For two decades the ecommerce industry has helped stabilize the U.S. Postal Service, but recent financial results suggest package delivery alone may not generate enough profit to sustain the carrier’s nationwide network.
The USPS reported a $2 billion loss for the second quarter of fiscal 2026, which ended March 31, even as package revenue increased 4.5% year over year. Yet losing $2 billion is an improvement over the same quarter last year, when it lost $3.3 billion.
It is nonetheless clear that the USPS cannot meet congressionally mandated price and service requirements and break even.
“The Postal Service remains in a serious financial crisis,” said Postmaster General David Steiner at the May 8, 2026, USPS Board of Governors meeting. “The status quo is not sustainable, and it would be irresponsible to pretend otherwise.”
Structural Tension
The Postal Reorganization Act of 1970 created the modern USPS, which began operations on July 1, 1971.
The reset followed a nationwide postal strike and years of financial strain that prompted President Nixon to declare a national state of emergency.
In response, Congress transformed the old Post Office Department into a self-financing organization expected to operate more like a business while still providing universal service.
That structure created a tension that remains today.
The Postal Service must deliver to more than 170 million U.S. addresses six days a week, including many rural and unprofitable routes. Unlike UPS, FedEx, or Amazon Prime, the USPS cannot easily abandon expensive delivery points or significantly reduce service obligations.
“Congress foresaw that the cost of universal service would likely be too much for the Postal Service to cover on its own. That is why they authorized a public service reimbursement to partially offset the costs related to our costly mandates,” said Steiner.
First-Class Mail
For decades, however, the system worked because First-Class Mail generated enormous volume and strong margins. Bills, bank statements, business correspondence, and personal letters flowed steadily through the network.
At its peak in 2001, the USPS handled roughly 104 billion items of First-Class Mail for 209 million U.S. adults, an average of 500 each.
By 2024, first-class volume had fallen to 44.3 billion pieces while the U.S. adult population grew to roughly 260 million, reducing per-adult density to roughly 170.
Yet the Postal Service’s overhead did not shrink proportionally. In fact, “delivery points have increased by tens of millions, mail volumes have decreased by over 50 percent,” since the 1970s, Steiner said.
| Fiscal Year | First-Class Mail Revenue ($ Billions) |
First-Class Mail Volume (Billions) |
Shipping & Packages Revenue ($ Billions) | Shipping & Packages Volume (Billions) |
|---|---|---|---|---|
| 2015 | $28.2 | 62.4 | $14.9 | 4.5 |
| 2016 | $27.3 | 60.9 | $17.3 | 5.1 |
| 2017 | $25.6 | 58.7 | $19.5 | 5.7 |
| 2018 | $25 | 56.7 | $21.5 | 6.2 |
| 2019 | $24.4 | 54.9 | $22.8 | 6.2 |
| 2020 | $23.8 | 52.6 | $28.5 | 7.3 |
| 2021 | $23.3 | 50.7 | $32 | 7.6 |
| 2022 | $24 | 48.9 | $31.3 | 7.2 |
| 2023 | $24.6 | 46 | $31.6 | 7.1 |
| 2024 | $25.4 | 44.3 | $32.3 | 7.3 |
| 2025 | $25.8 | 42 | $32.6 | 6.8 |
Ecommerce Growth
Ecommerce helped stabilize USPS amid the decline of traditional mail.
As Amazon, Walmart, and an army of ecommerce businesses expanded, packages increasingly filled USPS trucks, processing centers, and delivery routes. Lightweight residential shipments became especially important to those sellers because USPS already maintained nationwide last-mile infrastructure.
This was especially true during the pandemic when ecommerce became normalized for many American shoppers, fueling growth for nearly all carriers.
In fiscal 2021, for example, 41.6% of the USPS’s total revenue came from “Shipping and Packages,” compared to 30.2% from First-Class Mail. Six years earlier, in fiscal 2015, the share of revenue was 21.6% for parcels and 40.9% for First-Class Mail.
Thus the Postal Service has gradually evolved into something closer to a parcel and logistics business. It is an “economic platform” at the center of U.S. commerce, according to Steiner, who emphasized the agency’s modernization efforts at the 2026 National Postal Forum on May 5.
Yet problems persist.
| Fiscal Year | First-Class Mail % of Revenue |
Shipping & Packages % of Revenue |
|---|---|---|
| 2015 | 40.90% | 21.60% |
| 2016 | 38.20% | 24.20% |
| 2017 | 36.80% | 28.00% |
| 2018 | 35.40% | 30.50% |
| 2019 | 34.30% | 32.10% |
| 2020 | 32.60% | 39.00% |
| 2021 | 30.20% | 41.60% |
| 2022 | 30.60% | 39.90% |
| 2023 | 31.50% | 40.40% |
| 2024 | 31.90% | 40.60% |
| 2025 | 32.00% | 40.50% |
USPS Next Steps
In the March 31 quarter, while the USPS’s package revenue increased 4.5% year over year, volume declined 1.4%.
The combination of higher revenue from fewer packages may reflect a mature, slower-growth delivery market wherein prices and operational efficiency drive profit rather than quantity.
In that environment, the USPS faces significant competitive pressure from partnerships and direct carriers, including Amazon, UPS, FedEx, and numerous gig-based delivery networks.
Price, delivery speed, reliability, and universal six-day-a-week coverage all contribute to the core tension.
Steiner argues that the USPS cannot solve its financial problems solely through cost reductions. Instead, he said Congress must grant the USPS more operational flexibility or subsidize universal delivery.
The first option could include closing unprofitable post offices and aggressively raising prices, which Steiner addressed.
The second would treat universal mail service as a public obligation worthy of federal funding.
