i

Financial Analysis of

United States Postal Service

Financial Results and 10-K Statement

Fiscal Year 2021

May 18, 2022

Postal Regulatory Commission

Submitted 5/18/2022 11:33:37 AM

Filing ID: 121778

Accepted 5/18/2022
FY 2021 Financial Analysis Report

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Table of Contents

Chapter I. Overview.............................................................................................................................. 1

Purpose of This Report ..................................................................................................................................1

The Covid-19 Pandemic Continues to Impact Postal Service Finances—Key Findings .......2

Chapter II. Postal Service Financial Status................................................................................... 6

Introduction .......................................................................................................................................................6

Analysis of Income Statements ...................................................................................................................7

Market Dominant Revenue Compared to Prior Year.................................................................. 10

Competitive Product Revenue Compared to Prior Year............................................................ 13

Expense Analysis as Compared to Prior Year................................................................................ 14

PERSONNEL EXPENSES.................................................................................................................... 15

NON-PERSONNEL EXPENSES......................................................................................................... 22

Comparison of Postal Service Actual Results to Operating Plan............................................ 23

Financial Ratio Analysis......................................................................................................................... 26

OPERATING RATIO............................................................................................................................. 27

RETURN ON ASSETS........................................................................................................................... 28

Analysis of Balance Sheets......................................................................................................................... 30

Assets ............................................................................................................................................................ 34

LIABILITIES............................................................................................................................................ 35

Balance Sheet Trend Analysis.............................................................................................................. 36

DEBT RATIO........................................................................................................................................... 37

CURRENT RATIO.................................................................................................................................. 38

CASH RATIO........................................................................................................................................... 39

Analysis of Statements of Cash Flows ................................................................................................... 40

Cash Flow Ratio Analysis....................................................................................................................... 42

Chapter III. Volume, Revenue, and Cost Trends .......................................................................45

Overview........................................................................................................................................................... 45

Overall Volume, Revenue, and Cost Trends ........................................................................................ 45

Attributable and Institutional Cost Calculation............................................................................ 45

Methodological Changes ........................................................................................................................ 46

Market Dominant Products and Services........................................................................................ 46

Market Dominant Volume Trends ..................................................................................................... 48

Market Dominant Revenue and Cost Trends................................................................................. 49
FY 2021 Financial Analysis Report

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Competitive Products and Services................................................................................................... 50

Market Dominant Volume, Revenue, and Cost Trends by Class ................................................. 54

First-Class Mail.......................................................................................................................................... 54

FIRST-CLASS MAIL LETTERS COMPARED WITH FY 2020.................................................. 54

TRENDS IN FIRST-CLASS MAIL LETTERS.................................................................................. 56

FIRST-CLASS MAIL FLATS COMPARED WITH FY 2020 ....................................................... 59

TRENDS IN FIRST-CLASS MAIL FLATS ....................................................................................... 60

OTHER FIRST-CLASS MAIL COMPARED WITH FY 2020...................................................... 63

USPS Marketing Mail............................................................................................................................... 64

USPS MARKETING MAIL LETTERS COMPARED WITH FY 2020....................................... 64

TRENDS IN USPS MARKETING MAIL LETTERS....................................................................... 65

USPS MARKETING MAIL FLATS COMPARED WITH FY 2020............................................. 67

TRENDS IN USPS MARKETING MAIL FLATS............................................................................. 68

Periodicals................................................................................................................................................... 71

PERIODICALS COMPARED WITH FY 2020 ................................................................................ 71

TRENDS IN PERIODICALS................................................................................................................ 72

Package Services....................................................................................................................................... 75

Market Dominant Special Services .................................................................................................... 77

Competitive Volume, Revenue, and Cost by Product ...................................................................... 79

Trends in Competitive Products......................................................................................................... 80

Chapter IV. Cost and Profit Analysis .............................................................................................84

Introduction .................................................................................................................................................... 84

Contribution Margin Income Statement .............................................................................................. 84

Analysis of Cost Segments..................................................................................................................... 93

Analysis of Employee Labor Cost............................................................................................................ 95

COVID-19 Pandemic Impact on Postal Finances ........................................................................100

Appendices ......................................................................................................................................... 107

Appendix A: Fiscal Year 2021 Volume, Revenue, Incremental Cost, and Cost Coverage by 

Class Current Classification (Products)..............................................................................................107

Appendix B: Total Factor Productivity ...............................................................................................109
Financial Analysis Report 2021

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Chapter I. Overview

Purpose of This Report

This report provides an in-depth analysis of the Postal Service’s financial performance 

primarily using information reported in its FY 2021 Form 10-K measured against FY 2020

and its FY 2021 Integrated Financial Plan (Financial Plan).1 Additionally, data filed with the 

FY 2021 Annual Compliance Report (ACR), 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 2020 and FY 2021, 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. The 

Commission also presents an analysis of the impact of the COVID-19 pandemic on the 

revenue and compensation costs of the Postal Service in FY 2021.

1 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 2021, November 24, 2021. 
Financial Analysis Report 2021

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The Covid-19 Pandemic Continues to Impact Postal 

Service Finances—Key Findings

During Fiscal Year (FY) 2021, the COVID-19 pandemic continued to have a significant 

impact on Postal Service volume, revenue, and expenses. The COVID-19 pandemic 

exacerbated market dominant volume declines as activity in many sectors of the economy 

remained below pre-pandemic levels, although package volumes increased due to 

continued growth in e-commerce. The volume changes impacted overall revenues and 

costs, while changes in workforce mix and hours in response to the pandemic impacted 

labor costs. The impacts of the pandemic on the Postal Service were greater in the first half 

of FY 2021, during which Market Dominant revenue decreased, and Competitive products 

revenue increased compared to the first half of FY 2020. In the second half of FY 2021,

those trends reversed, with Market Dominant revenue increasing and Competitive 

products revenue decreasing compared to the second half of FY 2020.

In FY 2021, the Postal Service recorded a net loss from operations of $2.7 billion,2 a $0.9

billion improvement from the prior year. The decrease in the FY 2021 net operating loss is 

the result of higher revenues which were $3.0 billion higher than in FY 2020.

When Non-operating Expenses (NOEs) are included,3 the net operating loss of $2.7 billion 

becomes a total net loss of $4.9 billion. This is an improvement of $4.2 billion compared to 

FY 2020. Figure I-1 shows net income (loss) and net operating income (loss) results for the 

period FY 2012 – FY 2021.

2 United States Postal Service, 2021 Report on Form 10-K, November 13, 2020 (Postal Service FY 2021 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 by $303 million and negative $151 million for FY 2020 and FY 2021, 

respectively. 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. Postal Service FY 2021 Form 10-K at 22.

3 NOEs include all non-cash workers’ compensation costs, accruals to retirement accounts, and one-time adjustments.
Financial Analysis Report 2021

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Figure I-1

Postal Service’s Financial Condition Has Continued to Decline

Source: United States Postal Service, 2012 Report on Form 10-K, November 15, 2012; United States Postal Service, 2013 Report on Form 10-

K, January 31, 2014; United States Postal Service, 2014 Report on Form 10-K, December 5, 2014; United States Postal Service, 2015 Report 

on Form 10-K, November 13, 2015; United States Postal Service, 2016 Report on Form 10-K, November 15, 2016; United States Postal 

Service, 2017 Report on Form 10-K, November 14, 2017; United States Postal Service, 2018 Report on Form 10-K, November 14, 2018 (Postal 

Service FY 2018 Form 10-K); United States Postal Service, 2019 Report on Form 10-K, November 14, 2019 (Postal Service FY 2019 Form 10-K); 

Postal Service FY 2020 Form 10-K; Postal Service FY 2021 Form 10-K (collectively, Postal Service Form 10-K, FY 2012–FY 2021). 

As seen in Figure I-1, the Postal Service has not had a profitable year in the last decade. 

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 2021, the Postal Service recorded total assets of $46.4 billion and total liabilities of 

$122.1 billion. In FY 2021, the Postal Service continued to accrue unpaid retiree expenses, 

which, at the end of FY 2021, totaled $57.0 billion. On April 6, 2022, President Biden signed 

the Postal Service Reform Act (PSRA), which removes the $57 billion liability for past due 

Retiree Health Benefits (RHB) obligations and eliminates the annual payments for the RHB 

normal costs and the Retiree Health Benefits Fund (RHBF) amortization. This will have 

significant effects on the Postal Service’s financial position in FY 2022.

4 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 2021

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Financial sustainability of the Postal Service is adversely impacted by insufficient current 

assets to cover current liabilities.

At the end of FY 2021:

• The Postal Service’s total net loss was $4.9 billion.

o The net deficit was $75.7 billion, consisting of an accumulated deficit of $88.8 

billion offset by capital contributions of $13.1 billion. The net deficiency is $5 

billion less than in FY 2020, primarily as the result of the $10 billion capital 

contribution in the Coronavirus Aid, Relief, and Economic Security (CARES)

Act.

• The Postal Service’s cash and cash equivalents total, excluding restricted cash, was 

$23.9 billion, an increase of $9.6 billion. 

o Remaining available borrowing authority from the PAEA-mandated debt 

ceiling of $15 billion was $4 billion, an increase of $3 billion.

o The cash ratio, which measures the amount of cash, cash equivalents, or 

short-term investments available to cover current liabilities, was 0.28, an 

increase of 0.09 compared to the prior year. The FY 2021 cash ratio was also 

higher than the 10-year average of 0.15.

• The Postal Service’s operating revenue was $77 billion, which was $3.9 billion 

higher than the previous year.

o Pandemic-induced e-commerce led to $3.6 billion or 11.8 percent more 

Competitive product revenue, but the growth slowed during the second half 

of the year.

o In FY 2021, revenue from Competitive products exceeded First-Class Mail 

revenue.

o Market Dominant revenue decreased by $97 million in FY 2021, a 

substantially smaller decrease than FY 2020, as the economy recovered and 

USPS Marketing Mail volume increased during the second half of the year. 

• Net operating expenses stood at $79.6 billion, which were $3 billion greater in FY 

2021 than the prior year, and $3.2 billion more than the Integrated Financial Plan.
Financial Analysis Report 2021

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o Increased expenses for compensation (3.6%) and transportation (9.5%) 

were driven by pandemic-related increases in more labor-intensive package 

shipping, disruptions in air and highway transportation, and enhanced safety 

measures.

• Personnel-related expenses made up 75.7 percent of total expenses. 

o Overtime hours increased by 23 million compared to FY 2020, and total 

workhours increased by 1.4 percent, the highest rate in the past five years.

o Total postal employees increased by a net of 9,000. Over the past decade (FY 

2012–FY 2021), the Postal Service has reduced its full-time and part-time 

workforce by approximately 12,000 employees and added approximately 

36,000 non-career employees.
Financial Analysis Report 2021

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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 2020 and FY 2021. 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 longterm stability of the Postal Service.
Financial Analysis Report 2021

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Analysis of Statements of Cash Flows. This section analyzes the Postal Service’s inflows and 

outflows of cash and debt during the year.

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.5 Net operating expense is calculated as

the total expenses minus accruals for certain unfunded retirement liabilities and the noncash adjustments to the workers’ compensation liability.6 The unfunded retirement 

liabilities consist of three components: (1) amortization of unfunded liabilities for retiree 

health benefits in the RHBF, (2) pensions in the Civil Service Retirement System (CSRS), 

and (3) the Federal Employees Retirement System (FERS) in the Civil Service Retirement 

and Disability Fund (CSRDF).

7

The Postal Accountability Enhancement Act (PAEA)8 established the RHBF to fund the longterm 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 years 

FY 2012 through FY 2017, leaving a $33.9 billion unfunded balance in the RHBF. Beginning 

in FY 2017, these annual installment payments were replaced with annual amortization 

payments calculated by the Office of Personnel Management (OPM) for any remaining

unfunded balance to liquidate the fund and ensure that retiree health benefits liabilities are 

fully funded by 2056. In addition, beginning in FY 2017, the Postal Service’s share of 

healthcare premiums for retired employees has been paid from the RHBF. The Postal 

Service is also required to make annual contributions to the RHBF for the normal costs9 of 

retiree health benefits. In FY 2021, the Postal Service did not make the normal cost or the 

5

In FY 2021, $75.8 billion (98.4 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.

6 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 2021. The Postal Service considers these expenses noncontrollable. 

7 Career Postal Service employees participate in one of two federal pension programs; CSRS is a traditional defined-benefit program that is now 

closed to new entrants. The newer FERS generally covers employees hired since 1984. FERS has a smaller annuity than CSRS and is designed to 

work with Social Security and the Thrift Savings Plan (TSP), a 401(k) style program.

8 Postal Accountability and Enhancement Act, Pub. L. 109-435, 120 Stat. 3198 (2006).

9 Normal costs represent the present value of the estimated retiree health benefits attributable to active employees’ current year of service. 

United States Postal Service, 2021 Report on Form 10-K, November 10, 2021, at 39 (Postal Service FY 2021 Form 10-K).
Financial Analysis Report 2021

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unfunded amortization payments, totaling $5.1 billion.10 At the end of FY 2021, the Postal 

Service had a total unpaid balance of $57 billion in retiree health benefit liabilities. Id. at 15.

The $57 billion includes the defaulted prefunding RHBF payments of $33.9 billion from FY 

2012 through FY 2017, the defaulted RHBF amortization payments totaling $4.3 billion for 

years FY 2017 through FY 2021 and defaulted payments for retiree health benefits normal 

costs totaling $18.8 billion for years FY 2017 through FY 2021.

The enactment of the Postal Service Reform Act (PSRA) in April 2022 resulted in significant 

changes to the Postal Service’s retirement obligations. The PSRA removes the $57 billion 

liability for past due retiree health benefits obligations and eliminates the annual payments 

for the retiree health benefits normal costs and the RHBF amortization. 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.11 These changes will affect

both the Postal Service’s operating results and balance sheet beginning in FY 2022. 

The Postal Service is also required to make annual amortization payments for unfunded 

FERS and CSRS liabilities. The PAEA suspended the Postal Service’s contributions for CSRS 

until after FY 2016. In June 2017, OPM revalued the CSRS liability at $26.9 billion and 

assessed annual installment payments in order to liquidate the unfunded liability by FY 

2043. In FY 2021, the Postal Service did not pay its annual installment of $1.9 billion. Postal 

Service FY 2021 Form 10-K at 67. As of September 30, 2021, the Postal Service had a total 

of $8.5 billion in unpaid CSRS liabilities for years FY 2017 through FY 2021. Id. at 15.

FERS is a defined benefit plan that, until FY 2013, had assets that exceeded its liabilities. 

Since FY 2013, liabilities have grown faster than assets, requiring the Postal Service to 

make annual amortization payments. OPM calculates these payments annually to liquidate 

the unfunded liability over a 30-year period on a rolling basis. In FY 2021, the Postal 

Service did not make the FERS amortization payment of $1.4 billion. Since FY 2013, the 

Postal Service has accumulated total unpaid FERS liabilities of $6.2 billion. Id.

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. Table II-1 illustrates the Commission’s 

disaggregated version of the Income Statements.

10 RHB normal costs are $4.2 billion and the amortization of the RHBF unfunded liability is $0.9 billion. See Postal Service FY 2021 Form 10-K at 

80. 

11 Postal Service Reform Act of 2022, April 6, 2022.
Financial Analysis Report 2021

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Table II-1

Analysis of Postal Service Income Statements, FY 2020 and FY 2021 ($ in Millions)

FY 2020 FY 2021 $ Change FY 2021 $ Change 

Plan from Plan

Net Operating Revenue $ 73,133 $ 77,041 $ 3,908 $ 70,858 $ 6,183 

Operating Expense as Reported by the Postal 

Service

82,187 81,844 (343) 80,429 1,415

Less: Amortization of RHB Unfunded Liability (810) (907) (97) (900) (7)

 Amortization of CSRS Unfunded Liability (1,817) (1,858) (41) (1,343) (515)

 Amortization of FERS Unfunded Liability (1,343) (1,401) (58) (1,817) 416 

 Non-Cash Change to Workers' 

Compensation Liability (1,605) 1,925 3,530 0 1,925 

Net Operating Expense $ 76,612 $ 79,603 $ 2,991 $ 76,369 $ 3,234 

Interest Income 92 28 (64) 32 (4)

Interest Expense 214 155 (59) 168 (13)

Net Income (Loss) from Operations $ (3,601) $ (2,689) $ 912 $ (5,647) $ 2,958 

Amortization of RHBF Unfunded Liability 810 907 97 900 7 

Amortization of CSRS Unfunded Liability 1,817 1,858 41 1,343 515 

Amortization of FERS Unfunded Liability 1,343 1,401 58 1,817 (416)

Non-Cash Change to Workers' Compensation 

Liability

1,605 (1,925) (3,530) 0 (1,925)

Net Loss $ (9,176) $ (4,930) $ 4,246 $ (9,707) $ 4,777 

Decrease in revenue and expense is denoted by (). Increase in net loss is denoted by ().

Numbers may not add across due to rounding.

