USPS Loses $6.5 Billion In 2026 As Shipping Revenue Climbs On Fewer Packages
The US Postal Service ended fiscal year 2026 with a $6.5 billion loss despite generating $1.7 billion more in shipping revenue while handling 359 million fewer packages, as the agency continues raising shipping prices and deferring pension payments to manage its ongoing financial crisis.
USPS reported $82.9 billion in operating revenue for the year ending September 30, up 3% from fiscal 2025, while its net loss improved from $9 billion to $6.5 billion. Shipping and Packages revenue increased 5.1% despite a 5.3% decline in volume, continuing a trend reported in its third-quarter results as the agency relied on Ground Advantage growth and higher postage prices, including the temporary 8% transportation-related increase implemented in April.
Liz Morton
The FY2026 Form 10-K shows Ground Advantage revenue increased 20.7% as package volume grew 11.7%, making it the agency's largest shipping category and accounting for more than half of shipping revenue. But Parcel Services, which includes Parcel Select and other bulk commercial shipping products, lost 534 million packages, an 18% decline, while Priority Mail and Priority Mail Express volume fell nearly 24%.
USPS says Parcel Services is its lowest-priced shipping category and generates less contribution per package toward covering institutional costs than many of its other offerings, while Priority Mail continues facing pressure from customers choosing less expensive delivery options.
The Postal Service also acknowledges growing competition from major commercial customers and ecommerce retailers expanding their own delivery capabilities:
Certain of our major customers continue to increase their delivery densities across a greater geography. Additionally, in-sourcing from our major customers, major e-commerce retailers, and other competitors continues to grow.
USPS does not identify those customers or quantify how much of the volume decline resulted from business moving to competing delivery networks, changes in commercial shipping arrangements or customers shifting between its own services.
Across the entire Shipping and Packages category, USPS generated an average of approximately $5.28 in revenue per package during FY2026 compared to $4.76 last year, an increase of roughly 11% as USPS raised shipping prices and Ground Advantage became a larger share of its package business.
Published Ground Advantage rates increased an average of 7.8% in January, while Priority Mail rose 6.6% and Parcel Select increased 6%. USPS followed with the additional temporary 8% transportation-related increase in April, then made further Competitive pricing adjustments in July, including changes to dimensional weight calculations that increased costs for some bulky, lightweight shipments.
Those published increases are separate from the negotiated rates offered through marketplaces and third-party shipping platforms, which have also been changing with increasing frequency throughout the year.
Pirate Ship announced in October that it would stop notifying customers about routine shipping rate changes because carriers were adjusting prices multiple times per week, making it impractical to continue sending alerts for every adjustment. Meanwhile, eBay has implemented multiple rounds of changes to discounted USPS rates, sometimes giving sellers less than three days' notice without providing updated rate charts showing how much individual shipments would cost.
Liz Morton
An October 18 Ground Advantage geographic pricing overhaul added 7,625 previously standard ZIP codes to new geographic rate groups, followed by additional negotiated-rate changes on October 25, October 30 and November 8.
USPS implemented additional temporary holiday shipping increases in October that will remain in effect through January 17, 2027, overlapping with the existing 8% transportation-related increase. And the agency may be preparing to introduce even more frequent price adjustments next year.
Also in October, USPS published guidance describing plans for a weekly variable fuel surcharge on domestic packages beginning January 2027, with rates tied to diesel and jet fuel prices and changes potentially announced just three to five days before taking effect. The Postal Service removed the guidance from its PostalPro website two days later without explanation and has not responded to repeated requests for comment about the status of the proposed surcharge.
Liz Morton
Postmaster General David Steiner has made clear that raising prices will remain a central part of the Postal Service's financial strategy. During the August Board of Governors meeting, Steiner said USPS had "more price to take in the marketplace" and argued that pulling back from price increases would be financially irresponsible given the agency's continuing losses and cash constraints.
The latest financial results announcement confirms that approach, saying:
Price increases have been and will continue to be part of the Postal Service’s strategy in achieving long-term financial sustainability. These changes also provide better alignment between the Postal Service and its competitors within the shipping industry.
But higher revenue has not been enough to cover the agency's expenses, despite continued efforts to reduce work hours and streamline its transportation and processing network.
USPS reported $89.4 billion in operating expenses for FY2026, down just $404 million or 0.4% despite reducing approximately 19 million work hours during the year. Much of the improvement in its reported net loss came from a $2.4 billion reduction in workers' compensation expenses driven largely by actuarial adjustments and discount rate changes, while other operating costs continued rising. The agency's non-GAAP controllable loss, which excludes certain retirement-related expenses and noncash workers' compensation adjustments that USPS says are largely outside management's control, improved by just $344 million to $2.4 billion, compared to the $2.5 billion reduction in its headline net loss.
The Postal Service also reported $9.3 billion in unrestricted cash at year-end, up from $8.2 billion, with operating cash flow improving by $4.5 billion to a positive $2.6 billion. However, the 10-K attributes most of that improvement to deferred pension payments rather than stronger underlying operating performance.
USPS suspended regular Federal Employees Retirement System (FERS) contributions in April, deferring approximately $2.6 billion through September, and did not make a $1.5 billion partial annual payment comparable to one made in FY2025. Together, those changes accounted for approximately $4.1 billion of the cash-flow improvement, with the unpaid obligations continuing to accrue as USPS uses the temporary deferrals to preserve liquidity.
With USPS already at its $15 billion statutory borrowing limit, Steiner is urging Congress to expand borrowing authority and make broader changes to pension funding rules, retirement investment restrictions and workers' compensation administration, arguing that the agency cannot achieve financial sustainability through management actions alone.
Because of our ongoing financial crisis, we are continuing to balance the needs of our daily business operations with our need to conserve cash. We are also seeking legislative actions to establish a better and more durable business model for the Postal Service and for the benefit of the American public we serve.
USPS is also seeking additional regulatory pricing flexibility, including changes to the current price cap system for Market Dominant products such as First-Class Mail, Marketing Mail and Periodicals. The agency argues that existing restrictions prevent it from generating sufficient revenue to cover growing costs, even with the additional pricing authority granted in recent years.
But postal advocacy group Keep US Posted, which represents consumers, nonprofits, publishers and small businesses, is urging Congress to tie any financial relief to stronger cost controls, productivity improvements, affordable pricing and regulatory oversight.
The group is calling for a return to Consumer Price Index-based caps on Market Dominant postage increases, limiting rate hikes to once annually and giving the Postal Regulatory Commission more authority over service changes. Those proposed caps would not directly restrict Competitive package services like Ground Advantage and Priority Mail, which have greater pricing flexibility and account for much of the shipping activity used by ecommerce sellers.
Responding to the annual results, executive director and former Congressman Kevin Yoder warned that repeated rate increases and reduced service are driving customers away from the Postal Service, arguing that higher prices and additional borrowing will not restore financial stability without greater accountability.
The answer should not be another blank check without actionable reforms. Otherwise, USPS could soon be headed for a massive taxpayer bailout.
The latest filing says the pension payment suspensions have provided sufficient liquidity to continue operations through at least November 2027, extending the runway from its previous warning of a potential cash crisis by August 2027. However, USPS cautions that it still lacks sufficient liquidity to meet all its financial obligations and capital investment requirements over the longer term.
