FY 2006–FY 2023
Source: PRC derived from Postal Service FY 2006 Annual Report; Postal Service Form 10-K, FY 2007–FY 2023.
The Postal Service’s total assets are cash and cash equivalents; receivables; and property,
plant, and equipment. At the end of FY 2023, the Postal Service had a negative return on
assets ratio of 0.14,
40
a decline compared to the prior year’s ratio of negative 0.02.
Increasing capital investments in property, plant and equipment were offset by cash
declines. The increase in FY 2023 total net loss was the result of declining revenue and an
increase in operating expenses. The total net loss of $6.5 billion for FY 2023 was primarily
the result of compensation increases including the non-cash component of workers’
compensation, which increased by $2.5 billion compared to the prior year. The increase
was driven by a significant increase in discount rates in FY 2023. An increase of 1 percent
in interest rates can increase the workers’ compensation liability by $1.2 billion. Postal
Service FY 2023 Form 10-K at 43.
FY 2006 was the last year that showed a positive ratio. This was during the Postal
Reorganization Act regime when revenue was required to cover costs (break-even). From
FY 2007 through FY 2010, the percentage change in year-to-year net losses was greater
40
For analysis purposes the Commission excludes the one-time non-cash adjustment to retiree health benefit unfunded liability accruals ($57
billion).
(0.80)
(0.70)
(0
.60)
(0.50)
(0
.40)
(0
.30)
(0.20)
(0
.10)
0.00
0
.10
FY 2006
FY 2007
FY 2008
FY 2009
FY 2010
FY 2011
FY 2012
FY 2013
FY 2014
FY 2015
FY 2016
FY 2017
FY 2018
FY 2019
FY 2020
FY 2021
FY 2022
FY 2023
Return on Assets Rao
Fiscal Year
Financial Analysis Report FY 2023
27
than the percentage change in year-to-year total assets, resulting in increasingly negative
ratios. During this period, the Postal Service began using available debt to invest in capital
and fund its operations. From FY 2006 through FY 2011, the Postal Service used $13 billion
of its $15 billion allowable debt.
41
The sharp decline in FY 2012 was largely the result of
two retiree health benefits prefunding payments totaling $11.1 billion. The improvement in
FY 2014 through FY 2016 was primarily the result of revenue generated from the exigent
surcharge
42
and improving cash balances resulting from defaults on annual RHB
prefunding payments. The improvement in FY 2017 resulted from lower retirement-
related health benefit expenses compared to the statutory prefunding of the RHB and a
decrease in non-cash workers’ compensation expenses from higher discount rates.
Analysis of Balance Sheets
This section analyzes the Postal Service’s financial situation and use of resources based on
data from Balance Sheets prepared according to GAAP. The analysis compares two points
in time, September 30, 2023 (FY 2023) and September 30, 2022 (FY 2022). Table II-16
compares certain categories in the Postal Service’s asset and liability structure for FY 2023
with FY 2022.
41
Postal Service Form 10-K, Balance Sheet, FY 2007–FY 2010.
42
See Docket No. R2013-11, Order Granting Exigent Price Increase, December 24, 2013 (Order No. 1926).
Financial Analysis Report FY 2023
28
Table II-16
Structure of Assets and Liabilities, FY 2022 and FY 2023 ($ in Millions)
Decrease in amounts is denoted by ().
Numbers may not add across due to rounding.
Source: Postal Service FY 2023 Form 10-K at 47.
At the end of FY 2023, total assets decreased by $0.9 billion compared to the prior period,
driven by declines in available cash partially offset by an increase in short-term
investments.
43
Current assets are the sum of cash and cash equivalents, receivables and
supplies, and prepayments, easily converted to cash for financing operations. Noncurrent
assets, mainly buildings and equipment (capital assets), are more difficult to convert to
cash in the short term.
Liabilities at the end of FY 2023 totaled $68.4 billion, 53.4 percent of which were current
liabilities. Current liabilities are obligations that will come due within 1 year, while
noncurrent liabilities are long-term financial obligations. The Postal Service is required to
make payments for amortization of unfunded CSRS and FERS liabilities. The Postal Service
continued to accrue these unpaid retirement expenses, which totaled approximately $22.7
billion at the end of FY 2023. This obligation is 62.2 percent of current liabilities.
Additionally, at the end of FY 2023, the Postal Service had $1 billion more in short-term
43
The Postal Service invested excess cash not immediately necessary for operations in the amount of $8.8 billion and restricted cash in the
amount of $3.2 billion in Treasury bills of various maturities ranging between six months to one year. Postal Service FY 2023 Form 10-K at 62.
Financial Analysis Report FY 2023
29
debt compared to FY 2022. Long-term liabilities consist mainly of workers’ compensation
liability ($12.5 billion) and the total debt owed to the Federal Financing Bank ($12 billion).
On the Balance Sheets, net deficiency represents the difference between total assets and
total liabilities. This indicates whether assets were financed by borrowing (liability) or by
capital contributions and accumulated earnings from prior years. Net deficiency occurs
when liabilities are greater than assets.
At the end of FY 2023, the Postal Service recorded a $23.1 billion net deficit consisting of an
accumulated deficit of $39.2 billion offset by capital contributions of $16.1 billion. The
accumulated deficit is the result of multiple years of net losses, beginning in FY 2007, offset
by FY 2022 net income of $56 billion driven by PSRA adjustments. The $16.1 billion in
capital contributions consists of a beginning balance of $13.1 billion
44
and the $3.0 billion
in funds the Postal Service received in FY 2022 as part of the Inflation Reduction Act of
2022.
Figure II-6 shows the mix of the Postal Service’s asset and liability structure as of
September 30, 2023. The shortage of current assets (44.4 percent of total assets) to cover
current liabilities (53.4 percent of total liabilities) adversely affects the Postal Service’s
financial condition. In FY 2023, the Postal Service did not have a sufficient amount of
current assets to pay for current liabilities. Non-current assets comprise 55.6 percent of
total assets, while non-current liabilities only comprise 46.6 percent of total liabilities.
44
Total capital contributions of the U.S. government were $3.1 billion as of September 30, 2014, consisting of the beginning transfer of assets
from the former Post Office Department (POD) ($1.7 billion), cash contributions between 1972 and 1982 ($1.3 billion), and the contribution
of approximately 6,500 fuel efficient vehicles during FY 2009 and FY 2010 ($53 and $49 million), respectively.
Financial Analysis Report FY 2023
30
Figure II-6
Comparison of Postal Service’s FY 2023 Current and Noncurrent Assets and Liabilities
Source: PRC derived from Postal Service FY 2023 Form 10-K at 46.
Working capital is the difference between current assets and current liabilities. Negative
working capital indicates an excess of current liabilities over current assets. In FY 2023, the
Postal Service’s working capital was negative $16.4 billion.
Assets
Since 2008, Postal Service capital investments have not kept pace with depreciation and
amortization. Aging capital assets and the continued restrictions on capital investment
resulted in a depreciation expense in excess of investments from FY 2008 to FY 2019; fixed
assets declined by $9.2 billion over that period. The Postal Service reduced its capital
expenditures from an annual average of approximately $1.5 billion in FY 2009 through FY
2011 to an annual average of approximately $850 million in FY 2012 through FY 2015, a
reduction of approximately 43 percent. From FY 2015 through FY 2019, capital
expenditures to upgrade facilities, equipment, and the vehicle fleet increased to an annual
average of approximately $1.4 billion. In FY 2020 and FY 2021 capital assets grew at an
average rate of 1.4 percent.
0
5
10
15
20
25
30
35
40
Assets Liabilies
$ In Billions
Current Noncurrent
Financial Analysis Report FY 2023
31
Figure II-7
Percent Change in Capital Assets, FY 2006 - FY 2023
Source: PRC derived from Postal Service Form 10-K, FY 2006–FY 2023.
FY 2023 recorded its highest positive growth
in capital assets. The Postal Service recorded a
7.3 percent growth in capital, compared to the
2.5 percent in FY 2022. The Postal Service
purchased $3 billion in property and
equipment, offset by the total property, plant,
and equipment depreciation of $1.8 billion.
In September 2022, the Postal Service received $3.0 billion under the Inflation Reduction
Act of which $1.3 billion is available for the purchase of zero-emission vehicles with the
additional $1.7 billion available for the purchase and installation of infrastructure to
support those vehicles. Id. at 56.
FY 2023 RECORDED ITS HIGHEST
POSITIVE GROWTH IN CAPITAL
ASSETS. THE POSTAL SERVICE
RECORDED A 7.3% GROWTH IN
CAPITAL, COMPARED TO THE 2.5%
IN FY 2022.
Financial Analysis Report FY 2023
32
LIABILITIES
In FY 2023, total liabilities increased by $5.7 billion, resulting from increases in retirement
benefit liabilities and short-term debt.
The long-term portion of workers’ compensation decreased by $0.9 billion in FY 2023. This
actuarial adjustment is highly sensitive to discount and inflation rates and to new and
existing claims. Figure II-8 shows the current breakdown of the Postal Service’s liabilities
as of September 30, 2023.
Figure II-8
Postal Service Liabilities Structure, September 30, 2023
Source: PRC derived from Postal Service FY 2023 Form 10-K at 47.
In addition to the liabilities recorded on the Postal Service’s Balance Sheets, there are other
liabilities not recognized in the Postal Service’s financial statements. These liabilities are
controlled and administered by OPM and relate to the assets and liabilities attributed to the
Civil Service Retirement and Disability Fund (CSRDF). See 5 U.S.C. § 8909a. The CSRDF
provides pension benefits to retired and disabled Federal employees, including Postal
Service employees covered by CSRS and FERS. Id. § 8348.
Financial Analysis Report FY 2023
33
In addition, the PAEA requires the Postal Service to report certain disclosures provided by
OPM regarding the funded status of the CSRDF, specifically for postal employees, reported
on the Postal Service Form 10-K statements.
Balance Sheet Trend Analysis
To facilitate its analysis, the Commission applies key financial ratios to the Postal Service’s
Balance Sheet to further assess the current and historical financial stability of the Postal
Service. Table II-17 summarizes the key balance sheet ratios used in this analysis.
Table II-17
Postal Service Balance Sheet Ratios FY 2022 and FY 2023
Source: PRC derived from Postal Service FY 2023 Form 10-K.
DEBT RATIO
Debt ratio is the percentage of total liabilities an entity has on its balance sheet to its total
assets. The higher the ratio, the greater the risk that the entity’s debt level may impede its
ability to respond to challenges and opportunities effectively. Figure II-9 reflects the Postal
Service’s debt ratio trend since FY 2006.
Financial Analysis Report FY 2023
34
Figure II-9
Debt Ratio, FY 2006–FY 2023
Source: PRC derived from Postal Service FY 2006 Annual Report; Postal Service Form 10-K, FY 2007–FY 2023.
The ratio is generally a conservative measurement because the liabilities are carried at
estimated amounts of expected cash outflows. At the same time, some assets may be
understated because no adjustments have been made to restate for fair value. For example,
land or a fully depreciated building or equipment may have a higher fair market value than
its book value. As it pertains to the Postal Service, the debt ratio provides information
about the increasing amount of the
Postal Service’s liabilities relative to
its small asset base.
At the end of FY 2023, the debt ratio
increased to 1.51 from the 1.36 debt
ratio for FY 2022, the lowest the ratio
has been since FY 2008. The increase is primarily the result of a larger increase in total
liabilities than total assets. Retirement benefits and total debt owed to the Federal
Financing Bank are the primary drivers in increasing liabilities. While investments in
property, plant, and equipment were offset by declines in cash. The Postal Service’s FY
2023 debt ratio was lower than the average 10-year debt ratio of 2.28. This ratio is
indicative of the Postal Service’s insufficient resources to pay down its liabilities.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Debt Rao
Fiscal Year
Debt Ra o
Average FY
2006-FY 2023
AT THE END OF FY 2023, THE DEBT
RATIO INCREASED TO 1.51 FROM
THE 1.36 DEBT RATIO FOR FY 2022,
THE LOWEST THE RATIO HAS BEEN
SINCE FY 2008.
Financial Analysis Report FY 2023
35
CURRENT RATIO
The current ratio indicates the degree to which current assets meet current liabilities. The
higher the current ratio, the more likely an entity can pay its current liabilities because it
has a larger proportion of current assets relative to its current liabilities. Figure II-10
highlights the fluctuations in the current ratio since FY 2006.
Figure II-10
Current Ratio, FY 2006–FY 2023
Source: PRC derived from Postal Service Form 10-K, FY 2006–FY 2023.
At the end of FY 2023, the Postal Service had a current ratio of 0.55, a decrease of 0.14 from
the end of FY 2022. This is higher than the Postal Service’s 10-year average of 0.29.
The decrease in the ratio resulted from an increase in current liabilities compared to a
decline in current assets. Current liabilities increased by $4.4 billion (13.7 percent) due to
increases in CSRS and FERS unfunded liabilities. Retiree benefits are significantly impacted
by wage inflation, health benefit premium increases, retirement and workers’
compensation programs. Postal Service FY 2023 Form 10-K at 15.
The reduction of statutory prefunding payments in FY 2009 resulted in a higher current
ratio. A combination of increasing current liabilities and increasing cash has helped keep
the current ratio relatively flat. It has increased in the last 3 years resulting from increases
Financial Analysis Report FY 2023
36
in cash in years FY 2020 and FY 2021 and the reduction in current liabilities in FY 2022.
45
CASH RATIO
The cash ratio compares total liquid assets to its current liabilities. The ratio measures an
entity’s ability to pay current liabilities with available cash or cash equivalents. Figure II-11
illustrates the cash ratio from FY 2006 through FY 2022.
Figure II-11
Cash Ratio, FY 2006–FY 2023
Source: PRC derived from Postal Service FY 2006 Annual Report; Postal Service Form 10-K, FY 2007–FY 2023.
The Postal Service had a cash ratio of 0.50 at the end of FY 2023. This is a decrease
compared to the prior year’s cash ratio of 0.64. The FY 2023 cash ratio is also higher than
the 10-year average of 0.22. This is the result of a decrease in cash and cash equivalents
including short-term investments.
46
In FY 2008 and FY 2009, the Postal Service’s cash
balances increased by $533 million and $2.7 billion, respectively, which increased the cash
ratio. During FY 2011 through FY 2019, the Postal Service’s cash balance gradually
increased along with its current liabilities. During the years FY 2020 and FY 2021, gradual
cash increases helped improve the cash ratio.
45
The reduction in FY 2022 current liabilities was the result of PSRA adjustments to remove the accumulated retiree health benefit liability.
46
The Postal Service invested excess cash in the amount of $8.8 billion in highly liquid short-term investments issued by the U.S. Treasury.
Postal Service FY 2023 Form 10-K at 56.
Financial Analysis Report FY 2023
37
Analysis of Statements of Cash Flows
At the end of FY 2023, the Postal Service’s total cash and cash equivalents, excluding $1
billion in restricted cash, were $8.1 billion. Cash and cash equivalents excluding restricted
cash and short term investments were $11.6 billion lower than at the end of FY 2022. At
the end of FY 2023, the Postal Service had $2 billion in available borrowing authority
remaining from the PAEA-mandated debt ceiling of $15 billion. Table II-18 compares the
Postal Service’s cash flows from FY 2014 to FY 2023.
Table II-18
Postal Service Statements of Cash Flows, FY 2014–FY 2023 ($ in Millions)
47
Numbers may not add across due to rounding.
Source: PRC derived from Postal Service Form 10-K FY 2014–FY 2023.
Table II-19 illustrates the current liquidity position of the Postal Service. The Postal
Service’s liquidity is limited to cash and cash equivalents (excluding restricted cash) and
available borrowing authority. As of September 30, 2023, the Postal Service had $2 billion
in remaining borrowing capacity but is limited to a $3 billion annual borrowing cap. Postal
Service FY 2023 Form 10-K at 64.
47
The purchases and redemptions of investments and restricted investments in FY 2023 are investments of excess cash not immediately
necessary for operations in Treasury bills of various short-term maturities. Postal Service FY 2023 Form 10-K at 62.
