The US Postal Service incurred a loss of $6.5 billion in the past year, despite its earlier prediction of achieving a break-even financial status.

The US Postal Service’s dreams of a financial comeback were dashed when it lost $6.5 billion in its recently concluded fiscal year.

Prior to reaching yearly profits this year and in the future, the Postal Service had predicted it would break even in the fiscal year that concluded on September 30. Its earnings are especially disheartening because shippers moved their shipment volume away from UPS earlier this year due to the possibility of a strike there.

Postmaster General Louis DeJoy attributed the decline to inflation driving up operating expenses. Additionally, it caused printing costs to skyrocket, which drastically decreased the quantity of unsolicited mail that marketers delivered.

Despite the challenges, DeJoy expressed optimism about the Postal Service’s progress in its organizational transformation. He stated, “We are just in the early stages of one of the nation’s largest organizational transformations. We are already providing more consistent, reliable, and timely delivery to America’s businesses and residences. We are also addressing near-term financial headwinds relative to inflation as we make strong progress in our long-term cost control and revenue generating strategies.”

The report did not specify the exact increase in business during July and August, but it mentioned that the Postal Service reached an agreement with the Teamsters without a strike, and it anticipates recovering most of the business that was redirected to other carriers by the end of the year.

UPS noted that the shift of business to competitors resulted in a reduction of its US package volume by an average of 1.5 million packages per day in the July through September period, with the majority occurring in July and August. FedEx also mentioned an increase in business but did not provide specific figures, and the USPS report did not quantify its gains either.

In terms of revenue, the Postal Service reported that its shipping and packages segment, now the largest revenue contributor, increased by 1% to $31.6 billion, despite a 2% decline in volume. First-Class mail also saw a 2% growth in revenue, reaching $24.5 billion, despite a 6% volume decrease. The most significant decline was in revenue from marketing mail, which dropped by $920 million, or 8%.

It’s worth noting that the Postal Service reported a net income of $56 billion in the previous fiscal year, primarily due to a non-cash gain of nearly $57 billion resulting from 2022 legislation that changed the way it accounted for retiree health care expenses. Excluding this one-time gain and other “non-controllable” costs and gains, the “controllable loss” at the Postal Service increased to $2.3 billion in the just-completed fiscal year, compared to a controllable loss of $473 million in the previous fiscal year.