Source: Docket No. ACR2021, Library Reference USPS-FY21-5, December 29, 2021; Docket No. ACR2020, Library Reference USPS-FY20-5, 

December 29, 2020; FY 2021 Plan data from USPS Preliminary Financial Information (unaudited), September 2021, November 10, 2020 

(November 13, 2021, Preliminary Financial Information), PDF file "2021.11.10 September FY2021 Monthly Financial Report to the PRC.pdf."

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 2021 net operating

loss is $0.9 billion less than the FY 2020 net operating 

loss, representing an increase in profitability.12

Operating revenue increased by approximately $3.9

billion compared to FY 2020. The increase in revenue 

was driven by rate and volume increases in 

12 The Commission’s calculation of net operating income (loss) differs from the controllable net income (loss) reported in Postal Service FY 2021

Form 10-K by $303 million and negative $151 million for FY 2020 and FY 2021, respectively. The Postal Service excludes the difference in the 

normal cost of RHBs from its controllable income (loss) because it is the result of actuarial changes. Postal Service FY 2021 Form 10-K at 22.

The Postal Service’s FY 

2021 net operating loss is 

$0.9 billion less than the 

2020 net operating loss, 

representing an increase 

in profitability.
Financial Analysis Report 2021

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Competitive products. Volume growth in USPS Marketing Mail also resulted in significant 

revenue increases. USPS Marketing Mail volume increased as a result of election mail 

associated with the 2020 general election and the continued economic recovery during the 

second half of the year. Id at 21. Competitive products volume increased due to pandemicrelated surges in e-commerce as well as record holiday volume. Id.

Net operating expenseswere approximately $3 billion greater in FY 2021 than the prior 

year, primarily driven by increases in compensation and transportation. The increase was

largely caused by the pandemic-related increases in more labor-intensive package 

shipping, enhanced safety measures, rising fuel costs, and an increase in miles driven 

resulting from transportation disruptions related to air travel restrictions and limited 

commercial flight availability. Id. at 20, 21.

When adding the adjustments back in, the net operating loss of $2.7 billion becomes a total 

net loss of $4.9 billion.13 This total net loss is a $4.2 billion improvement when compared to 

FY 2020. As shown in Table II-1, the slight improvement in the non-operating expenses 

results from a favorable adjustment to the non-cash portion of the workers’ compensation 

expense, more than offsetting a slight increase in retirement expenses.14

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 2021 with FY 2020 and FY 2019 revenue by class.

15

13 For analysis purposes, if the $4.2 billion RHB normal costs is excluded from total operating expenses the result is an operating profit of $1.5 

billion. Furthermore, if the $0.9 billion in RHBF amortization is excluded, total net income increases to $0.2 billion.

14 Workers’ compensation is administered by the U.S. Department of Labor and its calculation reflects the impacts of changes in discount rates 

as well as actuarial revaluation of new cases and revaluation of existing ones. The decrease in the FY 2021 non-cash portion of workers’ 

compensation expense was driven by a significant increase in discount rates in FY 2021 compared to FY 2020. Id. at 42.

15 FY 2019 is included for comparison to pre-pandemic revenue amounts.
Financial Analysis Report 2021

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Table II-2

Revenue by Market Dominant Class,

16 FY 2019, FY 2020, and FY 2021 ($ in Millions)

FY 2020 FY 2021

$ Change % Change

FY 2019

$ Change % Change

FY 2021 

over FY 

2020

FY 2021 

over FY 

2020

FY 2021 

over FY 

2019

FY 2021 

over FY 

2019

First-Class Mail $ 24,203 $ 23,526 $ (677) (2.8%) $ 25,462 $ (1,936) (7.6%)

USPS Marketing 

Mail

13,959 14,645 686 4.9% 16,407 $ (1,762) (10.7%)

Periodicals 1,024 942 (82) (8.0%) 1,194 $ (252) (21.1%)

Package Services 832 835 3 0.3% 821 $ 14 1.7%

Ancillary and 

Special Services

1,713 1,686 (27) (1.6%) 1,810 $ (124) (6.9%)

Subtotal Market 

Dominant Mail 

and Services 

Revenue

$ 41,731 $ 41,634 $ (97) (0.2%) $ 45,694 $ (4,060) (8.9%)

Other 779 1,102 323 41.5% 1,299 (197) (15.2%)

Total Market 

Dominant Mail 

and Services 

Revenue

$ 42,509 $ 42,736 $ 226 0.5% $ 46,993 $ (4,257) (9.1%)

Decrease in revenue is denoted by (). 

Numbers may not add across due to rounding.

Source: Library Reference PRC-LR-ACR2021-1, March 29, 2022; Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1, March 29, 2021; Docket 

No. ACR2019, Library Reference PRC-LR-ACR2019-1, March 25, 2020.

Market Dominant mail and services revenue17 declined by 0.2 percent from the prior year

and 8.9 percent from FY 2019. Revenue declined in all classes of mail with the exception of 

Marketing Mail and Package Services.

Table II-2 compares FY 2021 with the prior year and includes an additional comparison 

with FY 2019, which is the last fiscal year prior to pandemic-related impacts on mail 

volume and revenue. As shown in Table II-2, First-Class Mail revenue declines were offset 

by USPS Marketing Mail revenue increases when compared to FY 2020. When compared to 

FY 2019, the largest contributing factor to the overall decline in Market Dominant revenue 

was revenue loss in First-Class Mail and USPS Marketing Mail. 

16 Other Market Dominant revenue includes appropriations, miscellaneous item revenue, and revenue foregone.

17 This excludes Other Market Dominant mail revenue.
Financial Analysis Report 2021

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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 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, despite having a 

higher impact than in previous years, increases in 

revenue per piece were not enough to offset volume 

decline and mail mix fluctuations. Additional rate 

authority authorized by the Commission under the 

revised system was only in effect for about 1 month 

of FY 2021. The volume impact was particularly dramatic in FY 2020 but stabilized in FY 

2021 as the economy continued to recover, and USPS Marketing Mail volume increased 

during the second half of the year.

The volume impact was 

particularly dramatic in FY 

2020 but stabilized in FY 

2021 as the economy 

continued to recover, and 

USPS Marketing Mail 

volume increased during 

the second half of the year.
Financial Analysis Report 2021

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Figure II-1

Change in Market Dominant Revenue Due to Changes in Mail Volume, Mail Mix, and Average 

Revenue per Piece, FY 2016-FY 2021 ($ in Millions)

Source: PRC derived from Docket No. ACR2016, Library Reference USPS-FY16-42, December 27, 2016; 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-FY20-43, December 29, 2021 (collectively, Postal Service RPW Report, FY 2016–FY 2021).

Competitive Product Revenue Compared to Prior Year

Total revenue from Competitive products increased by $3.6

billion or 11.7percent compared to FY 2020, as the result of

volume increases in all products. When compared to prepandemic FY 2019, Competitive products revenue has 

increased by 41.4 percent. Competitive products volume 

began to increase during the pandemic as online shopping 

increased. That growth slowed during the second half of FY 

2021. Table II-3 compares revenue for Competitive products 

between FY 2021, FY 2020, and FY 2019.

 39,000

 40,000

 41,000

 42,000

 43,000

 44,000

 45,000

 46,000

 47,000

 48,000

 49,000

 50,000

 51,000

 52,000

 53,000

2016 2017 2018 2019 2020 2021

$ Millions

Fiscal Year

Total Revenue

Change in Revenue from Volume

Change in Revenue from Mail Mix

Competitive products 

volume began to increase 

during the pandemic as ecommerce increased. That 

growth slowed during the 

second half of FY 2021.
Financial Analysis Report 2021

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Table II-3

Competitive Product Revenue, FY 2019, FY 2020, and FY 2021 ($ in Millions)

FY 2020 FY 2021

$ Change % Change

FY 2019

$ Change % Change

FY 2021 

over FY 

2020

FY 2021 

over FY 

2020

FY 2021 

over FY 

2019

FY 2021 

over FY 

2019

Priority Mail $ 11,529 $ 13,212 $ 1,683 14.6% $ 9,464 $ 3,748 39.6%

Total Ground 9,195 9,709 513 5.6% 7,271 2,438 33.5%

First-Class 

Package Service

6,228 7,388 1,161 18.6% 4,466 2,922 65.4%

Priority Mail 

Express

697 820 123 17.7% 716 104 14.5%

International 1,959 1,966 7 0.3% 1,380 586 42.4%

Ancillary and 

Special Services

1,004 1,139 135 13.5% 911 228 25.1%

Subtotal 

Competitive 

Products Mail 

and Services 

Revenue

$ 30,611 $ 34,233 $ 3,622 11.8% $ 24,207 $ 10,025 41.4%

Other Revenue 142 129 (13) (8.8%) 142 (13) (9.1%)

Total 

Competitive 

Products Mail 

and Services 

Revenue

$ 30,752 $ 34,362 $ 3,609 11.7% $ 24,349 $ 10,012 41.1%

Decrease in revenue denoted by ().

Numbers may not add across due to rounding.

Source: Library Reference PRC-LR-ACR2021-1; Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Docket No. ACR2019, Library 

Reference PRC-LR-ACR2019-1; Docket No. ACR2019, Library Reference USPS-FY19-42.

Expense Analysis as Compared to Prior Year

As noted earlier, for purposes of understanding the Postal Service’s financial position, the 

Commission differentiates between operating and total expenses. As shown in Table II-4, in 

FY 2021, total expenses decreased by $0.3 billion (0.4 percent), while operating expenses 

increased by approximately $3 billion (3.9 percent). The increase in operating expenses 

was due to increases in personnel ($2.1 billion) and transportation ($0.8 billion) expenses. 

A decline in the non-cash change to workers’ compensation liability ($3.5 billion) more 

than offset increases in retirement amortization expenses ($0.2 billion).
Financial Analysis Report 2021

15

Table II-4

Total Expenses, FY 2020 and FY 2021 ($ in Millions)

% of Total Expenses

FY 2020 FY 2021

$ 

Change

% 

Change

FY 2020 FY 2021

Compensation & Benefits Expenses:

Salaries and Benefits $52,411 $54,039 $ 1,628 3.1% 63.8% 66.0%

Workers' Compensation - Cash Outlays 1,298 1,345 47 3.6% 1.6% 1.6%

Normal Costs of Retiree Health Benefits 3,850 4,203 353 9.2% 4.7% 5.1%

Other Personnel Related 123 163 40 32.5% 0.1% 0.2%

Subtotal Personnel Expenses Excluding 

Systemwide Personnel Expenses

$57,682 $59,750 $ 2,068 3.6% 70.2% 73.0%

Transportation 8,814 9,652 838 9.5% 10.7% 11.8%

Other Expenses 10,116 10,201 85 0.8% 12.3% 12.5%

Total Operating Expenses $76,612 $79,603 $ 2,991 3.9% 93.2% 97.3%

Systemwide Personnel Expenses:

Non-Cash Change to Workers' Compensation 

Liability

1,605 (1,925) (3,530) NMF 2.0% (2.4%)

Amortization of RHB Unfunded Liability 810 907 97 12.0% 1.0% 1.1%

Amortization of FERS Unfunded Liability 1,343 1,401 58 4.3% 1.6% 1.7%

Amortization of CSRS Unfunded Liability 1,817 1,858 41 2.3% 2.2% 2.3%

Total Expenses $82,187 $81,844 $ (343) (0.4%) 100.0% 100.0%

Decrease in expenses is denoted by (). NM denotes not meaningful.

Numbers may not add across due to rounding.

Source: USPS Preliminary Financial Information (unaudited), September 2021, November 10, 2021 (November 10, 2020, Preliminary Financial 

Information), file "2021.11.10 September FY2021 Monthly Financial Report to the PRC.pdf."

PERSONNEL EXPENSES 

The majority of Postal Service expenses are 

personnel-related. In FY 2021, operating personnel 

expenses which exclude the non-cash adjustment to 

workers’ compensation and amortization costs of 

unfunded retirement liabilities, made up 75.1 percent 

of operating expenses;

18 when these expenses are 

included, Postal Service labor costs are 75.7 percent 

of total expenses. 

Table II-5 shows that total operating personnel 

expenses for FY 2021 increased by $2.1 billion from FY 2020, and a majority of that 

18 Operating personnel expenses ($59.8 billion) expressed as a percentage of total operating expenses ($79.6 billion) from Table II-4.

Total operating personnel 

expenses for FY 2021 

increased by $2.1 billion 

from FY 2020, and a 

majority of that increase 

resulted from increases in 

compensation.
Financial Analysis Report 2021

16

increase resulted from increases in compensation.

19 When systemwide personnel expenses

were included, total personnel expenses declined by $1.3 billion. The non-cash net 

decrease in the workers’ compensation liability20 more than offset the increases in nonoperating retirement expenses and operating personnel expenses.

Table II-5

Breakdown of Total Personnel Expenses, FY 2020 and FY 2021 ($ in Millions)

FY 2020 FY 2021 $ Change % Change

Total Compensation $ 39,754 $ 40,837 $ 1,083 2.7%

Retirement 7,254 7,739 485 6.7%

Health Benefits-Current Employees 5,188 5,248 60 1.2%

Workers' Compensation - Cash Outlays 1,298 1,345 47 3.6%

Normal Costs of Retiree Health Benefits 3,850 4,203 353 9.2%

Other Compensation 338 378 40 11.8%

Total Personnel Operating Expenses $ 57,682 $ 59,750 $ 2,068 3.6%

Non-Cash Change to Workers' Compensation Liability 1,605 (1,925) (3,530) NMF

Amortization of RHB Unfunded Liability 810 907 97 12.0%

Amortization of FERS Unfunded Liability 1,343 1,401 58 4.3%

Amortization of CSRS Unfunded Liability 1,817 1,858 41 2.3%

Total Personnel Expenses $ 63,257 $ 61,991 $ (1,266) (2.0%)

Decrease in expenses is denoted by (). NMF denotes not meaningful figures.

Numbers may not add across due to rounding.

Source: PRC derived from Postal Service National Trial Balance September 2021, November 5, 2021; Postal Service National Trial Balance 

September 2020, November 13, 2020.

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 Cost of Living Allowances (COLAs), the number of 

overtime workhours, and the composition of the workforce. The total compensation in FY 

2021 increased by approximately $1.1 billion compared to FY 2020 primarily due to

increased workhours, contractual wage increases, and pandemic-related costs affecting 

personnel such as sanitization, social distancing in Postal facilities, and pandemic-related 

procedure training. These increases were partially offset by reimbursements of pandemicrelated sick leave under the American Rescue Plan Act of 2021, which was not available in 

FY 2020. Postal Service FY 2021 Form 10-K at 30.

19 Beginning in FY 2022, the Postal Service is no longer required to pay the normal costs of retiree health benefits ($4.2 billion in FY 2021). 

20 Workers’ compensation expense consists of cash payments, miscellaneous expenses, and the net increase (decrease) in the workers’ 

compensation liability.
Financial Analysis Report 2021

17

Figure II-2 illustrates the change in overtime workhours by craft. Overtime hours increased 

for all crafts with the exception of headquarters-field, maintenance service, and casual. 

According to the Postal Service, total overtime hours increased by approximately 23 

million hours, offset by a decrease in straight-time hours of 7 million. Id. at 31. Clerks, city 

carriers, and mailhandlers account for approximately 74 percent of the total increase in 

overtime workhours. According to the Postal Service, the increases in overtime workhours 

resulted in part from an increase of 1.8 million delivery points during FY 2021 and 

increases in shipping and packages volume. Id.

Figure II-2

Change in Overtime Workhours, FY 2020 and FY 202121 (in Millions)

Source: PRC derived from National Payroll Hours Summary Report, Pay Period 20, 2021, September 2021, October 1, 2021; National Payroll 

Hours Summary Report, Pay Period 20, 2020, October 7, 2020.

21 “Other” includes Postmasters, Professional and Administrative, Vehicle Operators, and Headquarters.

 (2,000,000)

 -

 2,000,000

 4,000,000

 6,000,000

 8,000,000

 10,000,000

 12,000,000

FY 2020 FY 2021

Change in Overtime Workhours

Employees by Function 

Supervisors/Managers

Clerks

Mailhandlers

City Carriers

Rural Carriers

Maintenance Service

Vehicle Maintenance

Casual

Rural Relief/Leave

Replacement

Other
Financial Analysis Report 2021

18

The Postal Service’s workforce is comprised of career (full-time and part-time) and noncareer 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 2019-FY 2021.

Table II-6

Postal Service Employee Complement, FY 2019–FY 2021

FY 2020 FY 2021

Change FY 

2021 over FY 

2020

FY 2019

Change FY 

2020 over FY 

2019

Career Employees 495,941 516,636 20,695 496,934 (993)

Postal Support Employees 

(PSE)

25,778 31,346 5,568 26,251 (473)

City Carrier Assistants (CCA) 38,079 37,652 (427) 42,121 (4,042)

Mailhandler Assistants (MHA) 12,927 11,064 (1,863) 6,369 6,558

Other Non-Career 71,308 56,469 (14,839) 61,433 9,875

Total On-Roll Employees 644,033 653,167 9,134 633,108 10,925

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 (Postal Service ORPES), PP 20-2021, September 29, 2021; Postal 

Service ORPES, PP 20-2020, October 25, 2020; Postal Service ORPES, PP20-2019, October 25, 2019.