Financial Analysis Report FY 2023
38
Table II-19
Total Postal Service Liquidity (in $ Millions) End of FY 2022 Compared to FY 2023
Source: Postal Service FY 2023 Form 10-K at 47.
Cash Flow Ratio Analysis
Cash flow ratios are applied in the Commission’s analysis to illustrate the Postal Service's
financial solvency. The asset efficiency ratio, current liability ratio, and long-term debt ratio
are all helpful indicators of the Postal Service’s current and historical ability to pay down
debt and remain financially solvent.
Table II-20
Cash Flow Ratios, FY 2022 and FY 2023
Source: PRC derived from Postal Service FY 2023 Form 10-K.
Financial Analysis Report FY 2023
39
Figure II-12 shows all three ratios and their trends since FY 2006.
Figure II-12
Cash Flow Ratio Trend Analysis FY 2006–FY 2023
Source: PRC derived from Postal Service FY 2006 Annual Report; Postal Service Form 10-K FY 2007–FY 2023.
The asset efficiency ratio compares operating cash
flows to total assets. It measures how efficiently an
entity uses its assets to generate cash. At the end of
FY 2023, the Postal Service had a negative asset
efficiency ratio of 0.05, which is 0.03 lower than the
prior year. The FY 2023 asset efficiency ratio is
lower compared to the historical 10-year average of
0.09; cash flow from operations decreased
significantly while total assets declined slightly. From FY 2006 to FY 2011, the ratio was
quite volatile. The ratio gradually ticked up from FY 2012 through FY 2014 as a result of
the Postal Service defaulting on RHB liabilities and increases in revenue from the exigent
surcharge. From FY 2017 through FY 2019, both cash from operations and total assets
declined slightly, resulting in a relatively flat trend. This ratio illustrates the Postal Service’s
inability to generate sufficient operating cash using its total assets.
The Postal Service had an operating cash flow ratio of negative 0.07 at the end of FY 2023,
which is a decrease of 0.04 from the prior year and lower than the historical 10-year
AT THE END OF FY 2023, THE
POSTAL SERVICE HAD A
NEGATIVE ASSET EFFICIENCY
RATIO OF 0.05, WHICH IS 0.03
LOWER THAN THE PRIOR YEAR
Financial Analysis Report FY 2023
40
average. The operating cash flow ratio measures an entity's ability to generate cash that
can be used to cover current debt. In FY 2023, cash flow from operations decreased while
current liabilities increased compared to FY 2022. In FY 2007 and FY 2008, the ratio was
below zero resulting from negative operating cash flows caused by payments to the RHBF.
FY 2012 was the first year the Postal Service defaulted on its RHB payment, which
increased cash from operations and increased current liabilities. Since FY 2012, the Postal
Service has been unable to pay down its unfunded retirement liabilities, and the cumulative
missed payments increase the current liability on the balance sheet. The increase in
operating cash from these defaulted payments was not enough to offset revenue loss from
declining volume, resulting in a relatively flat increase in operating cash and gradually
increasing current liabilities.
The long-term debt ratio compares the Postal Service’s cash from operations to its long-
term debt. It illustrates the Postal Service’s ability to pay down long-term debt using cash it
generates from operations. Long-term debt includes non-current workers’ compensation
expenses and non-current portions of debt owed to the Federal Financing Bank. At the end
of FY 2023, the Postal Service had a long-term debt ratio of negative 0.08, a decrease of
0.05 from the end of FY 2022.
Financial Analysis Report FY 2023
41
Chapter III. Volume, Revenue, and Cost
Trends
Overview
This chapter presents an in-depth analysis of volume, revenue, and cost trends in three
sections.
The first section describes the calculation of attributable cost and institutional cost. It also
examines the overall trends for Market Dominant and Competitive products and services.
The second and third sections analyze the Market Dominant (organized by class) and
Competitive products, respectively. These sections compare volume, revenue, and cost
between FY 2022 and FY 2023;
48
trend analyses that highlight changes in volume, revenue,
and cost that have occurred over the last 10 years; and analyses by cost segment.
Overall Volume, Revenue, and Cost Trends
39 U.S.C. § 3622(c)(2) defines attributable cost as the “direct and indirect postal costs
attributable to each class or type of mail service through reliably identified causal
relationships plus that portion of all other costs of the Postal Service reasonably assignable
to such class or type[.]” In Order No. 3506, the Commission determined that attributable
product costs include volume-variable costs,
49
which in the aggregate increase as volume
increases and decrease as volume decreases; product-specific costs, which are costs caused
by a specific product but do not vary with volume; and inframarginal costs developed as
part of the estimation of each product’s incremental costs.
50
Attributable costs for classes
and Competitive products collectively also include group-specific costs, which are costs
caused by a group of products in combination rather than by an individual product, and
inframarginal costs developed as part of the estimation of incremental costs for classes and
Competitive products collectively. Attributable costs are equal to incremental costs, which
48
FY 2022 volume, revenue, and cost data that are not depicted in tables in this section can be found in the corresponding section of the PRC FY
2022 Financial Report.
49
Total volume-variable cost is calculated by multiplying total cost by the volume variability ratio for each cost segment.
50
Docket No. RM2016-2, Order Concerning United Parcel Service, Inc.’s Proposed Changes to Postal Service Costing Methodologies (UPS
Proposals One, Two, and Three), September 9, 2016 (Order No. 3506).
Financial Analysis Report FY 2023
42
reflect the total marginal costs of the volume in a class, a product, or Competitive products
collectively.
51
Attributable cost is distributed to products using distribution keys that reflect the
underlying cost driver.
52
These costs are piggybacked to include the indirect costs of each
activity.
Institutional cost cannot be attributed to a specific product or service, a class, or
Competitive products collectively and is equal to total accrued cost minus total attributable
cost. While sometimes referred to as “fixed cost,” it is more accurately characterized as
“common cost” because it includes costs that are variable but not causally related to an
individual product, class or competitive product collectively. Institutional cost includes
costs for carrier network travel time, amortization of CSRS unfunded liability apportioned
to prior years, and various administrative costs.
Market Dominant Products
Table III-1 illustrates the changes in total volume, revenue, attributable cost, and
contribution to institutional cost for Market Dominant products and services between FY
2022 and FY 2023.
Table III-1
Market Dominant Volume, Revenue, and Cost, FY 2022 and FY 2023
Negative values are denoted by ().
Source: PRC-LR-ACR2022-1; PRC-LR-ACR2023-1.
51
Incremental costs are sub-additive, meaning that the sum of the attributable costs of all products in a class is not equal to the attributable
cost of the class as a whole. The Postal Service generally exhibits declining marginal costs. As a result, the incremental cost of a class includes
additional inframarginal costs that are not included in the incremental cost of the individual products within the class. For this reason,
product attributable costs do not add to total attributable cost in Tables III-20, III-23, and III-25.
52
The Postal Service assigns these costs to each product according to methodologies approved by the Commission. Changes to those
methodologies are reviewed by the Commission in informal rulemaking proceedings, and members of the general public are given the
opportunity to comment in such proceedings.
Financial Analysis Report FY 2023
43
Over the years, there has been a
steady decline in Market Dominant
volume and revenue due to the
shifting preferences of customers
towards alternative products and
digital communication channels, a
trend that has been accelerated by the far-reaching impacts of the Covid-19 pandemic.
Postal Service FY 2023 Form 10-K at 10. Market Dominant volume decreased by 9.1
percent in FY 2023, and Market Dominant revenue decreased by 0.7 percent despite the
implementation of three price increases on certain Market-Dominant products and services
on July 10, 2022, January 22, 2023, and July 9, 2023, increasing prices by an average of 6.5
percent, 4.2 percent, and 5.4 percent, respectively. On a unit basis, revenue increased by 9.2
percent from FY 2022, to $0.40 per piece.
Despite the decrease in volume, the attributable cost for Market Dominant products
increased by 0.5 percent from FY 2022. On a unit basis, attributable costs increased from
$0.22 per piece to $0.24 per piece.
Total Market Dominant contribution to institutional cost decreased by $441.5 million, or
2.5 percent, in FY 2023, due to the combination of higher attributable cost and lower
revenue in FY 2023 than in FY 2022.
Market Dominant products accounted for
94.2 percent of total mail volume, a
decrease of 0.4 percentage points from FY
2022. Revenue from these products as a
percentage of total revenue from mail and
services decreased from 55.9 percent to
55.7 percent. Market Dominant
attributable cost as a percentage of total attributable cost decreased from 55.9 percent in
FY 2022 to 55.2 percent in FY 2023.
Several Market Dominant products failed to generate sufficient revenue to cover
attributable costs, resulting in negative contributions for these products. The total negative
contribution to institutional costs from these products amounted to $1.3 billion in FY 2023;
unchanged from FY 2022. Seven domestic mail products and services failed to cover their
attributable cost: USPS Marketing Mail Flats ($662.5 million), USPS Marketing Carrier
MARKET DOMINANT VOLUME
DECREASED BY 9.1% IN FY 2023,
RESULTING IN A 0.7% DECREASE IN
MARKET DOMINANT REVENUE.
SAME AS IN FY 2022, IN FY 2023, THE
POSTAL SERVICE LOST $1.3 BILLION
FROM PRODUCTS THAT DO NOT
COVER THEIR ATTRIBUTABLE COSTS.
Financial Analysis Report FY 2023
44
Route ($17.6 million), Periodicals Outside County ($568.4 million), Periodicals In-County
($44.9 million), and Package Services Media Mail/Library Mail ($49.1 million).
Market Dominant Volume
Figure III-1 shows the total volume of Market Dominant products over the last 10 years.
Over the last decade, volume for Market Dominant products declined by 45.7 billion pieces.
Figure III-1
Market Dominant Volume, FY 2014–FY 2023
Source: Source: Docket No. ACR2014, Library Reference PRC-LR-ACR2014/1, March 27, 2015; Docket No. ACR2015, Library
Reference PRC-LR-ACR2015/1, March 28,2016; Docket No. ACR2016, Library Reference PRC-LR-ACR2016/1, March 28, 2017;
Docket No. ACR2017, Library Reference PRC-LR-ACR2017-1, March 29, 2018; Docket No. ACR2018, Library Reference PRC-LR-
ACR2018-1, April 12, 2019; Docket No. ACR2019, Library Reference PRC-LR-ACR2019-1, March 25, 2020; Docket No. ACR2020,
Library Reference PRC-LR-ACR2020-1, March 29, 2021; Docket No. ACR2021, Library Reference PRC-LR-ACR2021-1, March 29,
2022; PRC-LR-ACR2022-1 PRC-LR-ACR2023-1 (collectively, PRC-LR-1, FY 2014-FY 2023).
In FY 2023, First-Class Mail and USPS Marketing Mail accounted for 96.4 percent of the
total Market Dominant volume. First-Class Mail volume, which continues to experience
“migration from mail to electronic communication and transaction alternatives” has
declined every year over the last decade, resulting in a loss of 20.6 billion pieces. Postal
Service FY 2023 Form 10-K at 20. This represents a 30.9 percent decrease in volume over
that period. USPS Marketing Mail volume has also declined considerably over the last
decade as it has been “challenged by commercial mailers’ increasing use of digital and
mobile advertising, which was accelerated by the pandemic, an overall decline in
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
Billions of Pieces
Fiscal Year
First-Class Mail USPS Markeng Mail All Other Mail
Financial Analysis Report FY 2023
45
advertising spending due to economic pressures, and a higher inflationary environment
affecting print media production costs.” Id. at 21. After recovering some volume lost during
the height of the pandemic, USPS Marketing Mail volume decreased in FY 2023, falling 4.7
billion pieces below the volume in FY 2020, before the COVID-19 pandemic. Moreover,
USPS Marketing Mail accounts for 46.8 percent of the 45.7 billion pieces of Market
Dominant volume lost over the last 10 years.
Market Dominant Revenue
Total Market Dominant revenue and attributable cost have also declined over the past
decade. Figure III-2 compares annual revenue and attributable cost from FY 2014 to FY
2023. Over the last 10 years, total revenue declined by 14.9 percent, while total
attributable cost declined by 9.7 percent. Nonetheless, First-Class Mail and USPS Marketing
Mail continue to generate the majority of the Postal Service’s revenue, even as the demand
for First-Class Mail and USPS Marketing Mail continues to decline. Id.
Figure III-2
Market Dominant Revenue and Attributable Cost, FY 2014–FY 2023
Source: PRC-LR-1, FY 2014-FY 2023.
0.0
10.0
20.0
30.0
40.0
50.0
60.0
FY
2014
FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023
$ in Billions
Fiscal Year
Market Dominant Revenue Market Dominant Aributable Cost
Financial Analysis Report FY 2023
46
Competitive Products and Services
The COVID-19 pandemic caused a
surge in e-commerce and a
substantial increase in
Competitive product volume. Over
the last two years, Competitive
product volume decreased, but is
still higher than pre-pandemic
levels. Competitive product
volume decreased 2.0 percent compared to FY 2022, but still represents a higher share of
total volume than before the COVID-19 pandemic. Revenue for Competitive products
increased in FY 2023. Table III-2 compares the total volume, revenue, and cost of these
products and services between FY 2022 and FY 2023.
Table III-2
Competitive Volume, Revenue, and Cost, FY 2022 and FY 2023
Source: PRC-LR-1, FY 2022-FY 2023
Despite the loss in volume, revenue increased by 0.7 percent in FY 2023, as unit revenue
increased by 2.8 percent compared with FY 2022. Attributable cost followed a similar
pattern to revenue; increased by 2.5 percent in the aggregate and increased by 4.6 percent
on a unit basis. Contribution to institutional cost decreased both on the aggregate and on a
unit basis. In FY 2023, contribution to institutional cost decreased by $295.3 million, or 2.4
percent in the aggregate, and decreased 0.3 percent on a unit basis.
Over the past decade Competitive products’ share of total Postal Service revenue and
attributable cost has grown significantly. As shown in Figure III-3, the share of total Postal
Service revenue and attributable cost generated by Competitive products was much
greater in FY 2023 than it was in FY 2014. With the exception of FY 2022, Competitive
products’ share of contribution to institutional cost increased every year, especially during
the height of the COVID-19 pandemic. In FY 2023, Competitive products’ share of
contribution to institutional cost was 40.0 percent, 0.7 percentage points more than in FY
COMPETITIVE PRODUCT VOLUME
DECREASED 2.0% COMPARED TO FY 2022,
BUT STILL REPRESENTS A HIGHER SHARE
OF TOTAL VOLUME THAN BEFORE THE
COVID-19 PANDEMIC.
Financial Analysis Report FY 2023
47
2022, but 7.0 percentage points more than in FY 2019, before the COVID-19 pandemic
began.
Figure III-3
Competitive Products’ Percent Share of Total Postal Service Revenue,
Cost, and Contribution to Institutional Cost, FY 2014–FY 2023
Source: PRC-LR-1, FY 2014-FY 2023.
Figure III-4 illustrates the changes in average unit revenue and cost from FY 2014 to FY
2023. Competitive products are required to collectively cover their required contribution
to institutional costs.
53
Figure III-4 shows the minimum required contribution as an
average cents per piece. Every year, the average unit revenue for Competitive products and
services exceeded the combined average unit attributable cost and required contribution
per piece.
53
See Docket No. RM2017-1, Order Adopting Final Rules Relating to the Institutional Cost Contribution Requirement for Competitive Products,
January 3, 2019 (Order No. 4963). On April 14, 2020, the United States Court of Appeals for the District of Columbia remanded Order No.
4963 to the Commission for further explanation. United Parcel Serv. v. Postal Regulatory Comm’n, No. 19-1026 (D.C. Cir. Apr. 14, 2020). Order
No. 4963 prescribed the formula for determining the appropriate share. The Commission issued Order No. 6399 with respect to this issue,
which left the formula prescribed in Order No. 4963 in place. See Docket Nos. RM2017-1 and RM2022-2, Order Finalizing Rule Relating to the
Institutional Cost Contribution Requirement for Competitive Products, January 9, 2023 (Order No. 6399).
