In brief: In the wake of Postmaster General Louis DeJoy asking the Board of Governors of the United States Postal Service to begin a search for his successor, there are conflicting reports about the future control of the agency. Political campaign mail helped the U.S. Postal Service reduce its losses in its fiscal first quarter ended Dec. 31, but the agency’s long-term financial health remains uncertain. Price increases on certain paper products started going into effect this month. The logistics market appears to be stabilizing, with a few caveats.
As you may be aware, an executive order was issued on Feb. 1, 2025, that imposed a 10% tariff on Chinese imports and a 25% tariff on materials provided by Canada and Mexico, effective Feb. 4. Although the U.S. government delayed the implementation of at least some of these tariffs on Feb. 3 (a 30-day freeze on tariffs against Canada and Mexico), we have begun planning on how to address these additional costs. In addition, the U.S. government has been threatening additional potential tariffs on other countries.
Built on our roots as a printer, mail industry partner and logistics leader, Quad is a marketing experience (MX) company focused on delivering streamlined solutions at scale to our clients. As the largest USPS customer, we are uniquely positioned to provide clients with best practices and insights on the latest postal, paper and logistics topics. If you have any questions or concerns during these challenging times for our industry, contact your Quad representative. We’ll tap our in-house experts to investigate and get you the answers you need.
Postal
There are conflicting reports about the future control of the United States Postal Service. The Washington Post reported on Feb. 20 that President Trump was considering an executive order to dissolve the Board of Governors of the USPS and take control of the agency. The Wall Street Journal added that a White House official denied such an order was in the works.
The news came in the wake of Postmaster General Louis DeJoy announcing that he plans to step down. In a Feb. 17 letter, he asked the Board of Governors to begin a search for his successor.
Quad is closely monitoring these developments. Stay tuned.
The USPS posted net income of $144 million in the fiscal first quarter of FY2025 (Oct. 1, 2024-Dec. 31, 2024). That compares to a net loss of $2.1 billion in the same period last year.
While the USPS credited a substantial part of the improved results to “the success of strategic initiatives under the ‘Delivering for America’ (DFA) plan,” industry observers pointed to the revenue boost provided by political mail during the fall election season. In addition, the first quarter is typically the agency’s strongest period thanks to holiday mail.
USPS first-quarter revenue jumped $885 million to $22.5 billion, 4% higher than the same period last year.
FY2025 Q1 saw volume declines across several mail classes and products, while revenue increased for all thanks to higher rates:
The net income number excluded the non-cash workers’ compensation (NCWC) adjustment. Including that, the USPS posted a net loss of $482 million for the 2025 quarter compared to a loss of $903 million the year before. For more details, read the USPS Q1 earnings announcement here.
Postal Regulatory Commission strongly criticizes USPS network reconfiguration plans
The Postal Regulatory Commission (PRC) is advising the USPS to rethink its plans to reconfigure its delivery network, a key part of the agency’s Delivering for America plan.
In a news release announcing its advisory opinion (which is more than 300 pages long), the PRC acknowledged that change is essential to ensure the USPS’s future viability, but it charged that the agency “is irreversibly changing its network without laying a foundation for success.” Specifically, the commission said that its in-depth analysis of the proposed changes raised serious questions:
While the USPS maintains that mail service standards won’t suffer as a result of the changes, the PRC pointed out that there have been declines in performance in Atlanta and Richmond, Va., where the network has already been reconfigured. The agency’s Office of Inspector General has also raised this concern, as Supply Chain Dive reports.
Postmaster General Louis DeJoy criticized the PRC’s criticism during the USPS Board of Governors’ meeting Feb. 6, saying that the Board of Governors could not “allow paralysis by analysis, or to continue to fiddle while Rome burns.” He maintained the reconfiguration will yield “net positive results for mailers.”
The PRC’s opinion is advisory only.
USPS union rejects new contract
The National Association of Letter Carriers (NALC) in late January rejected the tentative 2023-2026 bargaining agreement with the USPS by a wide margin. More than two-thirds of active members voted against ratification. On Feb. 19, the NALC Executive Council announced it had voted unanimously not to agree to terms with USPS that would have resulted in a second ratification vote. The USPS and the union will now go to binding arbitration over the terms of a new agreement.
Arbitration could lead to the USPS paying more to letter carriers because the arbitrator does not have to factor in the agency’s financial condition when making his or her decision. It appears the American Postal Workers Union (APWU) is also on track to binding arbitration as negotiation deadlines for them have also passed.