In FY 2021, the Postal Service’s total workforce increased by approximately 9,000

employees as a result of an increase in the career workforce of approximately 20,000

positions and an increase of approximately 5,000 in PSEs, offset by a decrease of over 

17,000 non-career positions. According to the Postal Service, the increase in the career 

workforce reflected the need to address the pandemic-related surge in shipping and 

packages volume and employee conversions from the non-career positions. Postal Service 

FY 2021 Form 10-K at 30. The decline in non-career workforce positions resulted from

normal attrition to align the workforce with declining mail volume. Id.

In January 2022, the Postal Service reached a tentative agreement with the National Rural 

Letter Carriers Association (NRLCA),

22 which covers a 3-year period from May 2021 to May 

2024. The tentative contract covers 132,000 rural letter carriers and includes a 1.3 percent 

general wage increase as well as retroactive COLA’s for July 2021 and January 2022.23

 

22 Id. at 75.

23 NRLCA USPS 2021-2024 Tentative Agreement Highlights, available at https://www.ncrlca.org/wp-content/uploads/NRLCA-USPS-2021-2024-

Tentative-Agreement-Highlights.pdf.
Financial Analysis Report 2021

19

In December 2021, the Postal Service reached a tentative agreement with the American 

Postal Workers Union, AFL-CIO (APWU), which will expire in September 2024. The 

tentative contract covers over 200,000 Postal employees and includes general wage 

increases and a retroactive COLA for November 2021. The tentative contract will also 

convert PSEs to career status depending on the size of their respective post offices.

24

In January 2020, the Postal Service reached an agreement with the National Postal Mail 

Handlers Union, AFL-CIO (NPMHU), on a new 3-year agreement which union membership 

ratified on April 7, 2020. The contract includes modest wage increases, a reduction in 

health insurance premiums, increased flexibility to use mail handler assistants, and the 

elimination of non-career casual employees. The contract will expire on September 20, 

2022. Postal Service FY 2021 Form 10-K at 75.

Total workhours increased by approximately 16.5 million during FY 2021.

25 Figure II-3 

illustrates the change in total workhours since FY 2007.

Figure II-3

Change in Total Workhours, FY 2007–FY 2021

Source: Postal Service Form 10-K, FY 2007–FY 2021.

24 APWU Summary of the 2021-2024 Tentative Collective Bargaining Agreement, December 11, 2021, available at https://apwu.org/tasummary.

25 United States Postal Service, 2020 Report on Form 10-K, November 12, 2020, at 31 (Postal Service FY 2020 Form 10-K).
Financial Analysis Report 2021

20

An analysis of workhours by function shows that in FY 2021, workhours increased in Mail 

Processing (7.7 percent), Rural Delivery (2.6 percent), City Delivery (0.06 percent), Vehicle 

Maintenance (0.8 percent), and Other (0.3 percent) categories.26 Workhours declined in 

Customer Service (1.6 percent) and Plant & Equipment (3.6 percent), as shown in Table II7.

Table II-7

Workhours by Function (Thousands of Workhours), FY 2019–FY 2021

FY 2020 FY 2021

% Change

FY 2019

% Change

FY 2021 over FY 

2020

FY 2020 over FY 2019

Mail Processing 193,286 208,232 7.7% 194,905 (0.8%)

Customer Service 167,676 165,041 (1.6%) 168,992 (0.8%)

Delivery Service:

 City Delivery 425,728 425,962 0.06% 425,894 (0.0%)

 Rural Delivery 217,396 223,040 2.6% 211,505 2.8% 

Maintenance:

Plant & Equipment 61,540 59,310 (3.6%) 62,525 (1.6%)

Vehicle 31,058 31,296 0.8% 30,822 0.8% 

Other 77,642 77,889 0.3% 78,566 (1.2%)

Total Workhours 1,174,326 1,190,769 1.4% 1,173,208 0.1% 

Decrease in amounts is denoted by ().

Numbers may not add across due to rounding.

Source: Library Reference USPS-FY21-7, December 29, 2021; Docket No. ACR2020, Library Reference USPS-FY20-7, December 29, 2020; Docket 

No. ACR2019, Library Reference USPS-FY19-7, December 27, 2019.

The Postal Service defines productive hourly wage rates as the labor costs per work hour 

by cost segment/craft.27 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.28 The productive hourly wage rate for mailhandlers 

decreased 2.3 percent compared to the prior year. The productive hourly wage rate for all 

other categories increased compared to the prior year. 

26 The “Other” category represents Operations Support, Finance, Human Resources, Administration, Training, and Rehabilitation workhours.

27 Library Reference USPS-FY21-17, December 29, 2021, PDF file “USPS-FY21-17.pdf,” at 1.

28 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 2021

21

Table II-8

Productive Hourly Wage Rates ($ per Workhour), FY 2019–FY 2021

FY 2020 FY 2021

% Change

FY 2019

% Change

FY 2021 over

FY 2020

FY 2020 over

FY 2019

Supervisors & Technicians $ 54.17 $ 55.65 2.7% $ 52.78 2.6%

Clerks 42.69 43.13 1.0% 40.61 5.1%

Mailhandlers 41.80 40.84 (2.3%) 41.45 0.8%

City Delivery Carriers 43.17 45.22 4.8% 42.34 1.9%

Vehicle Drivers 47.52 49.08 3.3% 45.41 4.6%

Rural Carriers 38.25 39.01 2.0% 38.17 0.2%

Building Services 45.80 47.58 3.9% 42.96 6.6%

Operating Equipment 58.41 60.00 2.7% 54.36 7.4%

Building Equipment 53.65 55.07 2.6% 55.32 (3.0%)

Motor Vehicle Service 52.78 54.75 3.7% 50.66 4.2%

Headquarters 68.81 79.74 15.9% 71.36 (3.6%)

Decrease in amounts is denoted by ().

Numbers may not add across due to rounding.

Source: Library Reference USPS-FY21-7, December 29, 2021; Docket No. ACR2020, Library Reference USPS-FY20-7; Docket No. ACR2019, Library 

Reference USPS-FY19-7, December 27, 2019.

Workers’ compensation expenses declined by $3.5

billion in FY 2021. 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. 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 2021, the non-cash component of 

long-term workers’ compensation expenses decreased by $3.5 billion compared to the 

prior year. Table II-9 disaggregates components factoring into the workers’ compensation 

expense for the past 2 years.

In FY 2021, the non-cash 

component of long-term 

workers’ compensation 

expenses decreased by $3.5 

billion compared to the 

prior year. 
Financial Analysis Report 2021

22

Table II-9

Components of Workers’ Compensation Expense, FY 2020 and FY 2021 ($ in Millions)

FY 2020 FY 2021 $ Change % Change

Medical and Compensation Claims Payments $ 1,216 $ 1,255 $ 39 3.2%

Administrative Fee 82 90 8 9.8%

Cash Outlays $ 1,298 $ 1,345 $ 47 3.6%

(Decrease) Increase in Long Term Workers' 

Compensation Obligation

1,605 (1,925) (3,530) NMF

Workers' Compensation Expense $ 2,903 $ (580) $ (3,483) NMF

Decrease in expenses is denoted by ().

Numbers may not add across due to rounding.

NMF = Not Meaningful Figure

Source: Postal Service FY 2021 Form 10-K at 42.

NON-PERSONNEL EXPENSES

Transportation is by far the biggest non-personnel Postal Service expense. It accounts for 

10.8 percent of total expenses. Table II-10 shows transportation expenses by category.

Table II-10

Transportation Expenses by Category, FY 2020 and FY 2021 ($ in Millions)

FY 2020 FY 2021 $ Change % Change

Highway Transportation $ 4,753 $ 5,427 $ 674 14.2%

Air Transportation 3,461 3,613 152 4.4%

International Transportation 555 563 8 1.4%

Other Transportation 45 49 4 8.9%

Total Transportation $ 8,814 $ 9,652 $ 838 9.5%

Decrease in expenses is denoted by ().

Numbers may not add across due to rounding.

Source: Postal Service FY 2021 Form 10-K at 43.

Total transportation expenses increased 

by 9.5 percent from FY 2020. Highway 

transportation increased by 14.2 

percent compared to last year, resulting 

from an increase in miles driven as 

travel restrictions limited commercial 

air carrier availability during the first 

half of the year. Id. Air transportation 

expenses increased by 4.4 percent 

compared to last year resulting from the 

Highway transportation increased by 

14.2 percent compared to last year, 

resulting from an increase in miles 

driven as travel restrictions limited 

commercial air carrier availability 

during the first half of the year.
Financial Analysis Report 2021

23

pandemic-related package volume increases, travel restrictions that limited the availability 

of commercial flights, and, during the second half of the year, increases in jet fuel rates. Id.

Table II-11 shows all other non-personnel-related expenses increased by $85 million in FY 

2021. Declines in supplies and services, depreciation, and rural carrier equipment 

maintenance partially offset increases in rent and utilities, vehicle maintenance, delivery 

vehicle fuel, information technology, and other expenses. The $143 million decline in 

supplies and services was largely the result of reduced PPE and other pandemic-related 

costs compared to the prior year, at the height of the pandemic. Postal Service FY 2021 

Form 10-K at 44. Miscellaneous other expenses consist mainly of travel, training, repairs, 

and contingency accounts.

Table II-11

Other Non-Personnel Expenses, FY 2020 and FY 2021 ($ in Millions)

FY 2020 FY 2021 $ Change % Change

Supplies and Services $ 3,088 $ 2,945 $ (143) (4.6%)

Depreciation and Amortization 1,706 1,668 (38) (2.2%)

Rent and Utilities 1,757 1,790 33 1.9%

Vehicle Maintenance Services 618 633 15 2.4%

Delivery Vehicle Fuel 432 526 94 21.8%

Information Technology and Communications 946 987 41 4.3%

Rural Carrier Equipment Maintenance 586 563 (23) (3.9%)

Miscellaneous Other 983 1,089 106 10.8%

Total Other Non-Personnel Expenses $ 10,116 $ 10,201 $ 85 0.8%

Decrease in expenses is denoted by ().

Numbers may not add across due to rounding.

Source: Postal Service FY 2021 Form 10-K at 44.

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 2021 Operating Plan, as 

outlined in its 2021 Integrated Financial Plan (IFP), projected a net loss of $9.7 billion in FY

2021.

29 The actual total net loss of $4.9 billion was $4.8 billion less than the Postal Service 

estimated. Total revenue was $6.2 billion more than planned. Total operating expenses 

were $3.2 billion more than planned with net retirement accruals slightly over budget by 

29 United States Postal Service, Integrated Financial Plan, Fiscal Year 2021, November 24, 2020, at 1 (Postal Service FY 2021 IFP); USPS 

Preliminary Financial Information (unaudited), September 2021, November 10, 2021 (Postal Service September 2021 PFI Report).
Financial Analysis Report 2021

24

$0.1 billion. Table II-12 compares actual FY 2021 results with the estimated results in the 

Operating Plan.

Table II-12

Actual and Operating Plan Income Statements, FY 2021 ($ in Billions)

FY 2021 Actual FY 2021 

Operating Plan

$ Change

Total Revenue $ 77.1 $ 70.9 $ 6.2 

Total Operating Expense 79.8 76.5 3.2

Net Operating Income/(Loss) $ (2.7) $ (5.6) $ 3.0 

Non-Cash Change to Workers' 

Compensation

 (1.9) (1.9)

RHBF Unfunded Liability Amortization 0.9 0.9 0.0

FERS Unfunded Liability Amortization 1.4 1.3 0.1

CSRS Unfunded Liability Amortization 1.9 1.8 0.0

Total Net Income/(Loss) $ (4.9) $ (9.7) $ 4.8 

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 2021 PFI Report, PDF file "2021.11.10 September FY2021 Monthly Financial Report to the PRC.pdf;" Postal 

Service FY 2021 IFP.

As seen in Table II-13, total revenue from Market Dominant mail was $2.9 billion more

than expected, while total revenue from Competitive mail was $3.2 billion greater than 

anticipated. First-Class and Marketing Mail revenues were more than projected, the result 

of higher than anticipated volume as the economy continued to recover.
Financial Analysis Report 2021

25

Table II-13

Actual and Operating Plan Revenue by Categories Shown in IFP,30 FY 2021 ($ in Billions)31

FY 2021 Actual

FY 2021 Operating 

Plan

$ Change

First-Class Mail $ 23.3 $ 22.8 $ 0.5 

Periodicals 0.9 0.9 0.0

USPS Marketing Mail 14.6 12.0 2.6

Other 3.6 3.8 (0.2)

Competitive and Other Parcels 32.4 29.2 3.2

International 2.2 2.2 0.0

Total Mail Revenue $ 77.0 $ 70.9 $ 6.1 

Decrease in revenue is denoted by ().

Numbers may not add across due to rounding.

Source: Postal Service September 2021 PFI Report, PDF file "2021.11.10 September FY2021 Monthly Financial Report to the PRC.pdf;" Postal 

Service FY 2021 IFP.

Total volume was more than expected, primarily due to higher-than-expected volume in 

USPS Marketing Mail and First-Class Mail. Table II-14 compares volumes for FY 2021 with 

the volume projected in the Operating Plan.

Table II-14

Actual and Operating Plan Volume by Categories Shown in IFP,32 FY 2021 (in Billions)

FY 2021 Actual

FY 2021 Operating 

Plan

$ Change

First-Class Mail $ 50.7 $ 49.6 $ 1.1

Periodicals 3.7 3.6 0.1

USPS Marketing Mail 66.2 54.7 11.5

Other 0.8 0.4 0.4

Competitive and Other Parcels 7.0 7.2 (0.2)

International 0.4 0.5 (0.1)

Total Mail Volume $ 128.9 $ 116.0 $ 12.9

Decrease is denoted by (). 

Numbers may not add due to rounding.

Source: Postal Service September 2021 PFI Report at 2; Postal Service FY 2021 IFP at 3

30 The Postal Service FY 2021 IFP isolates volume from International and Parcels from the other categories. See Postal Service FY 2021 IFP at 3.

31 Total mail revenue excludes investment income.

32 The Postal Service FY 2021 IFP isolates revenue and volume from International and Parcels from the other categories. See Postal Service FY 

2021 IFP at 3.
Financial Analysis Report 2021

26

Total expenses were $1.4 billion more than anticipated, the result of higher than expected 

operating expenses. Total operating expenses were $3.2 billion more than expected; 

compensation and benefits ($2.2 billion), transportation ($0.9 billion), and rent and 

utilities ($0.2 billion) were all higher than planned. Supplies and services were $0.1 billion 

less than anticipated. Excluding the non-cash workers’ compensation adjustment,

33 nonoperating expenses were $0.1 billion higher than anticipated resulting from lower rates 

used in OPM’s actuarial calculation for salary and cost of living index estimated increases in 

the unfunded FERS and CSRS annual installment payments. Postal Service FY 2021 Form 

10-K at 36.

Total non-personnel expenses were $1 billion more than projected from the result of

higher than anticipated transportation and other expenses. 

Table II-15

Actual and Operating Plan Expenses, FY 2021 ($ in Billions)

FY 2021 Actual

FY 2021 Operating 

Plan

$ Change

Compensation & Benefits $ 59.8 $ 57.5 $ 2.2

Transportation 9.7 8.7 0.9

Supplies & Services 2.9 3.1 (0.1)

Depreciation and Amortization 1.7 1.7 0.0

Rent/Utilities/Other 5.6 5.4 0.2

Total Operating Expenses $ 79.6 $ 76.4 $ 3.2

Workers' Compensation Adj. (1.9) 0.0 (1.9)

RHB Unfunded Amortization 0.9 0.9 0.0

FERS Unfunded Amortization 1.4 1.3 0.1

CSRS Unfunded Amortization 1.9 1.8 0.0

Total Expenses $ 81.8 $ 80.4 $ 1.4

Decrease in amounts is denoted by ().

Numbers may not add across due to rounding.

Source: Postal Service September 2021 PFI Report at 3; Postal Service FY 2021 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 2021. These ratios provide a concise and systematic way to 

organize financial data into meaningful information. The historic accounting information 

33 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 2021 IFP at 1. 
Financial Analysis Report 2021

27

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.

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.34 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 

increasing operating ratio indicates a deterioration in the Postal Service’s ability to reduce 

its operating expenses while generating revenue. As seen in Figure II-4, although the Postal 

Service’s operating ratio has fluctuated annually, it has trended upward since FY 2016; the 

average growth in operating expense has increased at a higher rate than the growth in 

revenue over this period. In FY 2020, operating revenue and operating expenses were the 

highest in more than a decade. Notably, for FY 2021, operating revenue grew at a higher rate 

than operating expenses resulting in the first decline in operating loss since FY 2016.35

34 The Commission calculates the operating ratio by dividing total operating expenses by total operating revenue.

35 Beginning in FY 2022, the Postal Service is no longer required to pay RHB normal costs which are included in total operating expenses. If the 

FY 2021 RHB normal cost expense of $4.2 billion is excluded from total operating expenses, the operating ratio would fall to 0.98, indicating a 

net operating profit for the first time since FY 2016. 

Notably, for FY 2021, operating 

revenue grew at a higher rate 

than operating expenses 

resulting in the first decline in 

operating loss since FY 2016.
Financial Analysis Report 2021

28

Figure II-4

Operating Ratio Trend FY 2006–FY 2021

Source: PRC derived from Postal Service Form 10-K, FY 2006–FY 2021.