0.0%
5
.0%
10.0%
15.0%
20
.0%
25.0%
30
.0%
35.0%
40
.0%
45.0%
50
.0%
Percentage of Total
Fiscal Year
% of Tota l Revenue % of Total Aributable Cost % of Total Contribuon
Financial Analysis Report FY 2023
48
Figure III-4
Competitive Average Unit Revenue and Cost, FY 2014–FY 2023
Source: PRC-LR-1, FY 2014-FY 2023.
In FY 2023, just as in previous years, total contribution to institutional cost from
Competitive products exceeded the required contribution to institutional cost. As shown in
Figure III-5, in general, the contribution from Competitive products increased in recent
years. The increases in FY 2020 and FY 2021 were particularly large due to the pandemic-
related surge in package volume. Before that, large increases in the share of institutional
cost contributed by Competitive products resulted primarily from Market Dominant
products transferred to the Competitive product list.
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023
$ per Piece
Fiscal Year
Average Revenue per Piece Average Aributable Cost per Piece Average Required Contribuon per Piece
Financial Analysis Report FY 2023
49
Figure III-5
Competitive Contribution to Institutional Cost, FY 2014–FY 2023
Source: PRC-LR-1, FY 2014-FY 2023.
Market Dominant Volume, Revenue, and Cost
Trends by Class
First-Class Mail
There are five products assigned to First-Class Mail: Single-Piece Letters/Postcards;
Presorted Letters/Postcards; Flats; Outbound Single-Piece First-Class Mail International;
and Inbound Letter Post. For comparison purposes in this report, the products are grouped
into letters, flats, and “all other.”
54
FIRST-CLASS MAIL LETTERS COMPARED WITH FY 2022
Table III-3 summarizes the FY 2023 change in total volume and revenue for First-Class Mail
letters. In FY 2023, First-Class Mail letters volume declined by 5.3 percent, showing only a
marginal improvement from FY 2022, during which volume declined by 5.5 percent.
Remarkably, these reductions exceeded those observed at the peak of the COVID-19
54
“All other” includes single-piece and presorted postcards, Outbound Single-Piece First-Class Mail International, Inbound Letter Post, and
Inbound International negotiated service agreements (NSAs).
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020
FY 2021
FY 2022 FY 2023
Percent Share
Fiscal Year
Contribuon to Instuonal Cost Required Contribuon to Instuonal Cost
Financial Analysis Report FY 2023
50
pandemic, with declines of 4.2 percent in FY
2021 and 4.5 percent in FY 2020. The rate of
decline for single-piece letters was 8.0 percent
in FY 2023, in contrast to less than 6 percent
in the years preceding the pandemic.
Additionally, Presorted letters volume
decreased by 4.2 percent in FY 2023, compared to a 3.5 percent decline in FY 2022.
Total revenue for First-Class Mail letters increased by 2.5 percent in FY 2023 due to the
price increases that went into effect in January 2022, January 2023, and July 2023.
55
Unit
revenue increased from 48 cents per piece in FY 2022 to 52 cents in FY 2023. The sharp
decline in single-piece letters volume resulted in a 0.5 percent decrease in total revenue for
single-piece letters. In contrast, revenue for presorted letters increased by 4.1 percent.
Table III-3
First-Class Mail Letters Volume and Revenue, FY 2022 and FY 2023
Negative values denoted by ().
Source: PRC-LR-1 FY 2022-FY 2023
Table III-4 summarizes the FY 2023 change in total attributable cost for First-Class Mail
letters. In FY 2023, the total attributable cost for First-Class Mail letters saw a notable
increase of $231 million. Despite an increase of 5.7 percent on a unit basis, the attributable
cost of single-piece letters decreased by 2.7 percent. Presorted letters also experienced an
increase in unit attributable cost (12.5 percent) in FY 2023. However, unlike the
attributable cost of single-piece letters, the attributable cost of presorted letters increased
in FY 2023, by 1.8 cents per piece or 7.7 percent.
55
Docket No. R2022-1, Order on Price Adjustments for First-Class Mail, USPS Marketing Mail, Periodicals, Package Services, and Special Services
Products and Related Mail Classification Changes, May 27, 2022 (Order No. 6188); Docket No. R2023-1, Order on Price Adjustments for First-
Class Mail, USPS Marketing Mail, Periodicals, Package Services, and Special Services Products and Related Mail Classification Changes,
November 28, 2022 (Order No. 6341); Docket No. R2023-2, Order on Price Adjustments for First-Class Mail, USPS Marketing Mail, Periodicals,
Package Services, and Special Services Products and Related Mail Classification Changes, May 31, 2023 (Order No. 6526)
IN FY 2023, FIRST-CLASS MAIL
LETTERS VOLUME DECLINED BY
MORE THAN AT THE PEAK OF THE
COVID-19 PANDEMIC.
Financial Analysis Report FY 2023
51
Table III-4
First-Class Mail Letters Attributable Cost and Average Unit Attributable Cost,
FY 2022 and FY 2023
Source: PRC-LR-1 FY 2022-FY 2023
TRENDS IN FIRST-CLASS MAIL LETTERS
First-Class Mail volume continues to remain below pre-pandemic levels. The primary
driver behind this ongoing decline in First-Class Mail volume is the widespread shift from
traditional mail to electronic communication and alternative transaction methods. As
depicted in Figure III-6, the rate of decline in volume for First-Class Mail letters is evident.
Over the past four years, Single-piece letter volume has steadily declined by approximately
8 percent annually, contrasting with a less than 6 percent decrease per year from FY 2014
to FY 2019. Additionally, the volume of First-Class Mail presorted letters has consistently
declined over the last decade, with FY 2023 experiencing the steepest decline in over a
decade at 4.2 percent, surpassing even the peak decline observed during the COVID-19
pandemic.
Financial Analysis Report FY 2023
52
Figure III-6
Percent Change in Volume for First-Class Mail Letters, FY 2014–FY 2023
Source: Library Reference PRC-LR-1, FY 2014-FY 2023.
Figure III-7 illustrates the fluctuation in the average unit attributable cost for First-Class
Mail letters. The average unit attributable cost of First-Class Mail single-piece letters
increased slightly in FY 2023, following another minor increase in FY 2022, which was
preceded by a significant increase in FY 2021. Over the last decade, apart from FY 2020
when a methodological change reduced the amount of city carrier costs allocated to letter-
shaped mail, and FY 2015 when inflation remained historically low, the unit attributable
cost of First-Class Mail single-piece letters has increased each year.
Over the last 10 years, the average unit attributable cost for First-Class Mail presorted
letters decreased only twice first in FY 2016, and more recently in FY 2022 when the PSRA
legislation canceled the Postal Service's unpaid PSRHBF obligations. Even so, the 12.5
percent increase in unit attributable cost in FY 2023 was the largest since FY 2014. The
next largest increase over that period was 6.7 percent in FY 2019.
(9.0%)
(8.0%)
(7.0%)
(6.0%)
(5.0%)
(4.0%)
(3.0%)
(2.0%)
(1.0%)
0.0%
Percent Change
Fiscal Year
Single-Pi ece Pres orted
Financial Analysis Report FY 2023
53
Figure III-7
First-Class Mail Letters Percent Change in Average Unit Attributable Cost,
FY 2014–FY 2023
Source: PRC-LR-1, FY 2014-FY 2023.
Table III-5 highlights the changes in major cost segments
56
for First-Class Mail single-piece
letters and First-Class Mail presorted letters for FY 2022 and FY 2023. The unit costs
presented include all indirect costs piggybacked on the direct cost.
57
The shift in costs from air to highway transportation can be attributed to the Postal Service
shifting volume from air to highway transportation and extending the days to delivery
service standards for First-Class Mail .
58
In FY 2023, both city carrier and rural carrier unit costs increased substantially for both
First-Class Mail single-piece letters and presorted letters. Specifically, city carrier unit costs
increased by 15.4 percent for single-piece letters and by 17.5 percent for presorted letters
compared to FY 2022, while rural carrier unit costs rose by 15.8 percent for single-piece
letters and by 16.2 percent for presorted letters over the same period. In FY 2023, unit
costs for both mail processing and window service increased compared to FY 2022, rising
by 1.0 percent for single-piece letters and 17.1 percent for presorted letters in mail
56
The term "major cost segment" refers to key postal operations like mail processing. Costs linked to this are compiled from relevant segments
and components detailed in the Cost Segments and Components Report.
57
In addition to the direct costs, there are other “indirect” costs associated with the direct cost component or cost segment. Some examples of
these indirect costs are Cost Segment 3 Administrative Clerks, Cost Segment 12 Vehicle Service Costs, Cost Segment 15 Rents and Fuel and
Utilities, and Cost Segment 18 Service-wide Labor Costs (such as, workers’ compensation, etc.). These “indirect” costs are referred to as
“piggybacked” costs. The unit cost by cost segment presented in this report are “piggybacked” volume variable and product specific costs,
unless stated otherwise.
58
See Revised Service Standards for Market-Dominant Mail Products, 86 Fed. Reg. 43,941 (Aug. 11, 2021) (codified at 39 C.F.R. part 121); see
also Docket No. N2021-1, Advisory Opinion on Service Changes Associated with First-Class Mail and Periodicals, July 20, 2021 (Docket No.
N2021-1 Advisory Opinion). The Postal Service estimated that its proposed changes would impact 38.5 percent of First-Class Mail and 7
percent of Periodicals. See Docket No. N2021-1 Advisory Opinion at 1.
(8
.0%)
(6.0%)
(4
.0%)
(2
.0%)
0.0%
2.0%
4
.0%
6.0%
8.0%
10
.0%
12.0%
14
.0%
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023
Percent Change
Fiscal Year
Single-Pi ece Pres orte d
Financial Analysis Report FY 2023
54
processing, and by 8.7 percent for single-piece letters and 12.5 percent for presorted
letters in window service.
Table III-5
First-Class Mail Single-Piece and Presorted Letters Average Unit Cost by Segment,
FY 2022 and FY 2023
Source: Docket No. ACR2023, Library Reference USPS-FY23-24, December 29, 2023; Docket No. ACR2022, Library Reference USPS-
FY22-24, December 29, 2022(Collectively Postal Service Piggybacked Costs, FY 2022- FY 2023); Docket No. ACR2023, Library
Reference USPS-FY23-2, December 29, 2023; Docket No. ACR2022, Library Reference USPSFY22-2, December 29, 2022 (Collectively
CSC Reports, FY 2022-FY 2023).
Purchased transportation costs decreased in FY 2023, with unit transportation costs
decreasing by 0.6 percent for single-piece letters and 14.5 percent for presorted letters.
According to the Postal Service, these decreases were primarily driven by changes
implemented as part of the DFA Plan, that aim to shift away from air transportation in favor
of less expensive and more reliable surface transportation, and to reduce trips and improve
utilization. The Commission finds that for single-piece letters, there was a significant shift
in the distribution of costs across various transportation modes between FY 2022 and FY
2023 consistent with this explanation. Specifically, highway transportation costs represent
a larger share of domestic transportation costs, accounting for 90 percent of domestic
transportation costs in FY 2023, a substantial increase from FY 2022, when highway
transportation costs represented 82 percent of domestic transportation costs. Conversely,
for single-piece letters, domestic air transportation represents a smaller share of domestic
transportation cost in FY 2023 than in FY 2022, 8 percent compared with 17 percent and
similarly for presorted letters 24 percent (down from 48 percent) compared to FY 2022.
The difference in unit costs between single-piece letters and presorted letters remained
nearly static compared to FY 2022, increasing by less than a penny overall. The gap in mail
processing unit costs between single-piece letters and presorted letters decreased by one
cent, while the difference in city carrier unit costs between single-piece letters and
Financial Analysis Report FY 2023
55
presorted letters increased by one cent. For the other cost segments depicted, the change
was less than one cent.
Figure III-8 displays three pie charts illustrating the composition of attributable costs by
cost segment for First-Class Mail single-piece letters across three fiscal years: FY 2023, FY
2022, and FY 2013. The largest share of costs is Cost segment 3, “Clerks and Mailhandlers,”
and covers salaries, benefits, and related expenses for clerks and mail handlers primarily
involved in mail processing activities. The proportion of costs represented by Clerks and
Mailhandlers decreased from 39 percent in FY 2022 to 37 percent in FY 2023, although it
still exceeds the share from a decade ago, which was 32 percent. Conversely, Cost segment
7, “City Delivery Carriers – Street Activity,” represents a larger portion of costs for First-
Class Mail single-piece letters in FY 2023 compared to FY 2022 (15 percent versus 14
percent), but a smaller share than in FY 2013 (17 percent).
Figure III-8
Composition of First-Class Mail Single-Piece Letters Attributable Cost,
FY 2023, FY 2022, and FY 2013
Note: The cost-shares presented in the figure are based on costs that are not “piggybacked.”
Source: CSC Reports, FY 2022-FY 2023; Docket No. ACR2013, Library Reference USPS-FY13-2, December 27, 2013 (USPS-FY13-2).
Figure III-9 presents a similar set of pie charts illustrating the composition of First-Class
Mail presorted letters attributable costs. In FY 2023, the share of costs represented by
transportation (Cost Segment 14) decreased from 14 percent in FY 2022 to 11 percent, but
Financial Analysis Report FY 2023
56
still represents a slightly higher share than in FY 2013 (10 percent). The share of costs
represented by Clerks and Mailhandlers, as well as City Delivery Carriers–Street Activity,
each increased by one percentage point compared to both FY 2022 and FY 2013.
Figure III-9
Composition of First-Class Mail Presorted Letters Attributable Costs,
FY 2023, FY 2022, and FY 2013
Note: The cost-shares presented in the figure are based on costs that are not “piggybacked.”
Source: CSC Reports, FY 2022-FY 2023; USPS-FY13-2.
FIRST-CLASS MAIL FLATS COMPARED WITH FY 2022
Table III-6 shows the total volume and revenue for First-Class Mail Flats. The volume of
First-Class Mail single-piece flats experienced a decline of 7.9 percent in FY 2023, showing
improvement from the steeper 11.1 percent decline in FY 2022. Conversely, the volume of
First-Class Mail presorted flats saw a significant decrease in FY 2023 compared to its
single-piece counterpart, plummeting by 13.8 percent. This decline starkly contrasts with
the modest 3.0 percent decrease in FY 2022 for presorted flats.
Despite the volume decreases, total revenue for First-Class Mail Flats increased by 3.1
percent in FY 2023, with revenue increases for both single-piece flats and presorted flats.
Additionally, revenue on a unit basis reveals a significant increase for both First-Class Mail
single-piece flats (10.3 percent) and First-Class Mail presorted flats (22.5 percent). These
results reflect the implementation of higher prices in FY 2023 compared to FY 2022.
Financial Analysis Report FY 2023
57
Table III-6
First-Class Mail Flats Volume and Revenue, FY 2022 and FY 2023
Negative values denoted by ().
Numbers may not add due to rounding.
Source: PRC-LR-ACR2022-1; PRC-LR-ACR2023-1.
Table III-7 summarizes the FY 2023 change in attributable cost. Attributable costs for First-
Class Mail Flats decreased 2.5 percent from FY 2022 for the Single-Piece category and
increased by 1.1 percent for the presorted category. However, on a unit basis, attributable
costs increased for both categories. In FY 2023, the unit attributable cost for First-Class
Mail Flats increased 10.8 percent, single-piece flats increased 5.8 percent, and presorted
flats increased 17.3 percent.
Table III-7
First-Class Mail Flats Attributable Cost and Average Unit Attributable Cost,
FY 2022 and FY 2023
Negative values denoted by ().
Source: PRC-LR-ACR2022-1; PRC-LR-ACR2023-1.