Miscellaneous
USPS delivery performance
USPS performance in early January was a bit delayed, which is not unusual coming off the holiday season. The volume of catalog mail was still high after
the peak parcel season, and it often takes the USPS several weeks to recover from peak.
The Los Angeles fires affected mail delivery to the specific Zip Codes where the fires occurred, but did not cause a measurable impact to overall in-home curves.
Winter storms caused some delays in facilities in Louisiana, Arkansas, Kentucky, Tennessee and parts of Florida.
| Week of 1/6 |
Week of 1/13 |
Week of 1/20 |
Week of 1/27 |
Week of 2/3 |
|
|---|---|---|---|---|---|
| Early | 14% | 15% | 16% | 21% | 28% |
| Day 1 | 39% | 40% | 41% | 45% | 58% |
| Day 2 | 52% | 58% | 58% | 67% | 77% |
| Day 3 | 72% | 78% | 73% | 85% | 90% |
| Day 4 | 78% | 90% | 85% | 93% | 96% |
| 1 Day Late | 88% | 92% | 85% | 96% | 97% |
The greatest delays in mail processing over the last few weeks were in Indianapolis. The USPS moved processing of mail from an Annex facility to
the RPDC earlier than the Feb. 1 implementation date. This caused confusion with trucks going into the city and delays in processing that continue through this writing.
Additional postal facilities that experienced delays in processing mail in January: St. Louis, National Distribution Center (NDC) Chicago and Wichita, Kansas.
USPS volume
| Mail volume for the week ended February 15, compared to last year |
||
|---|---|---|
| Total Mail Volume | Down 6.9% |
▼ |
| Packages | Down 6.0% |
▼ |
| Single Piece | Down 3.6% |
▼ |
| Presort First Class | Down 4.1% |
▼ |
| Marketing Mail | Down 9.9% |
▼ |
| Periodicals | Down 8.1% |
▼ |
| Mail volume for the week ended February 8 | ||
|---|---|---|
| Total Mail Volume | Down 20.4% |
▼ |
| Packages | Down 4.3% |
▼ |
| Single Piece | Down 5.3% |
▼ |
| Presort First Class | Down 10.2% |
▼ |
| Marketing Mail | Up 1.2% |
▲ |
| Periodicals | Up 9.7% |
▲ |
| Mail volume for the week ended February 1 |
||
|---|---|---|
| Total Mail Volume | Down 12.6% |
▼ |
| Packages | Up 0.2% |
▲ |
| Single Piece | Down 7.9% |
▼ |
| Presort First Class | Down 17.0% |
▼ |
| Marketing Mail | Down 19.4% |
▼ |
| Periodicals | Down 28.7% |
▼ |
| Mail volume for the week ended January 25 | ||
|---|---|---|
| Total Mail Volume | Down 15.6% |
▼ |
| Packages | Down 13.3% |
▼ |
| Single Piece | Down 21.9% |
▼ |
| Presort First Class | Down 6.4% |
▼ |
| Marketing Mail | Up 7.9% |
▲ |
| Periodicals | Down 29.2% |
▼ |
| Mail volume for the week ended January 18 | ||
|---|---|---|
| Total Mail Volume | Up 45.0% |
▲ |
| Packages | Up 14.7% |
▲ |
| Single Piece | Up 11.0% |
▲ |
| Presort First Class | Down 0.9% |
▲ |
| Marketing Mail | Down 16.3% |
▼ |
| Periodicals | Up 12.1% |
▲ |
| Mail volume for the week ended January 11 | ||
|---|---|---|
| Total Mail Volume | Down 12.1% |
▼ |
| Packages | Down 15.2% |
▼ |
| Single Piece | Down 15.5% |
▼ |
| Presort First Class | Up 0.01% |
▲ |
| Marketing Mail | Down 5.8% |
▼ |
| Periodicals | Down 11.3% |
▼ |
Paper market
In all cases, Quad is actively negotiating with the mills to determine the exact amount and timing of the increases.
Logistics
Overall, February has been a fairly favorable environment for shippers, though logistics markets continue to react to changing weather around the country and to both potential and actual tariffs. We anticipate the market will continue to stabilize as long as the weather cooperates, and pending continued changes to the tariff environment. Additional considerations:
As always, your Quad representative will work diligently to find you the lowest rates with the most efficient transportation available.