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.
Financial Analysis Report 2021

29

Figure II-5

Return on Assets Trend FY 2006–FY 2021

Source: PRC derived from Postal Service Form 10-K, FY 2006–FY 2021.

The Postal Service’s total assets are cash and cash equivalents, receivables; and property, 

plant, and equipment. At the end of FY 2021, the Postal Service had a negative return on 

assets ratio of 0.11, an improvement compared to the prior year’s ratio of negative 0.26.

This resulted from a larger increase in total assets driven by an increase in cash from the 

receipt of the $10 billion CARES Act funding and the deferral of $0.5 billion in payments for 

Social Security benefits and leave reimbursements. Postal Service FY 2021 Form 10-K at 

45.

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 

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.36 The sharp decline in FY 2012 was largely the result of 

36 Postal Service Form 10-K, Balance Sheet, FY 2007–FY 2010.

(0.80)

(0.70)

(0.60)

(0.50)

(0.40)

(0.30)

(0.20)

(0.10)

0.00

0.10

2006200720082009201020112012201320142015201620172018201920202021

Return on Assets Ratio

Fiscal Year
Financial Analysis Report 2021

30

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 

surcharge37 and improving cash balances resulting from defaults on annual RHB 

prefunding payments. The improvement in FY 2017 resulted from lower retirementrelated 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, 2021 (FY 2021) and September 30, 2020 (FY 2020). Table II-16

compares certain categories in the Postal Service’s asset and liability structure for FY 2021

with FY 2020. 

37 See Docket No. R2013-11, Order Granting Exigent Price Increase, December 24, 2013 (Order No. 1926).
Financial Analysis Report 2021

31

Table II-16

Structure of Assets and Liabilities, FY 2020 and FY 2021 ($ in Millions)

% of Total Assets

Assets FY 2020 FY 2021 $ Change FY 2020 FY 2021

Cash and Cash Equivalents (includes 

Restricted Cash)

$ 14,712 $ 24,307 $ 9,595 41.0% 52.4%

Receivables 1,359 1,412 53 3.8% 3.0%

Supplies and Prepayments 224 189 (35) 0.6% 0.4%

 Total Current Assets 16,295 25,908 9,613 45.4% 55.8%

 Noncurrent Assets 19,609 20,497 888 54.6% 44.2%

Total Assets $ 35,904 $ 46,405 $ 10,501 100.0% 100.0%

% of Total Liabilities

Liabilities FY 2020 FY 2021 $ Change FY 2020 FY 2021

Retiree Benefits $ 51,865 $ 56,975 5,110 44.5% 46.7%

Short-Term Debt 3,000 1,000 (2,000) 2.6% 0.8%

Deferred Revenue-Prepaid Postage 2,489 2,623 134 2.1% 2.1%

Other Current Liabilities 21,821 26,731 4,910 18.7% 21.9%

 Total Current Liabilities 79,175 87,329 8,154 67.9% 71.5%

Workers' Compensation Costs, 

Noncurrent

18,754 16,849 (1,905) 16.1% 13.8%

Long-Term Debt 11,000 10,000 (1,000) 9.4% 8.2%

Other Noncurrent Liabilities 7,683 7,907 224 6.6% 6.5%

 Total Noncurrent Liabilities 37,437 34,756 (2,681) 32.1% 28.5%

Total Liabilities $ 116,612 $ 122,085 $ 5,473 100.0% 100.0%

Decrease in amounts is denoted by ().

Numbers may not add across due to rounding.

Source: Postal Service FY 2021 Form 10-K at 57.

At the end of FY 2021, total assets increased by 

$10.5 billion compared to the prior period,

driven by increases in cash. 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.

At the end of FY 2021, the Postal Service had increased its cash balance by $9.6 billion 

compared to FY 2020, resulting from the receipt of $10 billion in CARES Act funding 

At the end of FY 2021, total 

assets increased by $10.5 billion 

compared to the prior period, 

driven by increases in cash.
Financial Analysis Report 2021

32

throughout the year and the deferral of approximately $0.5 billion in payments for the 

Postal Service’s share of Social Security benefits.

38

Liabilities at the end of FY 2021 totaled $122.1 billion, 71.5 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. Current liabilities consist largely 

of missed payments for statutory RHB prefunding and amortization of unfunded RHB 

liabilities, and defaulted payments for amortization of unfunded CSRS and FERS liabilities. 

The Postal Service continued to accrue unpaid retirement expenses, which totaled 

approximately $57 billion at the end of FY 2021. This includes accruals for FY 2012 through 

FY 2016, when the Postal Service could not pay down the liability along with the normal 

cost accruals for FY 2017 through FY 2021, and amortization payments on the RHB 

unfunded liability.

39 This obligation is 65.2 percent of current liabilities. Additionally, at the 

end of FY 2021, the Postal Service had $2 billion less in short-term debt compared to FY 

2020. Long-term liabilities consist mainly of workers’ compensation liability ($16.8 billion) 

and the total net debt owed to the Federal Financing Bank ($10 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 2021, the Postal Service recorded a $75.7 billion net deficit consisting of an 

accumulated deficit of $88.8 billion offset by capital contributions of $13.1 billion. The 

accumulated deficit is the result of multiple years of net losses, beginning in FY 2007. The 

$13.1 in capital contributions consists of a beginning balance of $3.1 billion40 and the $10 

billion in funds the Postal Service received in FY 2021 as part of the Consolidated 

Appropriations Act, 2021. The net deficiency of $75.7 billion is $5 billion less than FY 2020; 

the result of the $10 billion in the CARES Act capital contribution and the FY 2021 net loss 

of $4.9 billion. 

Figure II-6 shows the mix of the Postal Service’s asset and liability structure as of 

September 30, 2021. The shortage of current assets (55.8 percent of total assets) to cover 

current liabilities (71.5 percent of total liabilities) adversely affects the Postal Service’s 

38 Under the CARES Act, payment for the employer share of Social Security benefits through December 31, 2020, are deferred until December 

31, 2021 and December 31, 2022. Postal Service FY 2021 Form 10-K at 32.

39 In March 2022, the Postal Service Reform Act eliminated the Postal Service’s unpaid RHB balance of approximately $57 billion. 

40 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 2021

33

financial condition. In FY 2021, the Postal Service did not have a sufficient amount of 

current assets to pay for current liabilities, including the congressionally mandated 

retirement health benefit payments that the Postal Service accumulated in years FY 2012 

through FY 2017. Beginning in FY 2022, the $57 billion RHB liability will be removed from 

the Postal Service’s balance sheet and should improve its ability to use current assets to 

pay for current liabilities. Non-current assets comprise 44.2 percent of total assets, while 

non-current liabilities only comprise 28.5 percent of total liabilities.

Figure II-6

Comparison of Postal Service’s FY 2021 Current and Noncurrent Assets and Liabilities

Source: PRC derived from Postal Service FY 2021 Form 10-K at 57.

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 2021, the 

Postal Service’s working capital was negative $61.4 billion.

In December 2020, the Consolidated Appropriations Act, 2021 amended provisions of the 

CARES Act41 , converting the $10 billion available to borrow from the U.S. Treasury into a 

capital contribution with terms and conditions to be agreed upon by the Postal Service and 

the U.S. Treasury.42 The Postal Service has received and reported the entire capital 

contribution of $10 billion on its balance sheet, increasing its balances in cash and capital 

41 Pub. L. 116-136, the Coronavirus Aid, Relief, and Economic Act (the CARES Act), March 27, 2020.

42 In January 2021, the Postal Service and the U.S. Treasury agreed to the terms and conditions, as amended by the Consolidated Appropriations 

Act, 2021 that allow the Postal Service to request up to $10 billion in funding from the U.S. Treasury for COVID-19 related expenses that will not 

need to be repaid. Postal Service Quarter 1, 2021 Form 10-Q, February 9, 2021, at 9.
Financial Analysis Report 2021

34

contributions. Postal Service FY 2021 Form 10-K at 45. During FY 2021, total assets 

increased by $10.5 billion, primarily due to a cash increase of $9.5 billion. The increase in 

cash resulted from the issuance of CARES Act funding, deferral of employer contributions 

of social security, nonpayment of retiree benefits amortization and normal cost, and

increased revenue from USPS Marketing Mail and shipping packages volume. Total 

liabilities increased by a net of $5.5 billion mainly due to personnel-related liabilities, such 

as the accrual of the unpaid retirement expenses for FY 2021.

Assets

Postal Service capital investments have not kept pace with depreciation and amortization 

since 2008. 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.

Figure II-7

Percent Change in Capital Assets, FY 2010–FY 2021

Source: PRC derived from Postal Service Form 10-K, FY 2010–FY 2021.

(8.0%)

(6.0%)

(4.0%)

(2.0%)

 .0%

 2.0%

 4.0%

2006200720082009201020112012201320142015201620172018201920202021

Growth in Captial Assets

Fiscal Year
Financial Analysis Report 2021

35

FY 2021 was the second year since FY 2007 that 

the Postal Service recorded positive growth in 

capital assets. The Postal Service recorded a 1.4

percent growth in capital, compared to the 1.5

percent in FY 2020. The Postal Service purchased

$1.9 billion in property and equipment, offset by 

the total property, plant, and equipment 

depreciation of $1.7 billion.

The Postal Service continues to limit its capital expenditures to necessary safety, customer 

support, and high-return investments. Postal Service FY 2020 Form 10-K at 45. During FY 

2021, the Postal Service purchased 15,000 new vehicles at an approximate cost of $0.5

billion. Id. at 46. According to the Postal Service, its delivery fleet includes approximately 

137,000 vehicles that are at least 20 years old and require significant maintenance. Id.

LIABILITIES

In FY 2021, total liabilities increased by $5.5 billion, largely due to higher balances in 

compensations and retirement-related liabilities and partially offset by a decrease in shortterm debt.

The long-term portion of workers’ compensation decreased by $1.9 billion in FY 2021. This 

is highly sensitive to discount and inflation rates in actuarial adjustment and to new and 

existing claims. Figure II-8 shows the current breakdown of the Postal Service’s liabilities 

as of September 30, 2021.

FY 2021 was the second year 

since FY 2007 that the Postal 

Service recorded positive 

growth in capital assets. 
Financial Analysis Report 2021

36

Figure II-8

Postal Service Liabilities Structure, September 30, 2021

Source: PRC derived from Postal Service FY 2020 Form 10-K at 57.

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 

CSRDF and the RHBF. 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.

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 and the 

Postal Service RHBF, 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.
Financial Analysis Report 2021

37

Table II-17

Postal Service Balance Sheet Ratios FY 2020 and FY 2021

FY 2020 FY 2021 Change

Debt Ratio 3.25 2.63 (0.62)

Current Ratio 0.21 0.30 0.09 

Cash Ratio 0.19 0.28 0.09 

Source: PRC derived from Postal Service FY 2021 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 2007.

Figure II-9

Debt Ratio, FY 2007–FY 2021

Source: PRC derived from Postal Service Form 10-K, FY 2007–FY 2021.

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.

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2006200720082009201020112012201320142015201620172018201920202021

Debt Ratio

Fiscal Year

Debt Ratio

Average FY 2006-FY 2021
Financial Analysis Report 2021

38

At the end of FY 2021, the debt ratio decreased to 2.63 from the 3.25 debt ratio for FY 2020.

The decrease is the result of the higher growth of total assets resulting from the additional 

$10 billion in CARES Act funding and comparatively slower growth in total liabilities. The 

Postal Service’s FY 2021 debt ratio was lower than the average 10-year debt ratio of 3.08. 

This ratio is indicative of the Postal Service’s insufficient resources to invest in capital and 

pay down its liabilities.

43

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 2021

Source: PRC derived from Postal Service Form 10-K, FY 2006–FY 2021.

At the end of FY 2021, the Postal Service had a current ratio of 0.30, an increase of 0.09

from the end of FY 2020. This is higher than the Postal Service’s 10-year average of 0.17.

The increase in the ratio resulted from a smaller increase in current liabilities compared to 

current assets. Current liabilities increased by $8.2 billion (10.3 percent) due to higher 

retirement liabilities. Current assets increased by $9.6 billion (59 percent) compared to the 

43 In FY 2022, the $57 billion in RHB liabilities will be removed from the balance sheet. For analysis purposes, if $57 billion is excluded from FY 

2021 total liabilities, the result is an improvement in the debt ratio to 1.40; the lowest since FY 2011. 

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

2006200720082009201020112012201320142015201620172018201920202021

Current Ratio

Fiscal Year

Debt Ratio

10 Year Average
Financial Analysis Report 2021

39

end of FY 2020 as a result of an increase in cash. The increase in cash is the result of $10 

billion in CARES Act funding that the Postal Service received as reimbursement for 

operating expenses.44

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 2 years resulting from larger 

increases in cash than in current liabilities. 

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 2021.

Figure II-11

Cash Ratio, FY 2006–FY 2021

Source: PRC derived from Postal Service Form 10-K, FY 2006–FY 2021.

The Postal Service had a cash ratio of 0.28 at the end 

of FY 2021. This is an increase compared to the prior 

year’s cash ratio of 0.19. The FY 2021 cash ratio is 

also higher than the 10-year average of 0.15. This 

increase is the result of a $9.5 billion increase in cash 

44 If the $57 billion in RHB accrued liabilities is excluded, the result is an increase in the current ratio to 0.85. The elimination of this liability 

significantly impacts the Postal Service’s ability to cover current obligations using current assets.

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

2006200720082009201020112012201320142015201620172018201920202021

Cash Ratio

Fiscal Year

Cash Ratio

10 Year Average

The FY 2021 cash ratio is 

also higher than the 10-year 

average of 0.15.
Financial Analysis Report 2021

40

compared to FY 2020. 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.

Analysis of Statements of Cash Flows

At the end of FY 2021, the Postal Service’s total cash and 

cash equivalents, excluding $0.4 billion in restricted cash, 

were $23.9 billion. Cash and cash equivalents excluding 

restricted cash were $9.6 billion higher than at the end of 

FY 2020. At the end of FY 2021, the Postal Service had $4

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 2013 to 

FY 2021.

Table II-18

Postal Service Statements of Cash Flows, FY 2013–FY 2021 ($ in Millions)

Numbers may not add across due to rounding.

Source: PRC derived from Postal Service Form 10-K, FY 2013–FY 2021.

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, 2021, the Postal Service had $4 billion in 

FY FY FY FY FY FY FY FY FY

2013 2014 2015 2016 2017 2018 2019 2020 2021

Net Income/(Loss) $ (4,977) $ (5,508) $ (5,060) $ (5,591) $ (2,742) $ (3,913) $ (8,813) $ (9,176) $ (4,930)

Non-Cash Items and Other Cash Flows 5,911 8,822 7,939 8,327 6,565 6,680 11,278 13,545 9,414

Cash Flows From Investing Activities: 0 0 0 0 0 0 0 0 0

 Decrease (Increase) in Restricted Cash (79) 66 13 (20) (38) 16 (91) 12 (95)

Purchase of Property and Equipment (667) (781) (1,222) (1,428) (1,344) (1,409) (1,419) (1,810) (1,872)

 Proceeds From Sale of Property and Equipment 158 129 120 206 58 32 27 32 14

Net Cash Used in Investing Activities (588) (586) (1,089) (1,242) (1,324) (1,361) (1,483) (1,766) (1,953)

Cash Flows From Financing Activities: 0 0 0 0 0 0 0 0 0

 Increase (Decrease) in Debt 0 0 0 0 0 (1,800) 1,800 3,000 (3,000)

 Payments for Capital Leases (59) (58) (62) (51) (63) (58) (48) (40) (31)

Net Change in Revolving Credit Line 0 0 0 0 0 0 (4,000) 0 0

 U.S. Government Appropriations - Expensed (48) (90) 0 0 0 0 0 0

Contributions of the U.S. Government - - 0 0 0 0 0 0 10,000

Net Cash (Used) Provided by Financing Activities (107) (148) (62) (51) (63) (1,858) (2,248) 2,960 6,969

Net Increase/(Decrease) in Cash 803 2,580 1,728 1,443 2,436 (452) (1,266) 5,563 9,500

Cash Balance Beginning of Year 1,283 2,326 4,906 6,634 8,077 10,513 10,061 8,795 14,358

Cash Balance End of Year $ 2,086 $ 4,906 $ 6,634 $ 8,077 $ 10,513 $ 10,061 $ 8,795 $ 14,358 $ 23,858

Debt Outstanding $ 15,000 $ 15,000 $ 15,000 $ 15,000 $ 15,000 $ 13,200 $ 11,000 $ 14,000 $ 11,000

As of September 30, 2021, the 

Postal Service had $4 billion in 

remaining borrowing capacity.
Financial Analysis Report 2021

41

remaining borrowing capacity but is limited to a $3 billion annual borrowing cap. Postal 

Service FY 2021 Form 10-K at 64.

The Postal Service's liquidity position improved by approximately $2.5 billion, or almost 10 

percent, from FY 2020. With an average daily cash requirement of $214 million, the Postal 

Service had approximately 112 days of operating cash at the end of FY 2021;45 an increase 

of 42 days from the end of FY 2020. Much of this increase is a result of the CARES Act, 

which converted the $10 billion available to borrow from the U.S. Treasury into a capital 

contribution, increasing the Postal Service’s balances in cash and capital contributions. 