TRENDS IN FIRST-CLASS MAIL FLATS
The volume of First-Class Mail Flats has persistently declined over recent years, as
illustrated in Figure III-10, which compares the percent change in volume from FY 2014 to
FY 2023. Over the past decade, First-Class Mail Flats volume declined significantly, with
almost half of its volume eroded. Notably, the volume of single-piece flats continued its
downward trajectory in FY 2023. While both presorted flats and single-piece flats
experienced volume declines over the decade, the volume loss has been especially severe in
single-piece flats. Throughout this period, the volume of single-piece flats exhibited
Financial Analysis Report FY 2023
58
consistent annual decreases ranging from 4.4 percent to 11.1 percent, for a total decrease
of 60.0 percent over the last 10 years. In comparison, presorted flats experienced a volume
decrease of 25.6 percent during the same period. As depicted in Figure III-10, volume
declined for First-Class Mail presorted flats in eight of the last 10 years, with the largest
decrease recorded in FY 2023.
Figure III-10
Percent Change in First-Class Mail Flats Volume, FY 2014–FY 2023
Source: PRC-LR-1, FY 2014-FY 2023.
Figure III-11 compares the average unit attributable cost for First-Class Mail single-piece
and presorted flats since FY 2014. The average unit attributable cost for First-Class Mail
single-piece flats and presorted flats has steadily increased since FY 2016.
59
Over the last
decade, the average unit attributable cost for First-Class Mail single-piece flats has
increased more rapidly than for First-Class Mail presorted flats, 88.6 percent, and 47.9
percent, respectively.
59
In FY 2016, the Postal Service corrected an In-Office Cost System coding error that shifted costs from First-Class Mail presorted flats to First-
Class Mail single-piece flats. This resulted in an atypically large change in average unit attributable costs for both categories that year.
(15.0%)
(10.0%)
(5.0%)
0.0%
5.0%
10.0%
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023
Percent Change
Fiscal Year
Single-Pi ece Pres orted
Financial Analysis Report FY 2023
59
Figure III-11
First-Class Mail Flats Average Unit Attributable Cost, FY 2014–FY 2023
Source: PRC-LR-1, FY 2014-FY 2023.
Table III-8 compares the average unit cost by cost segment for First-Class Mail Flats in FY
2022 and FY 2023. Except for window service cost, unit costs increased in all the cost
segments depicted. Carrier costs increased the most significantly, with unit city carrier cost
increasing by 17.3 percent and unit rural carrier cost increasing by 12.8 percent in FY
2023. Mail processing unit cost increased by 9.1 percent in FY 2023. Lastly, transportation
cost also increased, despite a shift away from air transportation to highway transportation.
Highway transportation cost was 79 percent of domestic transportation cost for First-Class
Mail Flats in FY 2023 compared with 65 percent of domestic transportation cost in FY
2022.
40
60
80
100
120
140
160
180
Cents per Piece
Fiscal Year
Single
-Piece Pres orted
Financial Analysis Report FY 2023
60
Table III-8
First-Class Mail Flats Average Unit Attributable Cost by Segment, FY 2022 and FY 2023
Negative values denoted by ().
Source: Postal Service Piggybacked Costs, FY 2022-FY 2023; CSC Reports, FY 2022-FY 2023.
OTHER FIRST-CLASS MAIL COMPARED WITH FY 2022
Table III-9 shows the volume and revenue for “all other” First-Class Mail. The volumes of
Cards, Outbound Single-Piece First-Class Mail International, and Inbound Letter Post all
decreased in FY 2023. Revenue also decreased for all three categories compared with FY
2022.
Table III-9
All Other First-Class Mail Volume and Revenue, FY 2022 and FY 2023
Negative values denoted by ().
Source: PRC-LR-ACR2022-1; PRC-LR-ACR2023-1.
Table III-10 presents the changes in total attributable cost and average unit attributable
cost for “all other” First-Class Mail between FY 2022 and FY 2023. In FY 2023, both
aggregate and unit attributable costs decreased for Inbound Letter Post. For Outbound
Single-Piece First-Class Mail International, and for cards, attributable cost decreased in the
aggregate, but increased on a unit basis.
Financial Analysis Report FY 2023
61
Table III-10
Other First-Class Mail Attributable Cost and Average Unit Attributable Cost,
FY 2022 and FY 2023
Negative values denoted by ().
Source: PRC-LR-ACR2022-1; PRC-LR-ACR2023-1.
USPS Marketing Mail
Seven products comprise USPS Marketing Mail: Letters; Flats; Parcels; Carrier Route; High
Density and Saturation Letters; High Density and Saturation Flats/Parcels; and Every Door
Direct Mail—Retail (EDDM-R). For comparison purposes, the products have been grouped
into letters and flats.
USPS MARKETING MAIL LETTERS COMPARED WITH FY 2022
Table III-11 summarizes the FY 2023
change in volume and revenue of
letter-shaped USPS Marketing Mail.
USPS Marketing Mail Letters volume
decreased by 14.0 percent in FY 2023
but remains below pre-pandemic
levels. In comparison, High Density
and Saturation Letters volume
decreased less severely, by 7.3 percent in FY 2023. Revenue decreased in total for all letter-
shaped USPS Marketing Mail in FY 2023. Despite the substantial price increases in FY 2023,
the relatively large decrease in volume for USPS Marketing Mail Letters resulted in
significantly lower revenue in FY 2023 than in FY 2022. High Density and Saturation
Letters revenue increased by 1.0 percent, reflecting both a lower volume and higher prices
than in FY 2022.
DESPITE THE SUBSTANTIAL PRICE
INCREASES IN FY 2023, THE DECREASE
IN VOLUME FOR USPS MARKETING
MAIL LETTERS RESULTED IN
SIGNIFICANTLY LOWER REVENUE IN
FY 2023 THAN IN FY 2022.
Financial Analysis Report FY 2023
62
Table III-11
USPS Marketing Mail Letters Volume and Revenue, FY 2022 and FY 2023
Negative values denoted by ().
Source: PRC-LR-ACR2022-1; PRC-LR-ACR2023-1.
Table III-12 summarizes the FY 2023 change in attributable cost for USPS Marketing Mail
letters. Overall, attributable cost decreased minimally for USPS Marketing Mail letters in FY
2023 by 0.5 percent. On a unit basis, attributable cost for both Letters, and High Density
and Saturation Letters increased by 14.6 percent and 17.2 percent, respectively. Because
High Density and Saturation Letters is a relatively low-volume product compared with
USPS Marketing Mail Letters, the average unit decrease (14.6 percent) for letter-shaped
USPS Marketing Mail is closer to the increase in the unit attributable cost of USPS
Marketing Mail Letters.
Table III-12
USPS Marketing Mail Letters Attributable Cost and Average Unit Attributable Cost,
FY 2022 and FY 2023
Source: PRC-LR-ACR2022-1; PRC-LR-ACR2023-1
TRENDS IN USPS MARKETING MAIL LETTERS
As shown in Figure III-12, after several years of moderate volume changes, the COVID-19
pandemic precipitated comparatively large swings in volume from FY 2020 to FY 2023 for
USPS Marketing Mail Letters. High Density and Saturation Letters volume has also
contracted during that time, with particularly large decreases in FY 2020, FY 2022, and FY
2023. Over the last decade, USPS Marketing Mail Letters lost 2.4 percent of its volume and
High Density and Saturation Letters lost 1.9 percent of its volume.
Financial Analysis Report FY 2023
63
Figure III-12
Percent Change in USPS Marketing Mail Letters Volume, FY 2014–FY 2023
Source: PRC-LR-1, FY 2014-FY 2023.
Figure III-13 shows the average unit attributable cost for USPS Marketing Mail letters since
FY 2014. Average unit attributable cost for High Density and Saturation Letters and USPS
Marketing Mail Letters has been on an upward trend in recent years. The average unit
attributable cost for USPS Marketing Mail Letters increased in four of the last 5 years, while
the average unit cost of High Density and Saturation Letters increased in every year from
FY 2014 to FY 2023 except FY 2022. In FY 2023, the average unit attributable cost for each
product was substantially higher than in FY 2022, and they remain well above pre-
pandemic levels.
(20.0%)
(15.0%)
(10.0%)
(5.0%)
0.0%
5.0%
10.0%
FY 2014 FY 2015 FY 2016 FY
2017 FY 2018 FY 2019 FY 2020 FY
2021
FY 2022 FY 2023
Percent Change
Fiscal Year
High Density and Saturaon Leers Leers
Financial Analysis Report FY 2023
64
Figure III-13
USPS Marketing Mail Letters Average Unit Attributable Cost, FY 2014–FY 2023
Source: PRC-LR-1, FY 2014-FY 2023.
Table III-13 compares unit cost between FY 2022 and FY 2023 by cost segment. With a few
exceptions, unit costs increased substantially in all cost segments shown. Both rural carrier
and city carrier unit costs increased for letter-shaped USPS Marketing Mail letter. However,
High Density and Saturation Letters experienced a more pronounced increase in rural
carrier costs (22.3 percent) compared to city carrier costs (15.5 percent), while USPS
Marketing Mail Letters experienced a higher increase in city carrier costs (19.8 percent)
compared to rural carrier costs (17.9 percent). Additionally, there was an increase in unit
mail processing costs, with a 12.8 percent increase for High Density and Saturation Letters,
and a 10.2 percent increase for USPS Marketing Mail Letters.
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023
Cents per Piece
Fiscal Year
High Density and Saturaon Leers Leers
Financial Analysis Report FY 2023
65
Table III-13
USPS Marketing Mail Letters Unit Cost by Cost Segment,
FY 2022 and FY 2023
Source: Postal Service Piggybacked Costs, FY 2022-FY 2023; CSC Reports, FY 2022-FY 2023.
USPS MARKETING MAIL FLATS COMPARED WITH FY 2022
Table III-14 summarizes the FY 2023 changes in volume and revenue for flat-shaped USPS
Marketing Mail.
60
Volume for flat-shaped USPS Marketing Mail decreased by well over a
billion pieces in FY 2023. In fact, except for EDDM-R, volume for flat-shaped USPS
Marketing Mail categories decreased in FY 2023, with decreases ranging from 5.9 percent
to 17.3 percent. High Density and Saturation Flats/Parcels volume decreased by more than
500 million pieces in FY 2023, representing a 5.9 percent decrease in volume compared
with FY 2022. Similarly, Carrier Route volume
decreased by nearly 700 million pieces, or 14.7
percent and volume for USPS Marketing Mail Flats
decreased by nearly 500 million pieces or 17.3
percent. In contrast to other categories, EDDM-R
demonstrated a noteworthy increase in volume,
rising by 8.5 percent in FY 2023.
With the decrease in volume, the revenue for flat-shaped USPS Marketing Mail also
declined compared to FY 2022. Two USPS Marketing Mail products are primarily
responsible for the sharp decrease in revenue in FY 2023, Flats and Carrier Route, each
with an approximately 7.0 percent decrease in revenue. High Density and Saturation
Flats/Parcels revenue remained nearly unchanged in FY 2023. EDDM-R revenue increased
by approximately $4 million in FY 2023.
60
Some products include parcels; however, those products contain predominantly flat-shaped mailpieces.
VOLUME FOR FLAT-SHAPED
USPS MARKETING MAIL
DECREASED BY WELL OVER A
BILLION PIECES IN FY 2023.
Financial Analysis Report FY 2023
66
Table III-14
USPS Marketing Mail Flat Volume and Revenue, FY 2022 and FY 2023
Negative values denoted by ().
Source: PRC-LR-ACR2022-1; PRC-LR-ACR2023-1
Table III-15 summarizes the FY 2023 change in attributable cost for USPS Marketing Mail
flats. Total attributable cost for flat-shaped USPS Marketing Mail decreased 1.2 percent in
FY 2023 due to the loss of flat-shaped USPS Marketing Mail volume. On a unit basis,
attributable cost increased considerably for all flat-shaped USPS Marketing Mail products
in FY 2023.
Table III-15
USPS Marketing Mail Flats Attributable Cost and Average Unit Attributable Cost,
FY 2022 and FY 2023
Negative values denoted by ().
Source: PRC-LR-ACR2022-1; PRC-LR-ACR2023-1
TRENDS IN USPS MARKETING MAIL FLATS
Flat-shaped USPS Marketing Mail has experienced a significant decline, losing more than a
third of its volume over the past decade. As shown in Figure III-14, there have been even
more pronounced changes in volume in recent years. Specifically, over the last 5 years,
High Density and Saturation Flats/Parcels, USPS Marketing Mail Flats, and Carrier Route
have undergone consistent annual declines. Additionally, the volume for each product
decreased in eight out of the last 10 years. Notably, since its inception as a permanent
product, EDDM-R volume has only increased in FY 2023 and FY 2021.
Financial Analysis Report FY 2023
67
Figure III-14
USPS Marketing Mail Flats Percent Change in Volume, FY 2014–FY 2023
Source: PRC-LR-1, FY 2014-FY 2023.
The average unit attributable cost of each flat-shaped USPS Marketing Mail product has
increased significantly over the last decade. Figure III-15 illustrates the annual changes in
average unit attributable cost. Throughout this period, there has been a consistent upward
trajectory in the average unit attributable cost for all flat-shaped USPS Marketing Mail
products, with increases observed nearly every year. However, the cost increases in FY
2023 significantly surpass other increases over the past five years. In FY 2023, relatively
high inflation led to higher compensation and retirement benefit expenses and caused
volatility in fuel costs and associated with transportation expenses. FY 2023 Postal Service
Form 10-K at 16.
(30
.0%)
(25
.0%)
(20.0%)
(15
.0%)
(10.0%)
(5
.0%)
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
FY 2014 FY 2015 FY 2016
FY 2017 FY 2018 FY 2019 FY
2020 FY 2021 FY 2022 FY 2023
Percent Change
Fiscal Year
High Density and Saturaon Flats Ca rrie r Route EDDM – R
Financial Analysis Report FY 2023
68
Figure III-15
USPS Marketing Mail Flats Percent Change in Average Unit Attributable Cost,
FY 2014–FY 2023
Source: PRC-LR-1, FY 2014-FY 2023.
Table III-16 compares the change in the average unit cost between FY 2022 and FY 2023 by
cost segment. Rural carrier unit costs, City Carrier unit costs, and transportation unit costs
increased for all USPS Marketing Mail flats products. Except for USPS Marketing Mail Flats,
unit mail processing cost decreased from FY 2022 for flat-shaped USPS Marketing Mail. The
largest decrease was for EDDM-R; however, EDDM-R is a low volume category, and
consequently susceptible to larger fluctuations in unit cost.
(10.0%)
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
FY 2014 FY 2015 FY 2016
FY 2017 FY 2018 FY
2019 FY 2020 FY 2021 FY 2022 FY 2023
Percent Change
Fiscal Year
High Density and Saturaon
Carri er Route
Flats EDDM – R
Financial Analysis Report FY 2023
69
Table III-16
Change in USPS Marketing Mail Flats Average Unit Cost by Cost Segment,
FY 2022 and FY 2023
Source: Postal Service Piggybacked Costs, FY 2022-FY 2023 and CSC Reports, FY 2022-FY 2023.
Periodicals
Two products comprise the Periodicals class: In-County and Outside County. In-County is
typically used by newspapers with smaller weekly circulations for distribution within the
county of publication. Outside County consists of publications with a wide variety of
circulation sizes, distribution patterns, and frequencies.
PERIODICALS COMPARED WITH FY 2022
Table III-17 summarizes the FY
2023 changes in volume and
revenue for Periodicals. In FY 2023,
the volume of Periodicals declined
by 407 million pieces, or 12.0
percent, with most of the decrease occurring in Outside County publications. In FY 2023,
Outside County volume decreased 14.3 percent. Total revenue for Periodicals decreased by
$36 million, or 3.8 percent in FY 2023. On a unit basis, revenue increased by 10.9 percent
for Outside County Periodicals and by 13.1 percent for In-County Periodicals.
IN FY 2023, THE VOLUME OF
PERIODICALS DECLINED BY 407
MILLION PIECES, OR 12.0%.
Financial Analysis Report FY 2023
70
Table III-17
Periodicals Volume and Revenue, FY 2022 and FY 2023
Negative values denoted by ().
Source: PRC-LR-ACR2022-1; PRC-LR-ACR2023-1
Table III-18 compares total attributable cost and average unit attributable cost for
Periodicals for FY 2022 and FY 2023. The total attributable cost of Periodicals decreased by
$34 million, or 2.2 percent. The decrease in attributable cost is due primarily to the loss of
Periodicals volume, as only the unit attributable cost of In-County Periodicals, a relatively
small category, decreased in FY 2023.
Table III-18
Periodicals Attributable Cost and Average Unit Attributable Cost, FY 2022 and FY 2023
Negative values denoted by ().
Source: PRC-LR-ACR2022-1; PRC-LR-ACR2023-1
TRENDS IN PERIODICALS
As shown in Figure III-16, the volume of Outside County Periodicals has experienced a
consistent decline over the past decade, while In-County Periodicals saw growth in FY 2023
following a decline in the preceding nine years. Despite the volume uptick in FY 2023, In-
County Periodicals lost over a quarter of its volume in the past decade. For Outside County
Periodicals, the volume losses intensified in recent years, with a cumulative decrease of 1.3
billion pieces from 2014 to 2018 compared to a larger volume loss of 1.9 billion pieces
from FY 2019 to FY 2023. This decline in Periodicals volume can be largely attributed to
the availability of electronic alternatives. Postal Service FY 2023 Form 10-K at 10.
Financial Analysis Report FY 2023
71
Figure III-16
Periodicals Percent Change in Volume, FY 2014–FY 2023
Source: PRC-LR-1, FY 2014-FY 2023.
Figure III-17 illustrates the percentage change in the average unit attributable cost for In-
County and Outside County Periodicals. Over the ten-year period depicted, the average unit
attributable cost increased for both products, with the rate of increase more than doubling
in the latter half compared to the first half. Notably, in FY 2023, Outside County Periodicals
experienced the most significant increase over the entire ten-year period shown.
Conversely, the average unit attributable cost for In-County Periodicals decreased in both
FY 2022 and FY 2023.
(20.0%)
(15.0%)
(10
.0%)
(5
.0%)
0.0%
5.0%
FY 2014 FY 2015 FY 2016 FY
2017 FY 2018 FY 2019
FY 2020 FY 2021
FY 2022 FY 2023
Percent Change
Fiscal Year
In-County Outside County
Financial Analysis Report FY 2023
72
Figure III-17
Periodicals Percent Change in Average Unit Attributable Cost, FY 2014–FY 2023
Source: PRC-LR-1, FY 2014-FY 2023.
Table III-19 presents unit costs by cost segment for Outside County Periodicals for FY 2022
and FY 2023. As shown in Table III-19, unit cost increased for all cost segments depicted to
varying degrees. The Postal Service attributes the increase in operating expenses during FY
2023 to the impact of rising inflation, particularly evident in higher compensation and
retirement benefit expenses. Postal Service FY 2023 Form 10-K at 16. Carrier costs
experienced the most substantial increase, with unit city carrier costs increasing by 16.2
percent and rural carrier costs increasing by 21.6 percent from FY 2022 levels. Mail
processing unit cost increased by 12.6 percent in FY 2023, after a near equivalent decrease
from FY 2021 to FY 2022. Unit transportation costs increased the least of the cost segments
depicted for Outside County Periodicals, by 5.3 percent in FY 2023.
Table III-19
Outside County Periodicals Average Unit Cost by Segment, FY 2022 and FY 2023
Source: Postal Service Piggybacked Costs, FY 2022-FY 2023; CSC Reports, FY 2022-FY 2023.
(5.0%)
0.0%
5.0%
10.0%
15.0%
20.0%
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023
Percent Change
Fiscal Year
In
-County Outside County
Financial Analysis Report FY 2023
73
Package Services
The Package Services class consists of four
products: Alaska Bypass Service; Bound
Printed Matter (BPM) Flats; BPM Parcels; and
Media Mail/Library Mail. Table III-20
summarizes the FY 2023 changes in volume
and revenue for Package Services. Overall,
Package Services volume decreased 8.5
percent in FY 2023, with all products experiencing volume decreases. However, BPM Flats
had the most sizable decrease compared to FY 2022, 16.6 percent compared to less than
seven percent for the other Package Services products.
Except for BPM Flats, Package Services products had higher revenue in FY 2023 than in FY
2022, resulting in higher revenue for the Package Services class overall. On a unit basis,
revenue increased substantially for all Package Services products in FY 2023.
Table III-20
Package Services Volume and Revenue, FY 2022 and FY 2023
Negative values denoted by ().
Source: Source: PRC-LR-ACR2022-1; PRC-LR-ACR2023-1
As shown in Table III-21, attributable cost increased in the aggregate for the Package
Services class compared with FY 2022, even with a decrease in the attributable costs of
BPM Flats and BPM Parcels. Attributable cost for Alaska Bypass Service, which consists
entirely of Cost Segment 14 transportation costs, increased 14.8 percent in the aggregate,
and the attributable cost of Media Mail/Library Mail increased 8.5 percent. The unit cost
for all Package Services products increased in FY 2023.
OVERALL, PACKAGE SERVICES
VOLUME FELL 8.5% IN FY 2023,
WITH ALL PRODUCTS EXPERIENCING
VOLUME DECREASES.
Financial Analysis Report FY 2023
74
Table III-21
Package Services Attributable Cost and Average Unit Attributable Cost, FY 2022 and FY 2023
Negative values denoted by ().
Source: PRC-LR-ACR2022-1; PRC-LR-ACR2023-1
Table III-22 shows the FY 2023 percent change in unit cost for selected cost segments. As
shown in Table III-22, costs increased across all products for four cost segments: mail
processing, rural carriers, vehicle service drivers, and transportation.
For BPM Flats, window service was the only segment for which unit cost decreased
compared with FY 2022. For the largest cost segments of mail processing and city carriers,
BPM Flats experienced an increase in unit cost, of 23.0 percent and 5.8 percent,
respectively.
For BPM Parcels, unit attributable costs increased in almost all cost segments. One
exception was city carriers, which experienced a 6.1 percent decrease in FY 2023.
Transportation costs showed the most sizable change, a 41.4 percent increase in unit cost
compared to FY 2022, with a notable increase in domestic air as a share of transportation
cost for BPM Parcels.
Lastly, Media Mail/Library Mail had two cost segments that experienced a decrease in unit
cost, city carriers by 5.3 percent and window service by 4.1 percent. Mail processing unit
cost increased by 5.8 percent compared with FY 2022, after a decrease of the same
magnitude from FY 2021 to FY 2022.Vehicle service driver unit cost increased by 55.2
percent, which is similar to the increase for BPM Flats.
Financial Analysis Report FY 2023
75
Table III-22
Package Services Unit Cost by Segment, FY 2022 and FY 2023
Source: Postal Service Piggybacked Costs, FY 2022-FY 2023; CSC Reports, FY 2022-FY 2023.
Market Dominant Special Services
The Special Services class consists of 11 products: eight domestic products and three
international products. Three Special Services products: Ancillary Services,
61
Address
Management Services, and International Ancillary Services, include a number of distinct
services.
Special Services include Certified Mail, Insurance, Money Orders, Post Office Box Service,
and other services that enhance Market Dominant products. As shown in Table III-23, total
revenue for Special Services increased by $63 million in FY 2023, though revenue for some
products decreased, and the revenue for Stamped Envelopes & Cards was underreported in
FY 2022, likely by approximately $5 million.
62
61
One category included in Ancillary Services is “Other Ancillary Services,” which consists of USPS Tracking, Return Receipts, Restricted Delivery,
Signature Confirmation, Bulk Parcel Return Service, and Special Handling.
62
In January 2024, the Postal Service identified a reporting error in the RPW Report (inadvertent exclusion of revenue from retail transactions)
impacting the revenue figures for Stamped Envelopes and Stamped Cards. The Postal Service rectified the FY 2023 revenue for Stamped
Envelopes and Stamped Cards, resulting in an approximate $5 million increase in revenue. However, the Postal Service did not implement a
similar correction for FY 2022. The Postal Service acknowledges that the apparent revenue increase from FY 2022 likely stems from the
underreporting of Stamped Envelopes revenue in FY 2022. See Notice of the United States Postal Service of Revisions to Certain Pages of the
FY 2023 Annual Compliance Report -- Errata, February 22, 2024 (Report Errata); Notice of the United States Postal Service of Revisions to
Multiple Annual Compliance Report Folders -- Errata, February 22, 2024, and Responses of the United States Postal Service to Questions 1-4
of Chairman’s Information Request No. 15, February 22, 2024, question 1.
Financial Analysis Report FY 2023
76
Table III-23
Market Dominant Ancillary Services and Special Services Revenue, FY 2022 and FY 2023
Negative values denoted by ().
Source: PRC-LR-ACR2022-1; PRC-LR-ACR2023-1
Table III-24 shows that attributable cost for Special Services decreased by $16 million in FY
2023. Several services contributed to that decrease including Certified Mail, Money Orders
and Other Services. Among those services that experienced higher attributable cost in FY
2023 than in FY 2022, Stamped Envelopes and Cards had the highest increase, an increase
of 17.7 percent.
Table III-24
Market Dominant Ancillary Services and Special Services Attributable Cost,
FY 2022 and FY 2023
Negative values denoted by ().
Source: PRC-LR-ACR2022-1; PRC-LR-ACR2023-1
Financial Analysis Report FY 2023
77
Competitive Volume, Revenue, and Cost by
Product
Competitive products consist of both domestic and international products. Domestic
Competitive products include Priority Mail Express; Priority Mail; Parcel Select; Parcel
Return Service; USPS Ground Advantage; Address Enhancement Services; Greeting Cards,
Gift Cards, and Stationery; Competitive Ancillary Services; Premium Forwarding Service;
Post Office Box Service; and Shipping and Mailing Supplies. There was also a total of 167
Domestic Competitive NSA products in effect during FY 2023. International Competitive
products include Outbound International Expedited Services; Outbound Priority Mail
International; Inbound Air Parcel Post (at UPU rates); Outbound Single-Piece First-Class
Package International Service; International Surface Air Lift; International Priority Airmail;
International Direct Sacks—M-Bags; International Money Transfer Service—Outbound;
International Money Transfer Service—Inbound; and International Ancillary Services. In
FY 2023, there were also 77 International Outbound NSAs and 13 International Inbound
NSAs.
The products are grouped into several
broad categories to facilitate comparisons.
Table III-25 summarizes the FY 2023
changes in volume and revenue for
Competitive products and services. According to the Postal Service, the overall volume for
Competitive products declined in FY 2023 due to a combination of reduced COVID-19 test
distribution shipments and heightened market competition. Postal Service FY 2023 Form
10-K at 22. Overall, Competitive product volume decreased by 2.0 percent in FY 2023.
Every category except for ground parcels experienced a volume decline. Ground parcel
volume increased by 4.3 percent due to the addition of USPS Ground Advantage to the
category in July. Conversely, First-Class Package Service was discontinued in July and as a
result the FY 2023 volume reflects only a partial year. International volume experienced a
9.2 percent decrease in FY 2023, despite improvements in COVID-19 pandemic-related
disruptions and other global economic factors. Both Priority Mail and Priority Mail Express
experienced a double-digit percentage decrease in volume in FY 2023.
Total Competitive product revenue increased by 0.7 percent, or $220 million, in FY 2023.
On a unit basis, for domestic Competitive products overall, revenue increased by
approximately 3.0 percent. International revenue decreased by 8.7 percent in the aggregate
in FY 2023, even as unit revenue increased by 0.5 percent due to the January 9, 2022 price
COMPETITIVE PRODUCT VOLUME
DECREASED BY 2.0% IN FY 2023.
Financial Analysis Report FY 2023
78
increase and the time-limited price increase on certain categories from October 2, 2022
through January 22, 2023.
Table III-25
Competitive Products Volume and Revenue, FY 2022 and FY 2023
Negative values denoted by ().
Source: PRC-LR-ACR2022-1; PRC-LR-ACR2023-1
Table III-26 summarizes the FY 2023 changes in attributable cost. Total attributable cost
for Competitive products increased by 2.5 percent, or approximately $516 million, in FY
2023. Additionally, attributable costs increased on a unit basis for all categories.
Table III-26
Competitive Products Attributable Cost and Average Unit Attributable Cost, FY 2022 and FY
2023
Negative values denoted by ().
Source: PRC-LR-ACR2022-1; PRC-LR-ACR2023-1.
Financial Analysis Report FY 2023
79
Trends in Competitive Products
As Figure III-18 shows, after many years of significant increases Competitive product
volume contracted in FY 2022 and FY 2023. Competitive volume peaked during the COVID-
19 pandemic, exceeding 7 billion pieces in FY 2020 and FY 2021.
Figure III-18
Competitive Products Volume by Category, FY 2014–FY 2023
Source: PRC-LR-1, FY 2014-FY 2023.
As volumes grew over the last decade, the attributable cost of Competitive products has
also grown rapidly and now comprises 44.8 percent of the total attributable costs of the
Postal Service. Figure III-19 shows the average unit attributable cost by category from FY
2014 to FY 2023. In general, average unit attributable cost increased from FY 2014 to FY
2020, decreased in FY 2021, and increased again in FY 2022 and FY 2023.
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
FY 2014 FY 2015 FY 2016 FY
2017 FY 2018 FY 2019
FY 2020 FY 2021 FY
2022 FY 2023
Volume (Billions)
Fiscal Year
Priority Mail Ground Parcels First-Class Package Service Other Compeve
Financial Analysis Report FY 2023
80
Figure III-19
Competitive Products Average Unit Attributable Cost by Category, FY 2014–FY 2023
Source: PRC-LR-1, FY 2014-FY 2023.
Figure III-20 shows the percent change in average unit attributable cost by category from
FY 2014 to FY 2023. From FY 2016 to FY 2021, unit attributable costs were generally
stable. Larger swings before FY 2016 were generally caused by product transfers from the
Market Dominant to the Competitive product list, while more recent volatility was caused
by the COVID-19 pandemic and related adverse economic conditions.
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$
14.00
FY 2014 FY 2015 FY 2016 FY
2017 FY 2018 FY
2019 FY 2020 FY 2021
FY 2022 FY 2023
$ per Piece
Fiscal Year
Priority Mail Express First-Class Package Service Priority Mail Ground Parcels
Financial Analysis Report FY 2023
81
Figure III-20
Competitive Products Percent Change in Average Unit Attributable Cost by Category,
FY 2014–FY 2023
Source: PRC-LR-1, FY 2014-FY 2023.
(20.0%)
(10.0%)
0.0
%
10.0
%
20.0
%
30.0%
40.0
%
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023
Percent Change
Fiscal Year
Priority Mail Express First-Class Package Service Priority Mail Ground Parcels
Financial Analysis Report FY 2023
82
Chapter IV. Cost and Profit Analysis
Introduction
Chapter 4 divides the broad categories of costs analyzed in Chapter 2 into segments
categorized by function and explores how operations impact these costs and how they
impact total net income/loss. As stated in Chapter 2 (see Table II-4), the single largest cost
for the Postal Service is employee salaries and benefits. This chapter contains a discussion
of labor costs and workhours and the impact of recent inflation on total costs.
The basis of the analyses in this chapter are reports filed by the Postal Service; the Form
10-K, the CRA Report; the CSC Report; and payroll data. Docket No. RM 2024-4, Statutory
Review of the System for Regulating Rates and Classes for Market Dominant Products, April
5, 2024 (Order No. 7032) provides the background for the section “Revenue from CPI Rate
Authority”.
Analysis of Inflationary Impact on Financial
Condition
Inflation economy-wide began to decline in FY 2023, but for most of the year it was well
above historical levels for the second year in a row. High levels of inflation have affected
symmetrically the Postal Service’s net income by driving increases in specific costs and by
creating higher rate authority that the
Postal Service has utilized to generate
additional revenue.
The Postal Service states that inflationary
pressures resulted in higher costs for
compensation, retirement benefits,
transportation, and fuel.
63
The Postal Service has also identified inflation-related cost
increases as a source of financial stress.
64
An examination of the net effects of recent
inflation on the costs and revenues of the Postal Service however suggests that the CPI-
63
Postal Service FY 2023 Form 10-K at 18.