The Postal Service’s cash position is at its highest since FY 2007. Much of the growth in 

cash reserves during that time is the result of limited investment in capital infrastructure 

and equipment, nonpayment of retirement expenses, and the CARES Act funding of $10 

billion. Id. at 45 and 49. Notwithstanding the elimination of defaulted RHB payments by the 

PSRA, the Postal Service remains liable to OPM for past due amounts for CSRS and FERS 

totaling $14.6 billion, more than half of total liquidity. The Postal Service’s independent 

auditor included an “Emphasis of a Matter” paragraph in the FY 2021 financial statements 

indicating the Postal Service will not be able to meet all of its financial obligations through 

September 30, 2022. Id. at 55 and 89.

Operating revenue and available borrowing capacity are the only sources of income 

available to cover daily operating expenses and capital asset investment. The Postal Service 

estimates it will make approximately $2.5 billion of capital investment outlays in 2022. 

Additionally, for FY 2023 through FY 2026, the Postal Service projects capital investment 

outlays totaling $17.9 billion. Id. at 49. In March 2022, the Postal Service paid $3 billion for 

vehicles under the Next Generation Delivery Vehicle contract.46

45 The Commission calculated the days of operating cash in FY 2021 by dividing the Postal Service’s total expenses minus depreciation expenses, 

accruals for certain unfunded retirement liabilities and the non-cash adjustments to the workers’ compensation liability, by the number of 

operating days (365 days) to derive the average daily cash requirement; and then dividing the average daily cash requirement by the 

unrestricted balance of cash and cash equivalents.

46 USPS Places Order for 50,000 Next Generation Delivery Vehicles; 10,019 To Be Electric - Newsroom - About.usps.com
Financial Analysis Report 2021

42

Table II-19

Total Postal Service Liquidity (in $ Millions)

End of FY 2020 Compared to FY 2021

FY 2020 FY 2021

Cash and Cash Equivalents $ 14,358 $ 23,858 

Current Portion of Debt 3,000 1,000 

Long-Term Debt 11,000 10,000 

Total Debt $ 14,000 $ 11,000 

Statutory Debt Limit 15,000 15,000 

Available Debt 1,000 4,000 

CARES Act Borrowing Authority 10,000 - 

Total Liquidity (Cash + Available Debt) $ 25,358 $ 27,858 

Source: Postal Service FY 2021 Form 10-K at 57, 65.

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 2020 and FY 2021

FY 2020 FY 2021 Change

Asset Efficiency Ratio 0.12 0.10 (0.03)

Cash Flow to Debt Ratio 0.06 0.05 (0.00)

Long Term Debt Ratio 0.12 0.13 0.01 

Source: PRC derived from Postal Service FY 2021 Form 10-K.

Figure II-12 shows all three ratios and their trends since FY 2006.
Financial Analysis Report 2021

43

Figure II-12

Cash Flow Ratio Trend Analysis FY 2006–FY 2021

Source: PRC derived from Postal Service Form 10-K, FY 2006–FY 2021.

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 2021, the Postal 

Service had an asset efficiency ratio of 0.10, which is slightly lower than the prior year. The 

FY 2021 asset efficiency ratio is equal to the historical 10-year average of 0.10; cash flow 

from operations increased slightly while total assets increased significantly, resulting from 

the receipt of $10 billion in U.S. Government funding. 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 0.05 at the end of FY 2021, which is a 

decrease of 0.01 from the prior year and slightly higher than the historical 10-year average. 

The operating cash flow ratio measures an entity's ability to generate cash that can be used 

to cover current debt. In FY 2021, both cash flow from operations and current liabilities 

increased compared to FY 2019. 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 
Financial Analysis Report 2021

44

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 longterm 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 2021, the Postal Service had a long-term debt ratio of 0.13, a slight increase of 0.01

from the end of FY 2020. Although cash increased, the Postal Service remains unable to 

generate sufficient cash to pay down its total debt.
Financial Analysis Report 2021

45

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 and 

notes methodological changes implemented in FY 2021, with significant cost impacts. 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 2020 and FY 2021;47 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

Attributable and Institutional Cost Calculation

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,48 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.49 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 

47 FY 2020 volume, revenue, and cost data that are not depicted in tables in this section can be found in the corresponding section of the FY 

2020 Financial Report.

48 Total volume-variable cost is calculated by multiplying total cost by the volume variability ratio for each cost segment.

49 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 2021

46

Competitive products collectively. Attributable costs are equal to incremental costs, which 

reflect the total marginal costs of the volume in a class, a product, or Competitive products 

collectively.50

Attributable cost is distributed to products using distribution keys that reflect the 

underlying cost driver.51 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 RHB unfunded liability, amortization 

of CSRS unfunded liability apportioned to prior years, and various administrative costs.

Methodological Changes

In FY 2021, no methodological changes shifted significant costs between products. The 

Commission did approve changes to transportation variabilities to account for operational 

changes that were implemented since the previous econometric estimates of variabilities 

were developed. That methodological change increased transportation costs attributed to 

both Market Dominant products and Competitive products.52

Market Dominant Products and Services

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 

2020 and FY 2021.

50 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.

51 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.

52 See Docket No. RM2021-1, Order on Analytical Principles Used in Periodic Reporting (Proposal Seven), October 6, 2021 (Order No. 5999). It is 

also the subject of Docket Nos. RM2017-1 and RM2022-2.
Financial Analysis Report 2021

47

Table III-1

Market Dominant Volume, Revenue, and Cost, FY 2020 and FY 2021

 FY 2020 FY 2021 % Change

Volume (Millions) 122,054 121,640 (0.3%)

Revenue ($ Millions) 41,731 41,634 (0.2%)

Attributable Cost ($ Millions) 26,922 27,258 1.2% 

Contribution to Institutional Cost ($ Millions) 14,809 14,376 (2.9%)

Negative values are denoted by ().

Source: Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

Market Dominant volume and revenue have been on 

the decline for years as customers moved from 

traditional paper communication and correspondence 

to electronic alternatives. Postal Service FY 2021 Form 

10-K at 23. Although the COVID-19 pandemic 

exacerbated the Market Dominant volume loss, mail 

volumes began to recover in the second half of FY 2021. Total Market Dominant revenue 

decreased by 0.2 percent in FY 2021 due to the decrease in Market Dominant volume. On a 

unit basis, revenue remained unchanged from FY 2020 at $0.34 per piece. 

Despite the decrease in volume, the attributable cost for Market Dominant products 

increased by 1.2 percent from FY 2020. However, the average unit attributable cost 

remained the same as in FY 2020, at $0.22 per piece. 

Total Market Dominant contribution to institutional cost decreased by $432 million, or 2.9 

percent, in FY 2021, as Market Dominant volume decreased by 414 million pieces, or 0.3 

percent.

Market Dominant products accounted for 94.4 percent of total mail volume, a drop of 0.1 

percentage points from FY 2020. Revenue from these products as a percentage of total 

revenue from mail and services decreased from 57.1 percent to 54.1 percent. Market 

Dominant attributable cost as a percentage of total attributable cost decreased from 58.0 

percent in FY 2020 to 56.4 percent in FY 2021.

Total Market Dominant 

revenue decreased by 0.2 

percent in FY 2021. 
Financial Analysis Report 2021

48

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 

$1.9 billion in FY 2021; in FY 2020, the negative 

contribution from these products was $1.8 billion. 

Nine domestic mail products and services failed to 

cover their attributable cost: First-Class Mail Flats 

($16.7 million), USPS Marketing Mail Flats ($817.2 

million), USPS Marketing Carrier Route ($77.4 

million), USPS Marketing Mail Parcels ($20.4 million), Periodicals Outside County ($766.5 

million), Periodicals In-County ($59.4 million), Package Services Bound Printed Matter 

Parcels ($14.8 million) Package Services Media Mail/Library Mail ($74.3 million), and 

Money Orders ($19.2 million). Inbound Letter Post, a product that was non-compensatory 

in FY 2020 and for many years before then, covered its cost in FY 2021. 

Market Dominant Volume Trends

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 44.8 billion pieces.

The Postal Service 

continued to lose money 

from products that do not 

cover their attributable 

costs. In FY 2021, it lost 

$1.9 billion, compared to 

$1.8 billion in FY 2020.
Financial Analysis Report 2021

49

Figure III-1

Market Dominant Volume, FY 2012–FY 2021

Source: Docket No. ACR2012, Library Reference USPS-FY12-1, December 28, 2012; Docket No. ACR2013, Library 

Reference USPS-FY13-1, December 27, 2013; Docket No. ACR2014, Library Reference USPS-FY14-1, December 29, 

2014; Docket No. ACR2015, Library Reference USPS-FY15-1, December 29, 2015; Docket No. ACR2016, Library 

Reference USPS-FY16-1, December 29, 2016; Docket No. ACR2017, Library Reference USPS-FY17-1, December 29, 

2017; Docket No. ACR2018, Library Reference USPS-FY18-1, December 28, 2018; Docket No. ACR2019, Library 

Reference USPS-FY19-1, December 27, 2019; Docket No. ACR2020, Library Reference USPS-FY20-1, December 29, 

2020; Library Reference USPS-FY21-1, December 29, 2021, (collectively, Postal Service CRA Report, FY 2012–FY 

2021).

In FY 2021, First-Class Mail and USPS Marketing Mail accounted for 96.1 percent of the total 

Market Dominant volume. First-Class Mail volume has declined every year over the last 

decade, resulting in a loss of 23.0 billion pieces. This represents a 27.1 percent loss in volume

over that time period. USPS Marketing Mail volume has also declined considerably over the 

last decade. The loss in USPS Marketing Mail volume in FY 2021 was smaller than in previous 

years. Nonetheless, USPS Marketing Mail accounts for 41.2 percent of the 18.5 billion pieces 

of Market Dominant volume lost over the last 10 years. 

Market Dominant Revenue and Cost Trends

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 2012 to FY 

2021. Over that period, total revenue declined by 23.8 percent, while total attributable cost 

declined by 18.8 percent. First-Class Mail and USPS Marketing Mail continue to provide the 

majority of the Postal Service’s operating revenue “despite long-term trends away from 

traditional paper communication and correspondence to electronic media.” Postal Service 

FY 2021 Form 10-K at 23.
Financial Analysis Report 2021

50

Figure III-2

Market Dominant Revenue and Attributable Cost, FY 2012–FY 2021

Source: Docket No. ACD2012, Annual Compliance Determination, May 7, 2013 (FY 2012 ACD); Docket No. ACD2013, 

Annual Compliance Determination, March 27,2014(FY 2013 ACD); Docket No. ACR2014, Library Reference PRC-LRACR2014/1; Docket No. ACR2015, Library Reference PRC-LR-ACR2015/1; Docket No. ACR2016, Library Reference PRCLR-ACR2016/1; Docket No. ACR2017, Library Reference PRC-LR-ACR2017-1; Docket No. ACR2018, Library Reference 

PRC-LR-ACR2018-1; Docket No. ACR2019, Library Reference USPS-FY19-1, December 27, 2019; Docket No. ACR2020, 

Library Reference PRC-LR-ACR2020-1, March 29, 2021; Library Reference USPS-FY21-1, (collectively, Postal Service CRA 

Report, FY 2012–FY 2021).

Competitive Products and 

Services

The COVID-19 pandemic caused substantial 

growth in Competitive product volume in FY 

2020. However, as the U.S. economy began to 

recover, particularly in the second half of FY 

2021, the impact of the COVID-19 pandemic 

on Competitive product volume lessened.

Competitive product volume grew slightly 

compared to FY 2020 and represents a higher 

share of total volume compared to pre-pandemic levels. Postal Service FY 2021 Form 10-K 

at 23. Revenue for Competitive products also increased in FY 2021. Table III-2 compares the 

total volume, revenue, and cost of these products and services between FY 2020 and FY 

2021.

As the U.S. economy began to 

recover, particularly in the 

second half of FY 2021, the 

impact of the COVID-19 

pandemic on Competitive 

product volume lessened. 
Financial Analysis Report 2021

51

Table III-2

Competitive Volume, Revenue, and Cost, FY 2020 and FY 2021

FY 2020 FY 2021 % Change

Volume (Millions) 7,130 7,256 1.8%

Revenue ($ Millions) 30,611 34,233 11.8%

Attributable Cost ($ Millions) 19,426 21,040 8.3%

Contribution to Institutional Cost ($ Millions) 11,185 13,193 18.0%

Source: Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1, March 29, 2022.

Volume for Competitive products grew 1.8 percent in FY 2021 compared with 25.7 percent 

in FY 2020. In FY 2021, both revenue and unit revenue increased. Revenue increased by 

11.8 percent, or $3.6 billion, while unit revenue increased by 9.9 percent. Attributable cost 

increased by 8.3 percent in FY 2021; on a unit basis, it increased by 6.4 percent. 

Contribution to institutional cost also increased, both in the aggregate and on a unit basis. 

In FY 2021, contribution to institutional cost increased by 18.0 percent and by 15.9 percent 

on a unit basis.

As shown in Figure III-3, the Competitive products’ share of total Postal Service revenue 

and attributable cost has more than doubled since FY 2012. Competitive products’ share of 

contribution to institutional cost has also steadily increased from just 7.5 percent in FY 

2012 to 46.1 percent in FY 2021.
Financial Analysis Report 2021

52

Figure III-3

Competitive Products’ Percent Share of Total Postal Service Revenue, Cost,

and Contribution to Institutional Cost, FY 2012–FY 2021

Source: Docket No. ACR2012, Library Reference USPS-FY12-1; Docket No. ACR2013, Library Reference USPS-FY13-1; Docket No. 

ACR2014, Library Reference USPS-FY14-1; Docket No. ACR2015, Library Reference USPS-FY15-1; Docket No. ACR2016, Library 

Reference USPS-FY16-1; Docket No. ACR2017, Library Reference USPS-FY17-1; Docket No. ACR2018, Library Reference USPS-FY18-1; 

Docket No. ACR2019, Library Reference USPS-FY19-1; Library Reference USPS-FY20-1; Library Reference USPS-FY21-1, (collectively, 

Postal Service CRA Report, FY 2012–FY 2021).

Figure III-4 illustrates the changes in average unit revenue and cost from FY 2012 to FY 

2021. 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. Since FY 2012, 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. 6043 with respect to this issue, which 

left the formula prescribed in Order No. 4963 in place. See Docket Nos. RM2017-1 and RM2022-2, Supplemental Notice of Proposed 

Rulemaking and Order Initiating the Third Review of the Institutional Cost Contribution Requirement for Competitive Products, November 18, 

2021 (Order No. 6043).
Financial Analysis Report 2021

53

Figure III-4

Competitive Average Unit Revenue and Cost, FY 2012–FY 2021

Source: Postal Service CRA Report, FY 2012–FY 2021.

Through FY 2021, total contribution to institutional cost from Competitive products 

continued to exceed the required contribution to institutional cost. See Order No. 4963. As 

shown in Figure III-5, the contribution from Competitive products has increased 

significantly in recent years. The increases in FY 2020 and FY 2021 were particularly large 

compared with previous years. Previous large increases in the share of institutional cost 

contributed by Competitive products resulted primarily from Market Dominant products 

transferred to the Competitive product list.
Financial Analysis Report 2021

54

Figure III-5

Competitive Contribution to Institutional Cost, FY 2012–FY 2021

Source: Docket No. ACD2011, Annual Compliance Determination, March 28, 2012 (FY 2011 ACD); FY 2012–FY 2013 ACD; Docket No. 

ACR2014, Library Reference PRC-LR-ACR2014/1; Docket No. ACR2015, Library Reference PRC-LR-ACR2015/1; Docket No. ACR2016, Library 

Reference PRC-LR-ACR2016/1; Docket No. ACR2017, Library Reference PRC-LR-ACR2017-1; Docket No. ACR2018, Library Reference PRCLR-ACR2018-1; Docket No. ACR2019, Library Reference PRC-LR-ACR2019-1; Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; 

Library Reference PRC-LR-ACR2021-1.

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 2020

Table III-3 summarizes the FY 2021 change in total volume and revenue for First-Class Mail 

letters. First-Class Mail letters volume continued to decline considerably in FY 2021, after 

moderate declines in the years preceding the COVID-19 pandemic. For single-piece letters, 

the rate of decline was 8.2 percent in FY 2021 and 7.9 percent in FY 2020, compared to less 

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).
Financial Analysis Report 2021

55

than 6 percent in each of the prior 7 years. Presorted letters volume decreased 2.4 percent 

in FY 2021, compared to 3.0 percent in FY 2020.

Total revenue for First-Class Mail letters decreased by 2.5 percent in FY 2021 due to 

volume loss. Unit revenue increased slightly from 44 cents per piece in FY 2020 to 45 cents 

in FY 2021. The sharp decline in single-piece letters volume resulted in a 6.8 percent 

decrease in total revenue for single-piece letters. In contrast, revenue for presorted letters 

increased by 0.2 percent.

Table III-3

First-Class Mail Letters Volume and Revenue, FY 2020 and FY 2021

Negative values denoted by ().