64
United States Postal Service, United States Postal Service Delivering for America Second-Year Progress Report, April 27, 2023, at 10 (available
at https://about.usps.com/what/strategic-plans/delivering-for-america/assets/usps-dfa-two-year-report.pdf).
THE CPI-BASED RATE AUTHORITY IS
SUBSTANTIALLY OFFSETTING THE
EFFECTS OF INFLATION-DRIVEN COST
INCREASES WITH HIGHER REVENUES.
Financial Analysis Report FY 2023
83
based rate authority is substantially offsetting the effects of inflation-driven cost increases
with higher revenues.
Inflation affects different Postal Service costs in different ways, so it is not practical to
develop a complete alternative estimate of costs under a counterfactual low-inflation
scenario. However, for the major cost categories it is possible to estimate specific
inflationary effects on costs. Compensation, fuel, transportation, rent, and amortization of
CSRS and FERS liabilities are all closely tied to inflation and have been substantially
affected by recent high inflation.
65
Cost of Living Adjustments Compensation
Compensation or accrued salary cost encompasses pay for workhours including straight
time, overtime, premiums, paid leave and absences. Compensation costs for bargaining
employees are influenced by contractual general pay increases, net salary creep reflecting
turnover effects, step advancement, craft upgrades, overtime, and COLAs. With the
exception of COLAs these factors are not directly affected by inflation. Comparing the
estimated annual COLAs for bargaining employees for FY 2021, FY 2022 and FY 2023
provides an estimate of the effect of recent inflation on compensation costs. The estimated
COLAs increased from approximately $290 million in FY 2021 to $1.3 billion per year in FY
2022 and FY 2023,
66
resulting in approximately $2 billion in additional inflation-related
costs over the past 2 years.
Fuel
Fuel costs are recorded in Cost Segment 12 and include bulk fuel and oil and fuel purchases
from commercial service stations for fleet vehicles used by city and rural carriers and
vehicle service drivers. The movement of these costs followed the trends in gas prices,
increasing by $269 million in FY 2022 and remaining $225 million higher in FY 2023 than
in FY 2021. This resulted in about $500 million in additional costs over 2 years.
Purchased Transportation
Purchased transportation expenses cover moving mail and packages between facilities
using highway, air, and international transportation contracts, as well as contract delivery
services. In FY 2022, both highway transportation expenses (up $696 million, or 12.8
65
Health benefits, FERS normal costs, utilities, supplies, and workers’ compensation costs are also potentially subject to the effects of inflation,
but an examination of these cost categories did not reveal any clear substantial effects in FY 2022 and FY 2023.
66
Rural Carrier non-career bargaining employees receive a deferred payment equivalent to the accumulated COLA over the contract period.
This amount is not factored into the effective increase due to the difficultly in estimating the timing of the distribution.
Financial Analysis Report FY 2023
84
percent) and air transportation expenses (up $60 million, or 1.7 percent) increased. In FY
2023, highway transportation expenses increased by $432 million (7.1 percent) but this
was more than offset by a $600 million (16.3 percent) decrease in air transportation
expenses.
Isolating the impact of inflation on transportation is challenging due to variations in mail
and package volume, weight, transportation mode, and fuel prices. The data available does
not isolate the impact of shifting from air to highway transportation. Without specific data
on this shift, assessing its impact on expenses remains uncertain. Nevertheless, the net
changes in highway and air transportation expenses (up $756 million in FY 2022 and down
$168 million in FY 2023) are consistent with the trends in fuel prices
67
over the same
period and represent an additional $1.3 billion in expenses over two years.
Rent
Expenses related to renting facilities include various components such as variable lease
payments covering common area maintenance costs, portions of operating costs, and real
estate taxes. These expenses are generally pass-through charges based on actual amounts
incurred by the lessor,
68
with a higher susceptibility to inflation due to predetermined
rents set in contracts. Additionally, any new facilities rented within the year would also be
subject to inflationary impacts on the newly set rents. The total increase in rent expenses in
FY 2022 (up $92 million) and FY 2023 (up $43 million) was influenced by the inflationary
pressures on rents and represents $226 million in additional expenses over the last two
years. The Postal Service expected rent in both years to increase with the addition of
annexes. See FY 2023 United States Postal Service Annual Report to Congress at 57; FY
2022 United States Postal Service Annual Report to Congress at 48.
CSRS and FERS Amortization
The amortization costs for the funding of the remaining unfunded liabilities of the CSRS and
the FERS are also affected by inflation. Both CSRS and FERS amortization costs increased
20 percent in FY 2022 and 32 percent in FY 2023, mainly attributed to a rise in actual
annuitant COLAs for CSRS and FERS,
69
which replaced long term COLAs assumptions.
70
These COLAs increases were the primary drivers for the increase in CSRS and FERS
67
In 2023, U.S. retail gasoline prices were on average $3.52 per gallon, down almost 10.89 percent from $3.95 in 2022, averaging $0.43 per
gallon (gal) less than in 2022, according to data from U.S. Energy Information Administration in their Gasoline and Diesel Fuel Update
.
68
Postal Service FY 2023 Form 10-K at 51
69
In FY 2022, actual annuitant COLA for CSRS and FERS annuitants increased by 4.6 percent and 3.6 percent, respectively. In FY 2023, this
increase for both CSRS and FERS was 2.8 percent.
70
Id. at 28.
Financial Analysis Report FY 2023
85
amortization expenses totaling $1.9 billion in FY 2022 and FY 2023, as other long term
economic assumptions used in calculating these costs remained largely unchanged.
71
Revenue from CPI Rate Authority
As part of the price cap on market dominant products, the Postal Service accrues rate
authority equal to the changes in CPI-U. CPI-based rate authority is intended to allow the
Postal Service to generate sufficient revenue to compensate for the effects of inflation on
costs. The Postal Service has used CPI-based authority to increase rates four times between
the last quarter of FY 2021 and the end of FY 2023: by 1.244 percent in August 2021, 5.135
percent in July 2022, 4.200 percent in January 2023, and 3.406 percent in July 2023.
The Commission estimates that these CPI-based rate increases generated $4.7 billion in
revenue over the past two fiscal years.
72
This estimate does not include the effects of price
elasticity on volume, and therefore overstates the net increase in revenue resulting from
the price increases. Nevertheless, it is consistent with the magnitude of the effects of
inflation on the Postal Service’s costs over the same period. Moreover, there is a lag effect
on revenue because CPI-based rate authority is generated after inflation has already
occurred, and only produces revenue after it is used to increase rates. As a result, inflation
that drove the Postal Service’s costs higher in FY 2022 was not fully reflected in higher
rates until late in FY 2023. The most recent CPI-based rate increases generated little
revenue in FY 2023 but will generate much more in FY 2024 when they will be in effect for
the entire year.
Contribution Margin Income Statement
The contribution margin income statement distinguishes between the institutional and
attributable costs of each cost segment. By bifurcating the costs from Chapter 2 into
institutional and attributable cost categories, it aims to provide an alternative analysis of
the current financial condition of the Postal Service.
71
Id.
72
This estimate is developed by applying the approach used to calculate the revenue generated by retirement-based rate authority. See 39
C.F.R. § 3030.184.
Financial Analysis Report FY 2023
86
The contribution margin income statement analyzes the relationships between revenue,
attributable costs, institutional costs, and overall net income or loss. The sections below
individually examine each component of the contribution margin income statement.
Contribution margin on the contribution margin income statement differs from the
controllable loss on the Postal Service FY 2023 Form 10-K. Postal Service FY 2023 Form
10-K at 19. The Postal Service defines controllable loss, a non-GAAP measure, as the excess
of revenue over costs for normal business operations that the Postal Service deems under
management control. The Postal Service calculates controllable loss by excluding costs that
it determines do not arise from normal business operations and over which it has no
control. Those “non-controllable” costs include amortization of unfunded retirement
obligations, actuarial revaluation of and discount rate changes on workers' compensation
obligations, and in FY 2022, the one-time impact of the PSRA legislation cancelling the
unpaid PSRHBF obligations.
73
Table IV-1 presents a high-level view of the contribution margin income statement,
highlighting total attributable and institutional costs. From FY 2022 to FY 2023, total
revenue, excluding the one-time impact of the PSRA, increased by 0.7 percent and total
attributable costs increased by 1.9 percent. Total institutional costs increased by 15.8
percent.
73
Section 102(c)(1) of the PSRA repealed payments "required from the Postal Service under section 8909a of title 5, United States Code, as in
effect on the day before the date of enactment of this Act that remains unpaid as of such date of enactment." Postal Service Reform Act of
2022, Pub. L. 117-108, 136 Stat. 1127 (2022).
Financial Analysis Report FY 2023
87
Table IV-1
Condensed Contribution Margin Income Statement
74
Decrease in expenses is denoted by (). NM denotes not meaningful. Numbers may not add across due to rounding
Source: Docket No. ACR2022, Library Reference USPS-FY22-1, December 29, 2022, REVISED March 24,2023; Docket No. ACR2023, Library
Reference USPS-FY23-1, December 29, 2023, (Collectively Postal Service CRA Report, FY 2022- FY 2023).
Attributable costs are the “direct and indirect postal costs attributable to each class or type
of mail service through reliably identified causal relationships plus that portion of all other
costs of the Postal Service reasonably assignable to such class or type[.]” 39 U.S.C. §
3622(c)(2). In Order No. 3506, the Commission revised the methodology for determining
attributable cost to include inframarginal costs developed to estimate incremental costs.
Previously, attributable cost only included the sum of volume-variable costs, which, in the
aggregate, increase as volume increases and decrease as volume decreases, and product-
specific fixed costs, which are costs caused by a specific product or class but do not vary
with volume.
The Postal Service initially records costs as accrued costs. Accrued costs are separated into
cost segments generally corresponding to major divisions in the Postal Service’s chart of
accounts. The use of various systems designed to break down the cost of various postal
activities determines separation. Identifying cost drivers that reflect the essential activity
of each cost component determines the volume variable portion of attributable costs. Most
cost segments contain multiple cost components. Attributable costs are distributed to
products using distribution keys that reflect the underlying cost driver.
75
74
The Postal Service CRA Report includes inframarginal and group-specific costs in attributable costs. Table IV-3 is calculated using the Postal
Service’s Cost and Component Reports which reallocates inframarginal and group-specific costs as institutional costs.
75
The Postal Service assigns these costs to each product according to methodologies approved by the Commission. Changes to those
methodologies are reviewed by the Commission in informal rulemaking proceedings, and members of the general public are given the
opportunity to comment in such proceedings.
Financial Analysis Report FY 2023
88
After attributable costs are determined, the residual costs are classified as institutional
costs. Institutional costs cannot be attributed to specific products or services and are equal
to total costs minus total attributable costs. While sometimes referred to as “fixed cost,”
institutional cost is more accurately characterized as “common cost” because it includes
costs that are variable but not causally related to an individual product or class.
Institutional costs include costs for carrier network travel time, amortization of unfunded
retirement-related liabilities apportioned to prior years, and various administrative costs.
In FY 2022 and FY 2023, the Postal Service generated a positive contribution after
subtracting all attributable costs from revenue. However, total institutional cost exceeded
the contribution amount leading to a net loss in both years. Between FY 2022 and FY 2023,
the net loss excluding the impact of the PSRA increased by $5.5 billion. Total volume
declined 8.7 percent during that same period. All else being constant, total attributable
costs should generally track with volume declines; however, changes to the mail mix and
cost of inputs impact expected results.
The Postal Service’s institutional costs
include substantial costs for retirement-
related obligations and workers’
compensation. These costs can be highly
volatile and are impacted by actuarial
assumptions, health care inflation rates, and
discount rates. These costs experience more
year-to-year fluctuation at a faster rate than
the costs for common overhead, such as non-labor items for rent, supplies, and
transportation, largely driven by inflation.
To better understand the decrease in “Other” cost in FY 2023, the Commission analyzes
individual cost segment changes. The term “other costs” is derived from the Cost Segment
and Component Report and refers to the residual cost remaining after the subtraction of
volume variable and product-specific costs from total accrued cost for a cost segment or
component. Prior to Order No. 3506, the sum of “other costs” was equal to institutional
costs, but “other costs” include inframarginal costs and group-specific costs that are now
attributable. It is still the case that most “other costs” are institutional (and most
institutional costs are “other costs”), so analysis of them provides insights into the
composition and behavior of institutional costs. Table IV-2 presents the underlying changes
in institutional cost by year, beginning in FY 2019. Apart from FY 2022, the largest changes
have been in workers’ compensation. In FY 2022, the impact of the elimination of the
BETWEEN FY 2022 AND FY 2023,
THE NET LOSS INCREASED CLOSE
TO SIX TIMES. TOTAL VOLUME
DECLINED 8.7% DURING THAT
SAME PERIOD.
Financial Analysis Report FY 2023
89
required annual retiree health benefit payments
76
is seen in the comparatively large
decrease when compared to the prior fiscal year.
Table IV-2
Change in Other Cost by Segment, FY 2019–FY 2023 ($ in Millions)
Decrease in expenses is denoted by ().
Source: Postal Service CSC Report, FY 2022- FY 2023; Docket No. ACR2021, Library Reference USPS-FY21-2, December 29, 2021;
Docket No. ACR2020, Library Reference USPS-FY20-2, December 28, 2020; Docket No. ACR2019, Library Reference USPS-FY19-2,
December 27, 2019 (Collectively Postal Service CSC Report, FY 2019–FY 2023).
To further understand the cost changes that contribute to the Postal Service’s net loss,
Table IV-3 breaks out both volume variable and product-specific costs and other costs by
cost segment. The term “other cost” is derived from the Cost Segment and Component
Report and refers to the residual cost remaining after the subtraction of volume variable
and product-specific costs from total accrued cost for a cost segment or component. Prior
to Order No. 3506, the sum of “other costs” was equal to institutional costs, but “other
costs” now include inframarginal costs and group-specific costs that are attributable. It is
still the case that most “other costs” are institutional (and most institutional costs are
“other costs”), so analysis of them provides insights into the composition and behavior of
institutional costs.
76
Section 102 of the PSRA repealed former 5 U.S.C. 8909a(d).
Financial Analysis Report FY 2023
90
Table IV-3
Contribution Margin Income Statement, FY 2022 and FY 2023 ($ in Millions)
Decrease in expenses is denoted by (). Numbers may not add across due to rounding.
NM denotes not meaningful.
Source: Postal Service CSC Report, FY 2022-FY 2023.
Financial Analysis Report FY 2023
91
As seen in Table IV-3, certain cost segments show large absolute increases from FY 2022.
The four largest absolute changes from the prior year, which occur in the cost segments for
Service-wide Personnel Benefits and HQ/Area Operations, Rural Carriers, and City
Carriers–Street Activity and Other Accrued Expenses (Servicewide) are discussed below.
Service-wide Personnel Benefits and HQ/Area Operations cost segment consists of costs for
salaries, benefits, supplies, and other related costs for Headquarters, Field Service Units,
the Security Force, and Area Offices, and corporate-wide personnel expenses that are not
reported by employee category, such as supplemental costs of CSRS, FERS Supplemental
Liability and workers' compensation.
77
The increase in Components 486 (Workers’
Compensation), 071 (FERS Supplemental Liability) and 201 (CSRS Supplemental Liability)
largely accounted for the increase in this cost segment.
The workers’ compensation component contains current year costs, prior year costs, costs
associated with Post Office Department, and former postal employees on workers’
compensation (Office of Workers Compensation Programs (OWCP) Health Benefits). Prior
year workers’ compensation costs are the residual difference between the accrued
workers’ compensation costs and the current year workers’ compensation costs, arising
from changes in discount rates and/or actuarial revaluation of past year injuries.
78
The
prior year workers’ compensation costs are not related to mail volume in the current fiscal
year and are thus treated as institutional costs.
In FY 2023, the portion of workers' compensation expense (benefit) attributable to the
impact of discount rate changes increased $2.8 billion, compared to 2022.