Source: Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

Table III-4 summarizes the FY 2021 change in total attributable cost for First-Class Mail 

letters. Total attributable cost for First-Class Mail letters increased by $165 million in FY 

2021 due to a sizable increase in the attributable cost of single-piece letters. The 

attributable cost of single-piece letters increased 2.8 percent despite a decrease in volume. 

Attributable cost for single-piece letters increased 12.0 percent on a unit basis, primarily 

due to a large increase in the cost of transporting mail. Inconsistent commercial flight 

availability forced the Postal Service to use more expensive alternative modes of 

transportation, including charter flights and highway contract routes. Postal Service FY 

2021 Form 10-K at 11.

FY 2020 FY 2021 FY 2020 FY 2021

Single-Piece 14,696 13,484 (1,211) (8.2%) 8,020 7,471 (549) (6.8%)

Presorted 34,167 33,344 (822) (2.4%) 13,488 13,510 21 0.2%

Total Letters 48,863 46,829 (2,034) (4.2%) 21,508 20,980 (528) (2.5%)

(Millions) ($ in Millions)

Mail Volume Mail Revenue

Increase or 

Decrease

% Change % Change Increase or 

Decrease
Financial Analysis Report 2021

56

Table III-4

First-Class Mail Letters Attributable Cost and Average Unit Attributable Cost,

FY 2020 and FY 2021

Source: Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

TRENDS IN FIRST-CLASS MAIL LETTERS

Although customer “migration toward electronic communication and transaction 

alternatives” has been eroding the volume of First-Class Mail letters for some time, the 

COVID-19 pandemic accelerated the loss. Postal Service FY 2020 Form 10-K at 12. Figure

III-6 illustrates the rate of decline in volume for First-Class Mail letters. In FY 2020 and FY 

2021, the rate of decline for Single-Piece letters was higher than in the previous 7 years. 

Over the last decade, the volume of First-Class Mail presorted letters has decreased every 

year. The rate of decline in volume for First-Class Mail presorted letters decreased from 3.0 

percent in FY 2020 to 2.3 percent in FY 2021 but remains higher than in FY 2019, before 

the disruption caused by the COVID-19 pandemic.

FY 2020 FY 2021 FY 2020 FY 2021

Single-Piece 4,826 4,960 134 2.8% 32.8 36.8 3.9 12.0%

Presorted 4,781 4,812 31 0.7% 14.0 14.4 0.4 3.1%

Total Letters 9,607 9,772 165 1.7% 19.7 20.9 1.2 6.1%

Attributable Cost Unit Attributable Cost

Increase or 

Decrease

Increase or 

Decrease

($ in Millions) (Cents per Piece) Percent 

Change

Percent 

Change
Financial Analysis Report 2021

57

Figure III-6

First-Class Mail Letters Percent Change in Volume, FY 2012–FY 2021

Source: Docket No. ACR2012, Library Reference USPS-FY12-42, December 28, 2012; Docket No. ACR2013, Library Reference 

USPS-FY13-42, December 27, 2013; Postal Service RPW Report, FY 2012–FY 2021 (collectively, Postal Service RPW Report, FY 

2012–FY 2021).

Figure III-7 shows the change in the average unit attributable cost for First-Class Mail 

letters. The average unit attributable cost of First-Class Mail single-piece letters increased 

substantially in FY 2021, primarily due to an increase in transportation costs.

The average unit attributable cost for First-Class Mail presorted letters increased for the 

fifth year in a row. However, the rate of increase in FY 2021 was more moderate than in the 

previous 3 years. 
Financial Analysis Report 2021

58

Figure III-7

First-Class Mail Letters Percent Change in Average Unit Attributable Cost,

FY 2012–FY 2021

Source: FY 2012–FY 2013 ACD; Docket No. ACR2014, Library Reference PRC-LR-ACR2014/1; Docket No. ACR2015, Library Reference PRCLR-ACR2015/1; Docket No. ACR2016, Library Reference PRC-LR-ACR2016/1; Docket No. ACR2017, Library Reference PRC-LR-ACR2017-1; 

Docket No. ACR2018, Library Reference PRC-LR-ACR2018-1; Docket No. ACR2019, Library Reference PRC-LR-ACR2019-1; Docket No. 

ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

Table III-5 compares the average unit attributable cost for presorted letters by cost 

segment for FY 2020 and FY 2021. The unit attributable costs presented include all of the 

indirect cost that is piggybacked on the direct cost.55 Of all the cost segments, 

transportation increased the most substantially in FY 2021, with unit transportation costs

increasing by 16.6 percent. The increase is in large part due to an increase in highway 

transportation costs resulting from an increase in miles driven and higher average diesel 

fuel rates. Postal Service FY 2021 Form 10-K at 21. The average unit attributable cost for 

the city carrier street and rural carrier cost segments also increased in FY 2021, 2.6 percent 

and 5.3 percent, respectively. The mail processing unit cost for presorted letters decreased 

slightly in FY 2021. However, carrier in-office cost, which represents a mail processing 

activity because it is largely comprised of time spent sorting mail for delivery, increased by 

7.4 percent in FY 2021. 

55 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 attributable cost by cost segment presented in this report are “piggybacked” costs, unless stated otherwise.
Financial Analysis Report 2021

59

Table III-5

First-Class Mail Presorted Letters Average Unit Attributable Cost by Segment, 

FY 2020 and FY 2021

 

Source: Docket No. ACR2020, Library Reference USPS-FY20-43; Docket No. ACR2021, Library Reference USPS-FY21-

43, December 29, 2021.

FIRST-CLASS MAIL FLATS COMPARED WITH FY 2020

Table III-6 shows the total volume and revenue for First-Class Mail Flats. The volume of 

First-Class Mail single-piece flats declined 8.8 percent in FY 2021 compared to an 8.3 

percent decline in FY 2020. The volume of First-Class Mail presorted flats increased in FY 

2021, 6.0 percent, compared to a decrease of 5.3 percent in FY 2020. 

Total revenue for First-Class Mail Flats also declined in FY 2021, albeit minimally. It 

decreased by 0.3 percent compared to 6.3 percent in FY 2020 and 13.7 percent in FY 2019. 

On a unit basis, revenue increased for both First-Class Mail single-piece flats (3.7 percent) 

and First-Class Mail presorted flats (4.8 percent). 

Table III-6

First-Class Mail Flats Volume and Revenue, FY 2020 and FY 2021

Negative values denoted by ().

Numbers may not add due to rounding.

Source: Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

Table III-7 summarizes the FY 2021 change in attributable cost. Attributable costs for FirstClass Mail Flats increased both in the aggregate and on a unit basis, but less dramatically 

FY 2020 FY 2021

Mail Processing 5.99 5.90 -1.6%

City Carrier In-Office 1.60 1.72 7.4%

City Carrrier Street 3.06 3.14 2.6%

Rural Carriers 1.08 1.13 5.3%

Transportation 1.60 1.87 16.6%

All Other 0.66 0.67 1.3%

(Cents per Piece)

% Change

Attributable Cost

FY 2020 FY 2021 FY 2020 FY 2021

Single-Piece 679 619 (60) (8.8%) 1,064 1,006 (58) (5.4%)

Presorted 525 557 31 6.0% 484 537 54 11.1%

Total Flats 1,205 1,176 (28) (2.4%) 1,548 1,544 (4) (0.3%)

(Millions) ($ in Millions)

Mail Volume Mail Revenue

Increase or 

Decrease

% Change Increase or 

Decrease

% Change
Financial Analysis Report 2021

60

than in FY 2020. In FY 2021, attributable costs for First-Class Mail Flats increased 1.0 

percent, and unit attributable costs increased 3.5 percent, compared to 2.1 percent and 9.2 

percent, respectively, in FY 2020. The average unit attributable cost for First-Class Mail 

single-piece flats and First-Class Mail presorted flats increased by 6.4 percent and 3.4 

percent, respectively. 

Table III-7

First-Class Mail Flats Attributable Cost and Average Unit Attributable Cost,

FY 2020 and FY 2021

Negative values denoted by ().

Source: Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

TRENDS IN FIRST-CLASS MAIL FLATS

The volume of First-Class Mail Flats has been declining for a number of years. Figure III-8 

compares the percent change in the volume of First-Class Mail Flats from FY 2012 to FY 

2021. Over the past decade, the volume of First-Class Mail Flats decreased by 42.6 percent. 

The volume of single-piece flats continued its downward trend in FY 2021, and although 

both presorted flats and single-piece flats lost volume over the past decade, most of the 

volume loss for First-Class Mail Flats occurred in First-Class Mail single-piece flats. Over 

that period, the volume of single-piece flats decreased 56.0 percent, compared to a 13.3 

percent volume decrease for presorted flats. As Figure III-8 shows, the 6.0 percent volume 

increase for First-Class Mail presorted flats in FY 2021 represents one of just two annual 

increases of First-Class Mail presorted flats over the 10-year period. 

FY 2020 FY 2021 FY 2020 FY 2021

Single-Piece 1,052 1,020 (32) (3.0%) 154.8 164.7 9.9 6.4%

Presorted 490 537 47 9.6% 93.3 96.4 3.2 3.4%

Total Flats 1,545 1,560 16 1.0% 128.2 132.6 4.4 3.5%

($ in Millions) (Cents per Piece)

Attributable Cost Unit Attributable Cost

Increase or 

Decrease

% Change Increase or 

Decrease

% Change
Financial Analysis Report 2021

61

Figure III-8

Percent Change in First-Class Mail Flats Volume, FY 2012–FY 2021

Source: Postal Service RPW Report, FY 2012–FY 2021.

Figure III-9 compares the average unit attributable cost for First-Class Mail single-piece 

and presorted flats since FY 2012. The average unit attributable cost for First-Class Mail 

single-piece flats and presorted flats has steadily increased since FY 2016.56 However, the 

average unit attributable cost for First-Class Mail single-piece flats has increased more 

rapidly than for First-Class Mail presorted flats, 44.1 percent, and 35.7 percent, 

respectively.

56 In FY 2016, the Postal Service corrected an In-Office Cost System coding error that shifted costs from First-Class Mail presorted flats to FirstClass Mail single-piece flats. This resulted in an atypically large change in average unit attributable costs for both categories that year.
Financial Analysis Report 2021

62

Figure III-9

First-Class Mail Flats Average Unit Attributable Cost, FY 2012–FY 2021

Source: FY 2012–FY 2013 ACD; Docket No. ACR2014, Library Reference PRC-LR-ACR2014/1; Docket No. ACR2015, Library 

Reference PRC-LR-ACR2015/1; Docket No. ACR2016, Library Reference PRC-LR-ACR2016/1; Docket No. ACR2017, Library 

Reference PRC-LR-ACR2017-1; Docket No. ACR2018, Library Reference PRC-LR-ACR2018-1; Docket No. ACR2019, Library 

Reference PRC-LR-ACR2019-1; Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-

1.

Table III-8 compares the average unit attributable cost by cost segment of First-Class Mail 

single-piece and presorted flats for FY 2020 and FY 2021. With the exception of the city 

carrier street segment for single-piece flats, costs increased in every segment depicted in 

the table. The average unit attributable cost for First-Class Mail single-piece flats exceeded 

the average unit attributable cost for First-Class Mail presorted flats for all cost segments 

except rural carrier and city carrier in-office. Additionally, the difference between the unit 

attributable cost for First-Class Mail single-piece flats and First-Class Mail presorted flats 

increased from FY 2020 for three of the segments depicted, with the difference in the 

transportation segment increasing the most substantially by 50.3 percent. 
Financial Analysis Report 2021

63

Table III-8

First-Class Mail Flats Average Unit Attributable Cost by Segment,

FY 2020 and FY 2021

Negative values denoted by ().

Source: Postal Service Cost Segment and Component Reports, FY 2020 and FY 2021 (Postal Service CSC Report, FY 2020 and FY 2021)

OTHER FIRST-CLASS MAIL COMPARED WITH FY 2020

Table III-9 shows the volume and revenue for “all other” First-Class Mail. The volume of 

Outbound Single-Piece First-Class Mail International and Cards increased in FY 2021, while 

the volume of Inbound Letter Post decreased due to the transfer of Inbound Letter Post 

small packets and bulky letters from the Market Dominant product list to the Competitive 

Product list.57 There were no Inbound International NSAs in effect in FY 2021.

Similar to volume, revenue increased for Outbound Single-Piece First-Class Mail 

International and Cards compared with FY 2020, while Inbound Letter Post revenue 

decreased considerably. 

Table III-9

All Other First-Class Mail Volume and Revenue, FY 2020 and FY 2021

Negative values denoted by ().

Source: Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

57 Docket Nos. MC2019-17 and CP2019-155, Order Granting Postal Service’s Motion and Approving Prices for Inbound Letter Post Small Packets 

and Bulky Letters, December 19, 2019, at 2 (Order No. 5372).

Single-Piece Presort Diff. Single-Piece Presort Diff.

Mail Processing 87.1 51.6 35.5 93.4 53.8 39.6

City Carrier In-Office 16.7 15.1 1.6 14.6 15.3 (0.7)

City Carrrier Street 8.3 4.8 3.5 8.8 4.9 3.9

Rural Carriers 4.1 4.4 (0.3) 4.9 5.0 (0.1)

Transportation 25.5 14.5 11.0 31.3 14.7 16.5

All Other 13.1 2.9 10.2 12.4 2.3 10.1

Total 154.8 93.3 61.5 165.3 96.0 69.3

Cents per Piece Cents per Piece

FY 2020 FY 2021

FY 2020 FY 2021 FY 2020 FY 2021

Total Cards 2,566 2,714 148 5.8% 728 791 63 8.6%

Outbound Single-Piece First-Class Mail International 97 105 8 8.0% 145 167 23 15.7%

Inbound Letter Post 219 82 (137) (62.7%) 223 60 (162) (72.9%)

Total Other First-Class Mail 2,883 2,900 18 0.6% 1,147 1,018 (128) (11.2%)

Mail Volume Mail Revenue

(Millions) Increase or ($ in Millions)

Decrease

% Change Increase or 

Decrease

% Change
Financial Analysis Report 2021

64

Table III-10 presents the changes in total attributable cost and average unit attributable 

cost for “all other” First-Class Mail between FY 2020 and FY 2021. In FY 2021, in the 

aggregate and on a unit basis, attributable costs decreased for Cards, Inbound Letter Post, 

and Outbound Single-Piece First-Class Mail International. The large decrease in the unit 

attributable cost of Inbound Letter Post is due to the transfer of the relatively high-cost 

small packets and bulky letters out of Inbound Letter Post, leaving only the lower cost 

letter-shaped and flat-shaped pieces in the category.

Table III-10

Other First-Class Mail Attributable Cost and Average Unit Attributable Cost,

FY 2020 and FY 2021

 

Negative values denoted by ().

Source: Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

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 2020

Table III-11 summarizes the FY 2021 change in 

volume and revenue of letter-shaped USPS 

Marketing Mail. Both volume and revenue 

increased for letter-shaped USPS Marketing 

Mail. Although USPS Marketing Mail volume 

and revenue declined at the onset of the 

pandemic, as the economy began to recover, 

USPS Marketing Mail volumes and revenues 

rebounded somewhat but remained below prepandemic levels. Postal Service FY 2021 Form 

FY 2020 FY 2021 FY 2020 FY 2021

Total Cards 384 377 (6) (1.6%) 14.9 13.9 (1.0) (7.0%)

Outbound Single-Piece First-Class Mail International 113 109 (3) (2.9%) 116.4 104.6 (11.8) (10.1%)

Inbound Letter Post 267 49 (218) (81.5%) 122.0 60.4 (61.6) (50.5%)

Total Other First-Class Mail 774 536 (238) (30.8%) 26.9 18.5 (8.4) (31.2%)

Attributable Cost Unit Attributable Cost

($ in Millions) Increase or (Cents per Piece)

Decrease

% Change Increase or 

Decrease

% Change

Although USPS Marketing Mail 

volume and revenue declined at 

the onset of the pandemic, as 

the economy began to recover, 

USPS Marketing Mail volumes 

and revenues rebounded 

somewhat but remained below 

pre-pandemic levels.
Financial Analysis Report 2021

65

10-K at 25. Price increases in FY 202158 and the increase in volume for USPS Marketing 

Mail Letters resulted in higher revenue in FY 2021 than in FY 2020.

Table III-11

USPS Marketing Mail Letters Volume and Revenue, FY 2020 and FY 2021

Negative values denoted by ().

Source: Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

Table III-12 summarizes the FY 2021 change in attributable cost for USPS Marketing Mail 

letters. Overall, attributable cost increased 7.8 percent for USPS Marketing Mail letters in 

FY 2021. On a unit basis, attributable cost for both Letters, and High Density and Saturation 

Letters increased in FY 2021 by 0.7 percent and 5.8 percent, respectively. Since High 

Density and Saturation Letters is a relatively low-volume product compared with USPS 

Marketing Mail Letters, the average unit increase (1.5 percent) 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 2020 and FY 2021

Source: Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

TRENDS IN USPS MARKETING MAIL LETTERS

As shown in Figure III-10, after several years of moderate volume changes, the COVID-19 

pandemic precipitated comparatively large swings in volume in FY 2020 and FY 2021. 

58 See Docket No. R2021-2, Order on Price Adjustments for First-Class Mail, USPS Marketing Mail, Periodicals, Package Services and Special 

Services Products and Related Mail Classification Changes, July 19, 2021 (Order No. 5937); Docket No. R2021-1, Order on Price Adjustments for 

First-Class Mail, USPS Marketing Mail, Periodicals, Package Services, and Special Services Products and Related Mail Classification Changes, 

November, 18, 2020 (Order No. 5757).

FY 2020 FY 2021 FY 2020 FY 2021

Letters 38,408 41,222 2,814 7.3% 8,156 8,986 830 10.2%

High Density and Saturation Letters 6,533 6,532 (1) (0.0%) 1,103 1,129 26 2.3%

 Total Letters 44,940 47,753 2,813 6.3% 9,260 10,115 855 9.2%

Mail Volume Mail Revenue

(Millions) Increase or ($ in Millions)

Decrease

% Change Increase or 

Decrease

% Change

FY 2020 FY 2021 FY 2020 FY 2021

Letters 4,759 5,143 384 8.1% 12.4 12.5 0.1 0.7%

High Density and Saturation Letters 585 619 34 5.8% 9.0 9.5 0.5 5.8%

 Total Letters 5,344 5,762 418 7.8% 11.9 12.1 0.2 1.5%

Attributable Cost Unit Attributable Cost

($ in Millions) Increase or (Cents per Piece)

Decrease

% Change Increase or 

Decrease

% Change
Financial Analysis Report 2021

66

There was no change in volume for High Density and Saturation Letters, although volume 

decreased over the previous 2 years. Annual changes in USPS Marketing Mail Letters 

volume have been relatively small in recent years, with FY 2020 and FY 2021 being 

extraordinary exceptions. The decrease in volume in FY 2020 resulted in the lowest USPS 

Marketing Mail Letters volume in a decade. In FY 2021, volume rebounded significantly but 

remained far below pre-pandemic levels.

Figure III-10

Percent Change in USPS Marketing Mail Letters Volume, FY 2012–FY 2021

Source: FY 2012–FY 2013 ACD; Docket No. ACR2014, Library Reference PRC-LR-ACR2014/1; Docket No. ACR2015, Library Reference PRC-LRACR2015/1; Docket No. ACR2016, Library Reference PRC-LR-ACR2016/1; Docket No. ACR2017, Library Reference PRC-LR-ACR2017-1; 

Docket No. ACR2018, Library Reference PRC-LR-ACR2018-1; Docket No. ACR2019, Library Reference PRC-LR-ACR2019-1; Docket No. 

ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

Figure III-11 shows the average unit attributable cost for USPS Marketing Mail letters since 

FY 2012. 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 has increased for the last 5 years, while 

the average unit cost of High Density and Saturation Letters has increased since FY 2014. 

Even so, the FY 2021 increase in average unit attributable cost for both products was more 

moderate than in FY 2020. 

(20.0%)

(15.0%)

(10.0%)

(5.0%)

0.0%

5.0%

10.0%

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Percent Change

Fiscal Year

High Density and Saturation Letters Letters
Financial Analysis Report 2021

67

Figure III-11

USPS Marketing Mail Letters Average Unit Attributable Cost, FY 2012–FY 2021

Source: FY 2012–FY 2013 ACD; Docket No. ACR2014, Library Reference PRC-LR-ACR2014/1; Docket No. ACR2015, Library Reference PRCLR-ACR2015/1; Docket No. ACR2016, Library Reference PRC-LR-ACR2016/1; Docket No. ACR2017, Library Reference PRC-LR-ACR2017-1; 

Docket No. ACR2018, Library Reference PRC-LR-ACR2018-1; Docket No. ACR2019, Library Reference PRC-LR-ACR2019-1; Docket No. 

ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

USPS MARKETING MAIL FLATS COMPARED WITH FY 2020

Table III-13 summarizes the FY 2021 changes in volume and revenue for flat-shaped USPS 

Marketing Mail.59 Volume for all flat-shaped USPS Marketing Mail except EDDM-R declined 

in FY 2021, although more modestly than in FY 2020. Volume for USPS Marketing Mail 

Flats and High Density and Saturation Flats/Parcels each decreased by more than 300 

million pieces in FY 2021, representing a 10.3 percent and 4.1 percent decrease in volume, 

respectively. Carrier Route volume remained nearly unchanged, decreasing a mere 0.1 

percent. Volume for EDDM-R increased 2.3 percent in FY 2021.

Revenue for flat-shaped USPS Marketing Mail declined 3.2 percent in FY 2021. The 

products with the largest volume decreases in FY 2021 also had the largest decreases in 

revenue. USPS Marketing Mail Flats and High Density and Saturation Flats/Parcels

experienced the largest drops in revenue (7.7 percent and 4.1 percent, respectively). 

EDDM-R and Carrier Route revenues increased in FY 2021, but with a combined increase of 

just $29 million. 

59 Some products include parcels; however, those products contain predominantly flat-shaped mailpieces.
Financial Analysis Report 2021

68

Table III-13

USPS Marketing Mail Flat Volume and Revenue, FY 2020 and FY 2021

Negative values denoted by ().

Source: Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

Table III-14 summarizes the FY 2021 change in attributable cost for USPS Marketing Mail 

flats. Total attributable cost for flat-shaped USPS Marketing Mail decreased 0.5 percent in 

FY 2021 due to the loss of flat-shaped USPS Marketing Mail volume. On a unit basis, 

attributable cost increased for all flat-shaped USPS Marketing Mail products in FY 2021. 

Table III-14

USPS Marketing Mail Flats Attributable Cost and Average Unit Attributable Cost,

FY 2020 and FY 2021

Negative values denoted by ().

Source: Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

TRENDS IN USPS MARKETING MAIL FLATS

Flat-shaped USPS Marketing Mail has lost nearly 

a third of its volume over the last decade. As 

shown in Figure III-12, volume changes have 

been more substantial in recent years.60 For High 

Density and Saturation Flats/Parcels, USPS 

60 Large volume changes in FY 2016 and FY 2017 were due in large part to changes to the pricing structure of the Flats and Carrier Route 

products. See Docket No. ACR2017, Financial Analysis of United States Postal Service Financial Results and 10-K Statement, April 5, 2018, at 53-

54.

FY 2020 FY 2021 FY 2020 FY 2021

High Density and Saturation Flats/Parcels 10,427 9,994 (432) (4.1%) 1,867 1,790 (76) (4.1%)

Carrier Route 5,048 5,042 (6) (0.1%) 1,341 1,364 24 1.8%

Flats 3,199 2,869 (330) (10.3%) 1,344 1,241 (103) (7.7%)

Every Door Direct Mail ̶ Retail 530 542 12 2.3% 99 104 5 5.5%

Total 19,203 18,447 (756) (3.9%) 4,650 4,500 (150) (3.2%)

(Millions) ($ in Millions)

Mail Volume Mail Revenue

Increase or 

Decrease

% Change Increase or 

Decrease

% Change

FY 2020 FY 2021 FY 2020 FY 2021

High Density and Saturation Flats/Parcels 1,437 1,427 (10) (0.7%)

 13.8 14.3 0.5 3.6%

Carrier Route 1,394 1,442 47 3.4% 27.6 28.6 1.0 3.5%

Flats 2,124 2,058 (66) (3.1%) 66.4 71.7 5.3 8.0%

Every Door Direct Mail ̶ Retail 38 42 4 9.5% 7.2 7.8 0.5 7.1%

Total 4,993 4,969 (24) (0.5%) 26.0 26.9 0.9 3.6%

Attributable Cost Unit Attributable Cost

($ in Millions) Increase or (Cents per Piece)

Decrease

% Change Increase or 

Decrease

% Change

In FY 2021, EDDM-R volume 

increased for the first time since 

becoming a permanent product.
Financial Analysis Report 2021

69

Marketing Mail, and Carrier Route, the decline in volume in FY 2021 comes after an even 

larger decline in FY 2020. The volume for Flats decreased for the fourth time in a row. 

Although volume for all flat-shaped USPS Marketing Mail has been on a downward trend for 

years, in FY 2021, EDDM-R volume increased for the first time since becoming a permanent 

product.

Figure III-12

USPS Marketing Mail Flats Percent Change in Volume, FY 2012–FY 2021

Source: FY 2012–FY 2013 ACD; Docket No. ACR2014, Library Reference PRC-LR-ACR2014/1; Docket No. ACR2015, Library Reference PRCLR-ACR2015/1; Docket No. ACR2016, Library Reference PRC-LR-ACR2016/1; Docket No. ACR2017, Library Reference PRC-LR-ACR2017-1; 

Docket No. ACR2018, Library Reference PRC-LR-ACR2018-1; Docket No. ACR2019, Library Reference PRC-LR-ACR2019-1; Docket No. 

ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

The average unit attributable cost of each flat-shaped USPS Marketing Mail product has 

increased significantly over the last decade. Figure III-13 illustrates the annual changes in 

average unit attributable cost. Over the last decade, the average unit attributable cost 

increased nearly every year for flat-shaped USPS Marketing Mail products. The FY 2021 

increases were similar to previous increases for flat-shaped USPS Marketing Mail products.
Financial Analysis Report 2021

70

Figure III-13

USPS Marketing Mail Flats Percent Change in Average Unit Attributable Cost,

FY 2012–FY 2021

Source: FY 2012–FY 2013 ACD; Docket No. ACR2014, Library Reference PRC-LR-ACR2014/1; Docket No. ACR2015, Library Reference 

PRC-LR-ACR2015/1; Docket No. ACR2016, Library Reference PRC-LR-ACR2016/1; Docket No. ACR2017, Library Reference PRC-LRACR2017-1; Docket No. ACR2018, Library Reference PRC-LR-ACR2018-1; Docket No. ACR2019, Library Reference PRC-LR-ACR2019-1; 

Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

Table III-15 compares the change in the average unit attributable cost between FY 2020 

and FY 2021 by cost segment. Rural carrier unit costs and city carrier street unit costs 

increased for all USPS Marketing Mail flats products, with the exception of USPS Marketing 

Mail Flats city carrier street unit costs. The cost of mail processing activities, including city 

carrier in-office, increased for Carrier Route and EDDM-R.61 Conversely, it decreased for 

USPS Marketing Mail Flats and High Density and Saturation Flats/Parcels.

61 EDDM-R is a low volume category, and consequently susceptible to larger fluctuations in unit cost.
Financial Analysis Report 2021

71

Table III-15

Change in USPS Marketing Mail Flats Average Unit Attributable Cost by Cost Segment,

FY 2020 and FY 2021

Source: PRC derived from Docket No. ACR2020, Library Reference USPS-FY20-24, December 29, 2020; Library Reference USPS-FY21-

24, December 29, 2021.

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 2020

Table III-16 summarizes the FY 2021 changes in 

volume and revenue for Periodicals. In FY 2021, 

the volume of Periodicals declined by 327 million 

pieces, or 8.2 percent, with most of the decrease 

occurring in Outside County publications. In FY 

2021, Outside County volume decreased 8.6 

percent. Total revenue for Periodicals declined 

7.8 percent in FY 2021. The decline in total 

High Density and 

Saturation Carrier Route Flats EDDM-R

Mail Processing

FY 2020 1.6708 7.8054 38.0007 0.1747

FY 2021 1.6121 8.0865 35.9230 0.4732

% Change (3.5%) 3.6% (5.5%) 170.8%

City Carrier In-Office

FY 2020 1.8684 7.7470 11.4994 1.8286

FY 2021 1.8374 8.0181 11.1650 1.9175

% Change (1.7%) 3.5% (2.9%) 4.9%

City Carrier Street

FY 2020 4.8093 5.3949 5.0062 4.1820

FY 2021 4.8420 5.4673 4.9402 4.4419

% Change 0.7% 1.3% (1.3%) 6.2%

Rural Carriers

FY 2020 4.5930 4.9502 4.7320 0.6713

FY 2021 4.7375 5.3395 5.1660 0.7031

% Change 3.1% 7.9% 9.2% 4.7%

In FY 2021, Outside County 

volume decreased 8.6 percent. 

Total revenue for Periodicals 

declined 7.8 percent in FY 2021. 
Financial Analysis Report 2021

72

revenue is due to the loss of volume, as unit revenue increased slightly for both Outside 

County and In-County Periodicals. 

Table III-16

Periodicals Volume and Revenue, FY 2020 and FY 2021

Negative values denoted by ().

Source: Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

Table III-17 compares total attributable cost and average unit attributable cost for 

Periodicals for FY 2020 and FY 2021. The total attributable cost of Periodicals decreased by 

$29 million, or 1.6 percent. The decrease in Outside County overwhelmed the increase in 

In-County attributable cost. However, on a unit basis, both In-County and Outside County 

costs increased in FY 2021.

Table III-17

Periodicals Attributable Cost and Average Unit Attributable Cost,

FY 2020 and FY 2021

Negative values denoted by ().

Source: Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

TRENDS IN PERIODICALS

As shown in Figure III-14, Periodicals volume has continued to decline, in large part due to 

the availability of electronic alternatives. For In-County Periodicals, the decline in FY 2021 

is similar to declines seen in recent years. The volume losses for Outside County Periodicals 

in both FY 2021 and FY 2020 have exceeded volume losses in previous years. Over the last 

decade, volume for Outside County Periodicals decreased by 47.1 percent or 2.9 billion 

pieces.

FY 2020 FY 2021 FY 2020 FY 2021

In-County 469 447 (22) (4.7%) 51 49 (2) (4.5%)

Outside County 3,537 3,232 (305) (8.6%) 973 895 (78) (8.0%)

Total 4,006 3,679 (327) (8.2%) 1,024 944 (80) (7.8%)

Mail Volume Mail Revenue

(Millions) Increase or ($ in Millions)

Decrease

% Change Increase or 

Decrease

% Change

FY 2020 FY 2021 FY 2020 FY 2021

In-County 100 108 8 8.3% 21.3 24.2 2.9 13.7%

Outside County 1,698 1,661 (37) (2.2%) 48.0 51.4 3.4 7.1%

Total 1,798 1,770 (29) (1.6%) 44.9 48.1 3.2 7.2%

Attributable Cost Unit Attributable Cost

($ in Millions) Increase or (Cents per Piece)

Decrease

% Change Increase or 

Decrease

% Change
Financial Analysis Report 2021

73

Figure III-14

Periodicals Percent Change in Volume, FY 2012–FY 2021

Source: FY 2012–FY 2013 ACD; Docket No. ACR2014, Library Reference PRC-LR-ACR2014/1; Docket No. ACR2015, Library Reference PRC-LRACR2015/1; Docket No. ACR2016, Library Reference PRC-LR-ACR2016/1; Docket No. ACR2017, Library Reference PRC-LR-ACR2017-1; 

Docket No. ACR2018, Library Reference PRC-LR-ACR2018-1; Docket No. ACR2019, Library Reference PRC-LR-ACR2019-1; Docket No. 

ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

Figure III-15 shows the percent change in the average unit attributable cost for In-County 

and Outside County Periodicals. Average unit attributable cost for In-County and Outside 

County has been increasing for several years. However, the increases in the last 3 years 

were particularly large.
Financial Analysis Report 2021

74

Figure III-15

Periodicals Percent Change in Average Unit Attributable Cost, FY 2012–FY 2021

Source: FY 2012–FY 2013 ACD; Docket No. ACR2014, Library Reference PRC-LR-ACR2014/1; Docket No. ACR2015, Library Reference 

PRC-LR-ACR2015/1; Docket No. ACR2016, Library Reference PRC-LR-ACR2016/1; Docket No. ACR2017, Library Reference PRC-LRACR2017-1; Docket No. ACR2018, Library Reference PRC-LR-ACR2018-1; Docket No. ACR2019, Library Reference PRC-LR-ACR2019-1; 

Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

Table III-18 disaggregates the average unit attributable cost of Outside County Periodicals 

for FY 2020 and FY 2021. As shown in Table III-18, unit attributable cost increased for all 

cost segments depicted. Of these, unit transportation costs increased the most significantly 

in FY 2021, by 20.2 percent. Conversely, the “all other” category of costs for Outside County 

Periodicals decreased in FY 2021. The decrease was primarily due to a 30.8 percent 

decrease in the unit cost of vehicle service drivers. The unit cost of vehicle service drivers 

increased by 72.1 percent in FY 2020 and remains higher than in FY 2019, despite the 

decrease in FY 2021. 
Financial Analysis Report 2021

75

Table III-18

Outside County Periodicals Average Unit Attributable Cost by Segment, FY 2020 and FY 2021

Unit Attributable Cost

(Cents per Piece) Percent 

FY 2020 FY 2021 Change

Mail Processing 21.70 23.28 7.3%

City Carrier In-Office 9.83 10.29 4.7%

City Carrrier Street 4.55 4.66 2.4%

Rural Carriers 5.40 6.19 14.7%

Transportation 4.60 5.53 20.2%

All Other 1.93 1.45 (25.1%)

Total 48.02 51.41 7.1%

Source: PRC derived from Postal Service CSC Report, FY 2020 and FY 2021.

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-19 

summarizes the FY 2021 changes in volume 

and revenue for Package Services. Overall, 

Package Services volume decreased 9.4 percent 

in FY 2021. However, Media Mail/Library Mail 

and Alaska Bypass Service volumes were 

higher compared with FY 2020.