79
The Civil Service Retirement Supplemental Liability (Component 201) and FERS
Supplemental Liability, (Component 71) contains the annual payment, calculated by OPM,
to amortize the unfunded retirement obligation. Starting in FY 2017, PAEA required the
Postal Service to make annual payments to fully amortize its CSRS unfunded liabilities.
CSRS costs increased by 32 percent from the prior year. The increase was largely related to
the 2.8 percent increase in CSRS Actual Annuitant COLAs
80
applied in place of long term
COLAs assumptions.
81
The Postal Service is required to make annual amortization
77
United States Postal Service, Summary Description of USPS Development of Costs by Segments and Components, Fiscal Year 2022, file “CS18-
22.docx,” July 3, 2022 at 18-1 ( Postal Service FY 2022 Summary Description).
78
Id. at 18-17
79
Postal Service FY 2023 Form 10-K at 34.
80
The impact of inflation related on overall finances are discussed in the section “Analysis of Inflationary Impact on Postal Financial Condition.”
81
Postal Service FY 2023 Form 10-K at 28.
Financial Analysis Report FY 2023
92
payments to pay down the unfunded FERS liability over a 30-year period. The impact of the
increase in COLAs on the pension amortization cost is seen in Figure IV-1.
Figure IV-1
Impact of COLAs on CSRS and FERS Total Amortization Cost, FY 2017–FY 2023
Source: PRC derived from Form 10-K 2023 page 28, Form 10-K 2021 page 36, and Form 10-K 2019 page 30.
Rural carriers deliver to and collect mail from non-urban zones that are determined
through labor negotiations.
82
The rural carrier cost segment is comprised of three cost
components: Evaluated Routes, Other Routes, and Equipment Maintenance Allowance.
83
The largest portion of cost in this segment is comprised of labor costs for full-time or
Evaluated Routes, which increased by 6.5 percent from FY 2022. Compared to FY 2022,
higher costs in this segment partly result from a 4.3 percent increase in headcount for part-
time rural delivery carriers
84
and from a related increase of 15 percent in FERS and 18
percent in Social Security employer contributions
85
from the prior year. Additionally,
overtime pay increased by 20 percent from the prior year.
86
82
Postal Service FY 2022 Summary Description, file “CS10-23.docx,” at 10-1.
83
CSC Report, FY 2023
84
USPS-FY23-17, file “FY23.Annual.Report.USPS.FY23.17.pdf,” at 35
85
PRC derived from USPS-FY23-5, tab “seg10”; USPS-FY22-5, tab “seg10.”
86
Id.
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
FY 2017 FY 2018 FY 2019
FY 2020
FY 2021 FY 2022
FY 2023
Economic Assumpons in OPM esmates
Amorzaon Cost (Dollars in millions)
Fiscal Year
CSRS Amorzaon Cost FERS Amorzaon Cost CSRS Actual COLA applied FERS Actual COLA applied
Financial Analysis Report FY 2023
93
City Delivery Carrier –Street Activity consists of the costs of carriers delivering and
collecting mail from customers. Three components comprise this cost segment: Network
Travel (Component 54), Delivery Activities (Component 47), and Delivery Support
(Component 280).
87
The largest portion of the increase in FY 2023 in this cost segment
occurred in total accrued cost for Delivery Activities, increasing 3.2 percent.
88
Salary cost
based on straight time rate for hours worked by fulltime city carriers increased by 7.6
percent and the related FERS contribution increased by 5.4 percent from the prior year,
89
consistent with a 3.0 percent increase in headcount for full time employees.
90
Other Accrued Expenses (Servicewide) covers non-personnel costs for miscellaneous items
of expense, including depreciation of buildings, vehicles, equipment, and other assets;
indemnities (both domestic and foreign) and insurance claims; interest expense; and other
miscellaneous operating activities.
91
The largest increase in this cost segment in FY 2023
resulted from the change in Interest Expense.
92
In FY 2023, the costs in general ledger
account 58102, Interest Expense – Notes, included in this component, increased by 142
percent.
93
This account records interest accrued during the year on Postal Service Notes
with the Federal Financial Bank.
94
The weighted average interest rate of 4.202 percent for
all outstanding debt as of September 30, 2023,
95
was much higher than the weighted
average interest rate for all outstanding debt of 2.757 percent as of September 30, 2022.
96
Additionally, during FY 2023, the Postal Service borrowed $3.0 billion from the Federal
Financing Bank (FFB) on various long-term fixed rate notes.
97
Analysis of Cost Segments
The majority of the Postal Service’s costs are concentrated in five cost segments (CS):
Clerks and Mailhandlers (CS3), City Delivery Carriers – Street Activity (CS7), Rural Carriers
(CS10), Purchased Transportation (CS14), and Service-wide Personnel Benefits and
HQ/Area Operations (CS18). See Table IV-2.
87
Postal Service FY 2022 Summary Description, file “CS6&7-22.docx,” at 7-1.
88
FY 2023 CSC Report.
89
PRC derived from Docket No. ACR2023, Library Reference USPS-FY23-5, December 29, 2023, tab “seg6&7;” USPS-FY22-5, tab “seg6&7.”
90
USPS-FY23-17, file “FY23.Annual.Report.USPS.FY23.17.pdf,” at 35
91
Postal Service FY 2022 Summary Description, file “CS20-22.docx,” at 20-1.
92
Id.at file “CS20-22.docx,” at 20-12.
93
PRC derived from USPS-FY23-5, tab “seg20”; Docket No. ACR2022, Library Reference USPS-FY22-5, December 29, 2022, tab “seg20”.
94
Docket ACR 2023, Library Reference USPS-FY23-6, December 29, 2023.
95
Postal Service FY 2023 Form 10-K at 64.
96
Postal Service FY 2022 Form 10-K at 61.
97
Postal Service FY 2023 Form 10-K at 37.
Financial Analysis Report FY 2023
94
Figure IV-2
Share of Total Costs by Major Cost Segment, FY 2019–FY 2023
*Other comprises of cost segments for Postmasters, Supervisors and Technicians, City Delivery Carriers-Office Activity, Vehicle Service
Drivers, Custodial and Maintenance Services, Motor Vehicle Services, Miscellaneous Local Operations, Building Occupancy, Supplies and
Services, Research and Development, General Management Services and Other Accrued Expenses (Servicewide).
Source: Postal Service CRA Report, FY 2022-FY 2023; Docket No. ACR2021, Library Reference USPS-FY21-1, December 29, 2021; Docket No.
ACR2020, Library Reference USPS-FY20-1, December 28, 2020; Docket No. ACR2019, Library Reference USPS-FY19-1, December 28, 2019
(Collectively Postal Service CRA Report, FY 2019-FY 2023)
Between FY 2019 and FY 2023, the total costs in these five cost segments experienced a
growth rate of 4.2 percent, which was lower than the 7.1 percent growth rate in the Postal
Service’s total costs. This difference in growth rates can be attributed to the double-digit
growth rates in Supplies and Services, Motor Vehicle Service, and Building Occupancy
within the Other* segment compared to a FY 2019 benchmark.
Table IV-4 shows the proportion of costs that are “other costs” for each cost segment. In
three out of the five cost segments identified in Figure IV-2, over 60 percent of total costs
are “other costs.” For CS18 Servicewide Personnel Benefits and HQ/Area Operations, the
percentage of Other costs, as a fraction of the Total Accrued Costs, increased by 10.2
percentage points due to increases in three components: Workers Compensation
(component 486), FERS Supplemental Liability (component 71) and CSRS Supplemental
Financial Analysis Report FY 2023
95
Liability (component 201). The first two components have no volume variability, with the
increases from the prior year categorized as other costs. The third component, CSRS
Supplemental Liability, has a volume variability of 2 percent, with 98 percent categorized
as Other costs. These increases in the three components resulted in a 10 percentage point
increase in CS18 from the prior year.
Table IV-4
Other Cost Share of Total Costs, FY 2019–FY 2023
Source: Postal Service CRA Report, FY 2019–FY 2023.
Analysis of Employee Labor Cost
Employee labor costs, including compensation and benefits, are 74.2 percent of total Postal
Service costs. There are three categories of Postal Service employees: full-time career
employees, part-time career employees, and non-career employees. Full-time or part-time
career employees typically receive full federal benefits, whereas non-career employees
serve in temporary positions and do not receive full federal benefits. Over the past decade
(FY 2014–FY 2023), the Postal Service has added approximately 37,000 full-time and part-
Financial Analysis Report FY 2023
96
time employees and reduced its workforce by approximately 15,000 non-career
employees. See Figure IV-3.
Figure IV-3
Breakdown of Workforce, FY 2014–FY 2023
Source: Postal Service ORPES Report PP 20, FY 2021-FY 2023; United States Postal Service, On-Roll and Paid Employee Statistics, Pay Period 20,
2020, September 29, 2020; United States Postal Service, On-Roll and Paid Employee Statistics, Pay Period 20, 2019, October 15, 2019; United
States Postal Service, On-Roll and Paid Employee Statistics, Pay Period 20, 2018, October 11, 2018; United States Postal Service, On-Roll and
Paid Employee Statistics, Pay Period 20, 2017, October 6, 2017; United States Postal Service, On-Roll and Paid Employee Statistics September
2016, October 6, 2016; United States Postal Service, On-Roll and Paid Employee Statistics September FY 2015, September 24, 2015; United
States Postal Service, On-Roll and Paid Employee Statistics September FY 2014, September 26, 2014 (Collectively Postal Service ORPES Report
PP 20, FY 2014-FY 2023).
The trend of reduced workhours each year for the prior 15 years changed in FY 2015, and
workhours increased annually through FY 2021. In FY 2015 and FY 2016, workhours
increased by 1.9 percent and 2.6 percent, respectively. Since FY 2016, workhours have
been increasing at a slower pace, at 0.5 percent or lower each year until FY 2021. During FY
2021, workhours increased 1.4 percent
compared to the prior year, the highest
annual rate in the past 5 years. This trend
reversed in FY 2022 and FY 2023,
decreasing by 0.8 percent and 2.3 percent,
respectively. Figure IV-3 depicts annual
workhours during the past 10 years.
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023
Number of Employees
Fiscal Year
Full-Ti me Ca reer Employees Part-Ti me Career Empl oyees Non-Ca reer Empl oyees
IN FY 2023, WORKHOURS
DECREASED 2.3%, THE SECOND
CONSECUTIVE ANNUAL
DECREASE FOLLOWING SEVEN
YEARS OF INCREASES.
Financial Analysis Report FY 2023
97
Figure IV-4
Total Workhours (Millions), FY 2014–FY 2023
Source: USPS-FY23-17, compressed folder “FY23.17.Annual Report.zip,” File folder “TFP Materials,” Excel file “Table Annual 2023 ACR
(Public).xls” Postal Service FY 2023 TFP, tab "Lab-13b.”
As illustrated in Figure IV-5, the Postal Service reduced its cost of compensation and
benefits and workhours in FY 2014. Decreases in compensation and benefit costs and
workhours during this period reflect declines in mail volume, increased use of non-career
employees, incentives for employees to retire or resign, and the slowing growth rate of new
delivery points due to lower housing starts.
The cost of compensation and benefits spiked in FY 2015. Total workhours during FY 2015
increased by 1.9 percent, in part due to an increase in workhours for city delivery and
customer service operations. The increase in workforce, a slight increase (0.6 percent) in
career employees, and contractually obligated salary escalations during FY 2015 resulted
in higher compensation and benefits costs. Retirement expenses during FY 2015 increased
12.5 percent, primarily due to increases in the FERS employer contribution rate from 11.9
percent to 13.2 percent. Compensation and benefits have continued to grow since FY 2017.
Although there was a reduction in the workforce in FY 2018 and FY 2019, workhours and
the cost of compensation and benefits continued to increase.
Financial Analysis Report FY 2023
98
Figure IV-5
Percent Change from Prior Year in Compensation and Benefits, Workforce and Workhours,
FY 2014–FY 2023
Source: Postal Service FY 2023 Form 10-K at 23 and 25; Postal Service FY 2022 Form 10-K at 24; Postal Service FY 2021 Form 10-K at 30; Postal
Service FY 2020 Form 10-K at 34, 31; Postal Service FY 2019 Form 10-K at 25; Postal Service FY 2016 Form 10-K at 20; Docket No. ACR2021,
USPS-FY21-17, December 29, 2021, compressed folder “FY21.17.Annual Report.zip”, File folder “TFP Materials,” Excel file “Table Annual 2021
ACR (Public).xls” (USPS-FY21-17); USPS-FY21-17, FY 2021 TFP, tab "Lab-13b;” Docket No. ACR2020, Library Reference USPS-FY20-17, December
29, 2020, compressed folder “FY20.17.Annual Report.zip,” Excel file “TFP Table Annual 2020 ACR Public.xls,” tab "Lab-13b;” Postal Service
ORPES Report PP 20, FY 2014-FY 2023.
The composition of the postal workforce is a significant factor in compensation and
benefits costs. In FY 2016 and FY 2017, the number of total employees and total workhours
increased. Compensation and benefits costs also increased during the same period due to
contractually obligated salary escalations. The increase in compensation and benefits costs
from additional workhours and contractually obligated salary escalations was partially
offset by the attrition of higher-paid employees, who were replaced by newly converted
career employees and non-career employees earning lower wages. In FY 2016 and FY
2017, FERS normal costs increased by 5.5 percent and 1.1 percent, respectively, consistent
with the increase in the FERS employer contribution rate. Average health benefit premiums
also increased by 3.8 percent in FY 2016 and 4.4 percent in FY 2017.
Financial Analysis Report FY 2023
99
In FY 2018 and FY 2019, the total number of employees decreased by 1.5 percent and 0.2
percent, respectively, reflecting normal attrition as the Postal Service aligned its workforce
with declining mail volume. During the same period, total workhours increased slightly,
influenced primarily by the growth in the number of delivery points and higher volume
during the holiday seasons. Compensation and benefits cost increased by 1.8 percent and
2.1 percent, respectively, due to contractual wage adjustments and the increase in total
workhours. In FY 2018 and FY 2019, average health benefit premiums increased by 4.0
percent and 1.2 percent, respectively.
In FY 2020 and FY 2021, compensation and benefits cost increased by 2.5 percent and 2.8
percent, respectively. Compared to prior years, in FY 2020 and FY 2021, compensation
increased 2.6 percent and 2.7 percent, retirement expenses increased 6.0 percent and 6.7
percent, and health benefits increased 1.3 percent and 1.2 percent, respectively. Driving
factors for the compensation increase were contractual wage increases, higher overtime
hours, and training of new hires. In FY 2020 and FY 2021, Postal Service contributions for
social security, TSP, FERS, and FERS-Further Revised Annuity Employees’ normal cost and
average FEHB premium increased consistent with increases in compensation.
In FY 2020 and FY 2021, the postal workforce increased by 1.7 percent and 1.4 percent. In
FY 2020, total workhours slightly increased by 0.1 percent, with an increase in overtime
workhours of approximately 13 million, offsetting a decrease of straight-time hours of
approximately 12 million. In FY 2021, total workhours increased by 1.4 percent, with an
increase in overtime workhours of approximately 23 million, offsetting a decrease of
straight-time hours of approximately 7 million.
In FY 2020 and FY 2021, the employee mix changed as non-career employees were
converted to career status and the headcount of the total postal workforce increased due
to the hiring of additional casual employees to handle higher shipping volume.
During FY 2022, the postal workforce decreased by 17,750, or 2.7%. The reductions in non-
career employees by 13.2 percent (approximately 17,900), and part-time career employees
by 2.3 percent (approximately 770 employees) fully offset the slight increase (0.2 percent)
in the full-time career headcount. Compared to the prior year, during FY 2022, total
workhours decreased by 10 million, or 0.8%, compared to 2021, including a decrease in
overtime workhours of 16 million, partially offset by an increase of straight-time hours of 6
million.
Financial Analysis Report FY 2023
100
The impact of inflation is seen in the higher compensation expense, 3.4 percent ($1.4
billion) in FY 2022 compared to the prior year. This increase is primarily due to contractual
wage increases and related COLAs in August 2021, February 2022, and August 2022. Postal
Service contributions for Social Security, TSP matching contributions and FERS and FERS-
FRAE increased by 6.1 percent due to the impact of increased inflation on salaries. Postal
Service contributions for health benefits decreased slightly (0.9 percent) compared to the
prior year, reflecting the decrease in workforce.
During FY 2023, compensation costs increased 2.1 percent, primarily driven by contractual
wage increases and inflationary impacts on related COLAs. This increase was partially
offset by a reduction in workhours.
98
The postal workforce increased slightly by 0.7
percent, with career employees increasing by 1.6 percent and non-career employees
decreasing by 3.4 percent. The conversion of over 56,000 non-career employees to career
status contributed to this shift.
99
Total workhours decreased by 2.3 percent, mainly due to
a reduction in overtime hours. Employee health benefits expenses,100 including
contributions to the Federal Employees Health Benefits (FEHB) program and Medicare
taxes, increased by 3.1 percent, reflecting the growth in the workforce.
100
In FY 2023, Social
Security expenses increased by 4.8 percent and FERS normal costs increased 8.8 percent
compared to the prior year, consistent with the overall increase in compensation, an
increase in the maximum benefit base, and the workforce composition.
101
This section examines changes in compensation in FY 2023 across the three cost segments
where labor costs are highest by comparing compensation costs (salary before benefits) in
FY 2023 to the prior year.
Three Cost Segments account for almost 80 percent of total compensation costs: CS6 & 7
City Delivery Carriers (in-office and street), CS3 Clerks and Mailhandlers, and CS10 Rural
Carriers.
98
Postal Service FY 2023 Form 10-K at 23.
99
Id. at 24.
100
Id.
101
Id. at 25.
Financial Analysis Report FY 2023
101
Figure IV-6
Cost Segment Share of Total Compensation Cost, FY 2023
Source: PRC derived from USPS-FY23-7, Excel file “Wkyrcalc.xls,” tab “Calculations.”
Figure IV-7 illustrates the relative shares of the growth in compensation for FY 2022 and
FY 2023, showing significant changes in each cost segment’s share of the total growth rate
compared to the prior year. Notably, the share of growth in Clerks and Mailhandlers and
Rural Carriers decreased, with the share of growth of Clerks and Mailhandlers decreasing
by nearly one-third and the growth rate of City Delivery Carriers increasing by 8
percentage points.
CS3 Clerks and
Mailhandlers
28%
CS6 & CS7 City
Delivery Carriers
33%
CS10 Rural
Carriers
17%
All Other Cost
Segments
22%
Financial Analysis Report FY 2023
102
Figure IV-7
Cost Segment Shares of Growth Rate of Total Compensation Cost,
FY 2022-FY 2023
Source: PRC derived from USPS-FY23-7, Excel file “Wkyrcalc.xls,” tab “Calculations.”
These shifts, influenced by changes in workforce composition and types of workhours, led
to changes in individual cost segment growth rates between FY 2022 and FY 2023,
resulting in a shift in each cost segment’s share of total compensation costs.
In FY 2023, the total compensation cost for City Delivery Carriers increased by the same
rate as the prior two years, 2 percent ($269 million). Figure IV-8 shows that compensation
costs for overtime also decreased by the same rate as the prior year, 6 percent ($245
million). Straight-time compensation for full-time employees increased by 6 percent,
a 2-percentage point additional increase from the increase in the prior year. Straight-time
compensation for part-time employees decreased by 5 percent ($68 million), compared to
prior year’s increase of 6 percent ($89 million).
Financial Analysis Report FY 2023
103
Figure IV-8
Composition of Cost Segments 6 & 7 City Delivery Carriers Change from Prior Year
FY 2022 and FY 2023
Source: PRC derived from USPS-FY23-7, Excel file “Wkyrcalc.xls,” tab “Calculations.”
In FY 2023 and FY 2022, total compensation costs for Rural Carriers increased by 4 percent
($284 million) and 7 percent ($426 million), respectively. In both years, compensation
costs for overtime increased; by 18 percent ($120 million) in FY 2023 and 25 percent
($132 million) in FY 2022. Straight-time compensation for full-time employees increased
by 2 percent ($94 million), lower than the 8 percent ($365 million) increase in the prior
year. Straight-time compensation for part-time employees increased by 5 percent ($71
million) reversing the decrease of 4 percent ($71 million) in FY 2022.
Financial Analysis Report FY 2023
104
Figure IV-9
Composition of Cost Segment 10 Rural Carriers Change from Prior Year,
FY 2022 and FY 2023
Source: PRC derived from USPS-FY23-7, Excel file “Wkyrcalc.xls,” tab “Calculations.”
In FY 2023 and FY 2022, total compensation costs for Clerks and Mailhandlers decreased
by 2 percent ($285 million) reversing the prior year increase of 2 percent ($182 million),
respectively. Compensation costs for overtime decreased by 28 percent ($503 million) in
FY 2023 and by 18 percent ($393 million) in FY 2022. Straight-time compensation for full-
time employees increased in both years, by 6.3 percent ($486 million) and by 7 percent
($517 million), respectively. Straight-time compensation for part-time employees
decreased by 11 percent ($268 million) in FY 2023, more than offsetting the 2 percent ($58
million) decrease in FY 2022.
Financial Analysis Report FY 2023
105
Figure IV-10
Composition of Cost Segment 3 Clerks and Mailhandlers Change from Prior Year,
FY 2022 and FY 2023
Source: PRC derived from USPS-FY23-7, Excel file “Wkyrcalc.xls,” tab “Calculations.”
Figures IV-8, IV-9, and IV-10 illustrate that overall increase in compensation is due to an
increase in straight-time compensation costs for full-time employees during FY 2023.
However, this growth rate was slower than the increase from FY 2021 to FY 2022. This
increase effectively offset the decrease in straight-time compensation costs for part-time
employees and overtime in FY 2023 compared to the prior year. This trend aligns with the
3 percent reduction in non-career employees and the 1.6 percent increase in career
employees during FY 2023.
102
102
Postal Service FY 2023 Form 10-K at 24.
APPENDICES
106
Appendix A
Table A-1
Fiscal Year 2023 Volume, Revenue, Incremental Cost
and Cost Coverage by Class Current Classification (Products)
Contribution to Contribution to
Attributable Institutional Institutional
Volume Revenue (Incremental) Cost Cost Rev./Pc. Cost/Pc. Cost/Pc. Cost
(000) ($ 000) ($ 000) ($ 000) (Cents) (Cents) (Cents) Coverage
COMPETITIVE MAIL
Priority Mail Express 24,032 713,930 311,405 402,525 2,970.704 1,295.776 1,674.928 229.3%
Priority Mail 1,057,981 10,806,647 8,124,905 2,681,742 1,021.441 767.963 253.477 133.0%
Total Ground 4,155,186 13,322,273 7,142,702 6,179,571 320.618 171.898 148.719 186.5%
First-Class Package Service 1,363,415 5,845,145 3,540,895 2,304,250 428.713 259.708 169.006 165.1%
Competitive Domestic Services 1,330,347 370,270 960,077 359.3%
Competitive International Mail & Services 150,441 1,331,257 1,119,930 211,327 884.900 744.429 140.471 118.9%
Total Competitive Group Specific & Non-Product Inframarginal Costs 572,984
Total Competitive Mail and Services 6,751,056 33,349,599 21,183,091 12,166,508 493.991 313.774 180.216 157.4%
MARKET DOMINANT MAIL
FIRST-CLASS MAIL
Single-Piece Letters and Cards 11,784,857 7,340,413 4,644,540 2,695,873 62.287 39.411 22.876 158.0%
Presort Letters and Cards 33,249,078 15,595,078 5,256,633 10,338,445 46.904 15.810 31.094 296.7%
Flats 973,030 1,640,339 1,445,106 195,233 168.581 148.516 20.064 113.5%
First-Class Non-Product Inframarginal Costs 252,941
Seamless Acceptance Incentive Payments 0
Total Domestic First-Class Mail 46,006,965 24,575,830 11,599,220 12,976,610 53.418 25.212 28.206 211.9%
MARKETING MAIL
High Density & Saturation Letters 5,601,823 1,143,438 618,290 525,148 20.412 11.037 9.375 184.9%
High Density & Saturation Flats & Parcels 8,887,073 1,781,933 1,452,085 329,849 20.051 16.339 3.712 122.7%
Carrier Route 4,024,763 1,335,993 1,353,584 (17,591) 33.194 33.631 (0.437) 98.7%
Letters 38,126,466 9,508,508 5,280,530 4,227,979 24.939 13.850 11.089 180.1%
Flats 2,227,825 1,205,185 1,867,658 (662,473) 54.097 83.833 (29.736) 64.5%
Parcels 25,411 58,745 49,151 9,594 231.184 193.428 37.756 119.5%
Every Door Direct Mail - Retail 555,570 106,007 49,361 56,646 19.081 8.885 10.196 214.8%
Marketing Mail Non-Product Inframarginal Costs 435,463
Seamless Acceptance Incentive Payments 0
Total Marketing Mail 59,448,929 15,139,809 11,106,121 4,033,688 25.467 18.682 6.785 136.3%
PERIODICALS
Within County 451,825 60,405 105,303 (44,899) 13.369 23.306 (9.937) 57.4%
Outside County 2,541,109 862,272 1,430,664 (568,391) 33.933 56.301 (22.368) 60.3%
Periodicals Non-Product Inframarginal Costs 429
Seamless Acceptance Incentive Payments 0
Total Periodicals 2,992,935 922,677 1,536,396 (613,719) 30.829 51.334 (20.506) 60.1%
PACKAGE SERVICES
Alaska Bypass 1,253 39,065 32,538 6,527 3,118.902 2,597.828 521.074 120.1%
Bound Printed Matter Flats 114,868 108,133 94,892 13,241 94.137 82.610 11.527 114.0%
Bound Printed Matter Parcels 226,433 317,270 266,906 50,365 140.117 117.874 22.243 118.9%
Media and Library Mail 92,258 429,134 478,187 (49,053) 465.146 518.316 (53.170) 89.7%
Package Services Non-Product Inframarginal Costs 619
Seamless Acceptance Incentive Payments 0
Total Package Services 434,811 893,603 873,143 20,460 205.515 200.810 4.705 102.3%
U.S. Postal Service Mail 376,075
Free Mail 19,703 30,933 (30,933) 156.997
Total Market Dominant Mail 109,279,417 41,531,919 25,145,813 16,386,106 38.005 23.011 14.995 165.2%
MARKET DOMINANT SERVICES
Ancillary Services
Certified Mail 652,432 454,778 197,654 143.5%
COD 4,417 3,915 502 112.8%
Insurance 68,877 24,773 44,104 278.0%
Registered Mail 21,027 16,796 4,231 125.2%
Stamped Envelopes 11,607 7,868 3,739 147.5%
Stamped Cards 685 113 572 608.2%
Other Ancillary Services 393,284 277,343 115,941 141.8%
Money Orders 220,430 165,620 54,811 133.1%
Post Office Box Service 321,605 138,694 182,911 231.9%
Caller Service 96,569 20,438 76,130 472.5%
Other Special Services 75,588 15,255 60,333 495.5%
Market Dominant Services Non-Product Inframarginal Costs 19,804
Total Market Dominant Domestic Services 1,866,522 1,145,397 721,125
Outbound Single-Piece Mail Intl 99,085 179,146 105,273 73,872
Inbound Single-Piece Mail Intl 71,673 52,279 40,510 11,769
International Services 8,768 4,777 3,991
Market Dominant Intl Non-Product Inframarginal Costs 5 (5)
Market Dominant International Mail & Services 170,758 240,193 150,566 89,628
Federal Interagency Agreements 433,962 250,862 183,100
Other Income 919,251 919,251
Other International Mail Attributable 67,918 (67,918)
Total Mail and Services 116,201,231 78,341,446 47,943,646 30,397,800
67.419 41
.259 26.160 163.4%
Institutional Costs 37,858,402
Impact of Postal Reform Legislation (Gain)
Appropriations: Revenue Forgone 41,668
Investment Income 940,837
Total Revenues 79,323,951
Total Costs 85,802,048
Net Income (Loss) (6,478,097)
Source: Library Reference PRC-ACR2023-NPLR1
APPENDICES
107
Appendix B: Total Factor Productivity
Total factor productivity (TFP) is a measure of Postal Service productivity for any given
year. TFP measures the change in the relationship between outputs (workload processed)
and inputs (resource usage) over a period of time. Workload consists of weighted mail
volume, miscellaneous output, and the expanding delivery network. Resources consist of
labor, materials (including purchased transportation), and capital assets. TFP is calculated
as the difference in workload growth and the growth of resources used.
The Postal Service is a labor-intensive organization. Approximately 75 percent of its
resource usage is made up of labor. Prior to FY 2000, the Postal Service’s growth in
workhours outpaced its workload, resulting in either reductions or small gains in TFP.
From FY 2000 to FY 2007, the Postal Service reduced its labor force while its workload
remained basically flat, resulting in improvements in productivity. The large drop in mail
volume in FY 2008 and FY 2009 resulted in a decline in workload and a corresponding
decline in productivity.
The last decade saw early TFP growth that leveled off before mostly declining in recent
years. The productivity growth is partly caused by the reduction in workhours and the
continued restrictions on capital investment, resulting in lower resource usage and a
corresponding improvement in productivity. From FY 2011 to FY 2015, TFP improved each
year as workhours decreased. Since FY 2016, average annual wages increased, resulting in
yearly increases in the postal inflation factor (a measure of the change in the cost of
resources used) after a period of decline.
In FY 2019 and FY 2020, TFP decreased by 0.3 percent and 1.0 percent, respectively. Total
workload increased by 0.3 percent in FY 2020, less than the 1.3 percent increase in
resources for the same period. The growth rate of resources used, specifically materials
(domestic air transportation, highway transportation, and supplies), contributed to the
decrease in TFP in FY 2020.
In FY 2021, TFP increased by 0.7 percent, primarily from an increase in labor productivity.
Delivery points increased, and mail volume decreased slightly, resulting in a 0.2 percent
increase in workload, less than the 0.5 percent decrease in resources for the same period.
APPENDICES
108
In FY 2022, TFP declined 0.9 percent, largely
reflecting the impact of inflation. During FY 2022, the
price of labor and materials increased by 6.5 percent
and 14.6 percent, respectively, fully offsetting the
decrease in the price of capital of 11.3 percent.
FY 2023 saw the largest single-year decline in TFP since 1965. TFP declined 4.0 percent,
due to reduced labor productivity. Workload decreased 4.7 percent, but resource usage
only decreased by 0.7 percent. The largest component of workload, Weighted Mail Volume,
decreased by 8.1 percent, driven by decreases in Priority Mail, USPS Marketing Mail
Letters, and First-Class Package Service Mail. Miscellaneous output also decreased 10.1
percent, while delivery points increased 1.2 percent. Labor input, the largest component of
resource usage, decreased by 1.9 percent mainly due to a 2.3 percent reduction in
workhours, with reductions in Non-Career Clerks, Full-Time Clerks, and Non-Career City
Delivery Carriers. Capital input decreased by 5.3 percent, and materials input increased 4.1
percent.
Figure B-1 shows the trend in TFP from FY 1972 through FY 2023.
Figure B-1
Postal Service Total Factor Productivity, FY 1972–FY 2023
Source: USPS-FY23-17, FY 2023 TFP, tab “Tfp-52.”
100
105
110
115
120
125
130
135
140
FY 1972
FY 1975
FY 1978
FY 1981
FY 1984
FY 1987
FY 1990
FY 1993
FY 1996
FY 1999
FY 2002
FY 2005
FY 2008
FY 2011
FY 2014
FY 2017
FY 2020
FY 2023
Index (1972 = 100)
Fiscal Year
Average Annual Growth
1972 - 2006 = 0.51%
2007 - 2023 = 0.02%
FY 2023 SAW THE LARGEST
DECLINE IN TFP SINCE 1965.