Two Package Services products had higher revenue in FY 2021 than in FY 2020, resulting 

in slightly higher revenue for the Package Services class overall. On a unit basis, revenue 

increased slightly for all Package Services products in FY 2021.

Package Services volume 

decreased 9.4 percent in FY 

2021. However, Media 

Mail/Library Mail and Alaska 

Bypass Service volumes were 

higher compared with FY 2020.
Financial Analysis Report 2021

76

Table III-19

Package Services Volume and Revenue, FY 2020 and FY 2021

Negative values denoted by ().

Source: Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

As shown in Table III-20, attributable cost decreased in the aggregate for the Package 

Services class compared with FY 2020, even with an increase in the attributable cost of two 

products. In FY 2021, Alaska Bypass Service cost, which consists entirely of Cost Segment 

14 transportation, increased both in the aggregate and on a unit basis, 23.2 percent and 

16.6 percent, respectively. The attributable cost of BPM Parcels and BPM Flats decreased in 

the aggregate (10.7 percent and 6.9 percent, respectively) but increased on a unit basis (2.4 

percent and 8.4 percent, respectively) compared with FY 2020. Only Media Mail/Library 

Mail experienced a unit cost decrease in FY 2021, albeit a small one. 

Table III-20

Package Services Attributable Cost and Average Unit Attributable Cost, FY 2020 and FY 2021

Negative values denoted by ().

Source: Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

Table III-21 shows the FY 2021 percent change in unit attributable cost for selected cost 

segments. As shown in Table III-21, costs increased across all products for two cost 

segments, rural carriers, and motor vehicle service. 

For BPM Flats, while unit attributable cost increased overall in FY 2021, unit costs 

decreased for the city carrier delivery and transportation segments. 

FY 2020 FY 2021 FY 2020 FY 2021

Alaska Bypass 1 1 0 5.7% 32 35 3 8.3%

Bound Printed Matter Flats 211 181 (30) (14.1%) 161 140 (21) (13.2%)

Bound Printed Matter Parcels 261 227 (33) (12.8%) 289 260 (29) (10.1%)

Media Mail/Library Mail 98 107 9 9.7% 349 400 50 14.4%

Total 571 517 (54) (9.4%) 832 835 2 0.3%

Increase or 

Decrease

% Change Increase or 

Decrease

% Change

Mail Volume Mail Revenue

(Millions) ($ in Millions)

FY 2021 FY 2020 FY 2021 FY 2020

Alaska Bypass 22 27 5 23.2% 1,725.0 2,011.7 286.7 16.6%

Bound Printed Matter Flats 128 119 (9) (6.9%) 60.7 65.8 5.1 8.4%

Bound Printed Matter Parcels 308 275 (33) (10.7%) 118.1 120.9 2.8 2.4%

Media/Library Mail 441 474 34 7.6% 450.5 442.0 (8.5) (1.9%)

Total 899 896 (3) (0.4%) 157.6 173.2 15.6 9.9%

Attributable Cost Unit Attributable Cost

($ in Millions) Increase or (Cents per Piece)

Decrease

% Change Increase or 

Decrease

% Change
Financial Analysis Report 2021

77

For BPM Parcels, unit attributable cost increased for most cost segments in FY 2021. The 

exceptions were to city carrier activities (in-office and street) and “all other,” which were 

primarily lower in FY 2021 due to lower window service costs. Vehicle service driver unit 

costs increased most substantially compared with FY 2020.

With reductions in mail processing, city carrier in-office, vehicle service driver, and “all 

other” unit costs, the unit attributable cost of Media Mail/Library Mail decreased in FY 

2021. However, the cost of delivery activities increased, with city carrier delivery 

increasing 15.9 percent and rural delivery increasing 5.2 percent.

Table III-21

Package Services Percent Change in Average Unit Attributable Cost by Segment, FY 2021

Source: PRC derived from Postal Service CSC Report, FY 2020 and FY 2021.

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,62 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-22, total 

revenue for Special Services declined by $27 million in FY 2021, though revenue for some 

products increased slightly. Most of the decline in revenue for Special Services was driven 

by a decrease in revenue from Certified Mail. 

62 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.

BPM Flats BPM Parcels Media Mail/ 

Library Mail

Mail Processing 20.0% 9.0% (5.1%)

City Carrier In-Office 1.2% (0.4%) (16.0%)

City Carrier Street (3.4%) (13.1%) 15.9%

Vehicle Service Driver 1.4% 33.9% (11.4%)

Rural Carriers 11.9% 13.2% 5.2%

Motor Vehicle Service 7.0% 3.3% 6.5%

Transportation (9.4%) 18.3% 4.0%

All Other 9.4% (67.0%) (3.9%)

Total Attributable Cost 8.4% 2.4% (1.9%)
Financial Analysis Report 2021

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Table III-22

Market Dominant Ancillary Services and Special Services Revenue, FY 2020 and FY 2021

 

Negative values denoted by ().

Source: Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

Table III-23 shows that attributable cost for Special Services increased by $4 million in FY 

2021. Although most services contributed to that increase, attributable costs for Insurance, 

Stamped Envelopes and Cards, and Other Services decreased significantly from FY 2020.

Table III-23

Market Dominant Ancillary Services and Special Services Attributable Cost,

FY 2020 and FY 2021

 Negative values denoted by ().

 Source: Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

FY 2020 FY 2021

Certified Mail 598 569 (29) (4.9%)

COD 3 3 0 0.4%

Insurance 93 105 13 13.5%

Registered Mail 21 21 - 0.0%

Stamped Envelopes & Cards 13 12 (0) (2.4%)

Other Ancillary Services 374 384 9 2.5%

Money Orders 153 147 (6) (3.9%)

Post Office Box 298 299 1 0.4%

Other Services 159 143 (16) (10.2%)

Total Services 1,713 1,686 (27) (1.6%)

Revenue

($ in Millions) Increase or 

Decrease

% Change FY 2020 FY 2021

Increase or 

Decrease

% Change

Certified Mail 485 492 7 1.4%

COD 3 3 0 0.0%

Insurance 32 27 (5) (14.7%)

Registered Mail 14 17 3 18.8%

Stamped Envelopes & Cards 10 9 (2) (15.2%)

Other Ancillary Services 268 272 3 1.3%

Money Orders 157 166 9 6.0%

Post Office Box 130 137 6 4.8%

Other Services 71 51 (20) (27.8%)

Total Services 1,192 1,196 4 0.4%

Attributable Cost ($ in Millions)
Financial Analysis Report 2021

79

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; First-Class Package Service; Retail Ground; 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 

were also a total of 167 Domestic Competitive NSA products in effect during FY 2021. 

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 2021, there were also 482 International Outbound 

NSAs and 17 International Inbound NSAs.

The products are grouped into several broad 

categories to facilitate comparisons. Table III24 summarizes the FY 2021 changes in volume 

and revenue for Competitive products and 

services. Total volume for Competitive 

products increased in FY 2021, but less 

dramatically than at the onset of the COVID-19 

pandemic. Postal Service FY 2021 Form 10-K at 

20. Volume for Competitive products increased 

by 1.8 percent overall in FY 2021, but volume 

for ground parcels and International decreased. International volume decreased by 44.2 

percent in FY 2021 due to the impact of the COVID-19 pandemic on the global economy, as 

well as significantly higher rates. Id. at 28. The decrease in ground parcels was minimal. 

Priority Mail, Priority Mail Express, and First-Class Package Service had double-digit 

percentage volume increases in FY 2021.

Total Competitive product revenue increased 11.8 percent, or $3.6 billion, in FY 2021. 

Revenue increased across the board, including for categories that lost volume in FY 2021. 

On a unit basis, for domestic Competitive products overall, revenue increased by 

approximately 12.6 percent.

Total Competitive product 

revenue increased 11.8 percent, 

or $3.6 billion, in FY 2021. 

Revenue increased across the 

board, including for categories 

that lost volume in FY 2021. 
Financial Analysis Report 2021

80

Table III-24

Competitive Products Volume and Revenue, FY 2020 and FY 2021

Negative values denoted by ().

Source: Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

Table III-25 summarizes the FY 2021 changes in attributable cost. Total attributable cost 

for Competitive products increased 8.3 percent, or approximately $1.6 billion, in FY 2021. 

However, on a unit basis, attributable costs for Priority Mail and Priority Mail Express 

decreased in FY 2021 (1.6 percent and 6.7 percent, respectively). International unit cost 

increased substantially in FY 2021, by 65.7 percent.

Table III-25

Competitive Products Attributable Cost and Unit Attributable Cost, FY 2020 and FY 2021

 

Negative values denoted by ().

Source: Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

Trends in Competitive Products

After many years of significant increases, Competitive product volume grew only slightly in 

FY 2021. Figure III-16 highlights the growth in Competitive categories since FY 2012.63 It 

illustrates the effect of the COVID-19 pandemic on Competitive volume over the last 2

years.

63 The transfer of First-Class Mail commercial parcels and lightweight Standard Mail parcels from the Market Dominant product list to the 

Competitive product list was completed by FY 2012.

FY 2020 FY 2021 FY 2020 FY 2021

Priority Mail Express 24 29 5 19.1% 697 820 123 17.7%

First-Class Package Service 1,848 2,056 208 11.3% 6,228 7,388 1,161 18.6%

Priority Mail 1,262 1,394 133 10.5% 11,529 13,212 1,683 14.6%

Ground Parcels 3,584 3,546 (38) (1.1%) 9,195 9,709 514 5.6%

International 413 230 (182) (44.2%) 1,959 1,965 7 0.3%

Domestic Services 1,004 1,139 135 13.5%

Total Competitive 7,130 7,256 125 1.8% 30,611 34,233 3,622 11.8%

Increase or 

Decrease

% Change

Mail Volume Mail Revenue

(Millions) Increase or ($ in Millions)

Decrease

% Change

FY 2020 FY 2021 FY 2020 FY 2021

Priority Mail Express 280 312 31 11.2% 1,163 1,085 (78) (6.7%)

First-Class Package Service 3,907 4,614 707 18.1% 211 224 13 6.1%

Priority Mail 8,284 9,006 722 8.7% 657 646 (11) (1.6%)

Ground Parcels 4,693 4,791 99 2.1% 131 135 4 3.2%

International 1,451 1,343 (108) (7.4%) 352 583 231 65.7%

Domestic Services 345 364 19 5.5%

Total Competitive 19,426 21,040 1,614 8.3% 272 290 18 6.4%

Increase or 

Decrease

% Change Increase or 

Decrease

% Change

Attributable Cost Unit Attributable Cost

($ in Millions) (Cents per Piece)
Financial Analysis Report 2021

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Figure III-16

Competitive Products Volume by Category, FY 2012–FY 2021

Source: FY 2012–FY 2013 ACD; Docket No. ACR2014, Library Reference PRC-LR-ACR2014/1; Docket No. ACR2015, Library Reference 

PRC-LR-ACR2015/1; Docket No. ACR2016, Library Reference PRC-LR-ACR2016/1; Docket No. ACR2017, Library Reference PRC-LRACR2017-1; Docket No. ACR2018, Library Reference PRC-LR-ACR2018-1; Docket No. ACR2019, Library Reference PRC-LR-ACR2019-1; 

Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

The attributable cost of Competitive products has grown rapidly over the last decade and 

now comprises 43.5 percent of the total attributable cost. However, analysis of total 

attributable cost over time is complicated by mail classification changes that resulted in 

transfers of products from the Market Dominant to the Competitive product list. These 

include the transfer of Commercial First-Class Mail Parcels to a new Lightweight 

Commercial Parcels category, USPS Marketing Mail lightweight parcels to the Competitive 

ground parcels category, single-piece Parcel Post from Market Dominant products to the 

Competitive Standard Post product, and First-Class Mail single-piece retail Parcels to the 

First-Class Package Service product.64

Figure III-17 shows the average unit attributable cost by category from FY 2012 to FY 

2021. For each category, the unit attributable cost increased overall from 5 years ago. 

However, each category experienced both annual increases and decreases in unit 

attributable cost over that time. 

64 See Docket No. MC2011-22, Order Adding Lightweight Commercial Parcels to the Competitive Product List, April 6, 2011 (Order No. 710); 

Docket No. MC2010-36, Order Conditionally Granting Request to Transfer Commercial Standard Mail Parcels to the Competitive Product List, 

March 2, 2011 (Order No. 689); Docket No. MC2012-13, Order Conditionally Granting Request to Transfer Parcel Post to the Competitive 

Product List, July 20, 2012 (Order No. 1411); Docket No. MC2015-7, Order Conditionally Approving Transfer, July 20, 2017 (Order No. 4009).
Financial Analysis Report 2021

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Figure III-17

Competitive Products Average Unit Attributable Cost by Category, FY 2012–FY 2021

Source: FY 2012–FY 2013 ACD; Docket No. ACR2014, Library Reference PRC-LR-ACR2014/1; Docket No. ACR2015, Library Reference 

PRC-LR-ACR2015/1; Docket No. ACR2016, Library Reference PRC-LR-ACR2016/1; Docket No. ACR2017, Library Reference PRC-LRACR2017-1; Docket No. ACR2018, Library Reference PRC-LR-ACR2018-1; Docket No. ACR2019, Library Reference PRC-LR-ACR2019-1; 

Docket No. ACR2020, Library Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.

Figure III-18 shows the percent change in average unit attributable cost by category from 

FY 2012 to FY 2021. In general, fluctuations in the average unit attributable cost of 

Competitive products have been smaller in the last 5 years than in the previous 5 years 

when a number of products were transferred from the Market Dominant to the 

Competitive product list.
Financial Analysis Report 2021

83

Figure III-18

Competitive Products Percent Change in Average Unit Attributable Cost by Category,

FY 2012–FY 2021

Source: FY 2012–FY 2013 ACD; Docket No. ACR2014, Library Reference PRC-LR-ACR2014/1; Docket No. ACR2015, Library Reference PRC-LRACR2015/1; Docket No. ACR2016, Library Reference PRC-LR-ACR2016/1; Docket No. ACR2017, Library Reference PRC-LR-ACR2017/1; Docket 

No. ACR2018, Library Reference PRC-LR-ACR2018-1; Docket No. ACR2019, Library Reference PRC-LR-ACR2019-1; Docket No. ACR2020, Library 

Reference PRC-LR-ACR2020-1; Library Reference PRC-LR-ACR2021-1.
Financial Analysis Report 2021

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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. 

The basis of the analyses in this chapter are from reports filed by the Postal Service; the 

Cost and Revenue Analysis (CRA) Report; the Cost Segment and Components (CSC) Report; 

and payroll data.

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.

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 2021 Form 10-K. Postal Service FY 2021 Form 10-

K at 22. The Postal Service defines controllable loss, a non-GAAP measure, as the excess of 

revenue over costs for normal business operations and calculates it by adding to total net 

loss those costs that it determines do not arise from normal business operations and over 

which it has no control. These costs include amortization of unfunded retirement 

obligations, actuarial revaluation of and discount rate changes on workers' compensation 

obligations, and retirement obligations.

Table IV-1 presents a high-level view of the contribution margin income statement, 

highlighting total attributable and institutional costs. From FY 2020 to FY 2021, total 

revenue and total attributable costs increased by 5.3 percent and 4.2 percent, respectively, 

and total institutional costs decreased by 6.5 percent. 
Financial Analysis Report 2021

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Table IV-1

Condensed Contribution Margin Income Statement65

Source: Postal Service CRA Report, FY 2020–FY 2021.

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 productspecific fixed costs, which are costs caused by a specific product or class but do not vary 

with volume.

The Postal Service records costs, initially, 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.66

After attributable costs are determined, the residual costs classify 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. 

65 The Postal Service includes inframarginal and group-specific costs in institutional costs. Table IV-4 reallocates inframarginal and group-specific 

costs as attributable costs.

66 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.

$ Change % Change

Total Revenue $ 73,224 $ 77,068 $ 3,844 5.3%

Total Attributable Costs 46,414 48,364 1,950 4.2%

Contribution Margin 26,809 28,704 1,894 7.1%

Total Institutional Costs 35,986 33,634 (2,352) (6.5%)

Net Loss $ (9,176) $ (4,930) $ 4,246 (46.3%)

Total All Mail and Services Volume (in Millions) 129,184 128,895 (290) (0.2%)

FY 2021 over FY 2020

FY 2020 FY 2021
Financial Analysis Report 2021

86

Institutional costs include costs for carrier network travel time, amortization of RHB 

unfunded liability, amortization of CSRS unfunded liability apportioned to prior years, and 

various administrative costs.

In FY 2020 and FY 2021, 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 2020 and FY 2021, the net loss 

decreased by 46.3 percent. Total volume declined 0.2 

percent during that same period. All else being constant, 

total attributable costs should generally track 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 increase in institutional cost in FY 2021, the Commission analyzes 

individual cost segment changes. Table IV-2 presents the underlying changes in 

institutional cost by year, beginning in FY 2017. From FY 2017 through FY 2019 and in FY 

2021, the largest changes have been in workers’ compensation. In FY 2020, the impact of 

the COVID-19 pandemic on institutional costs is seen in city carrier costs. City carrier street 

delivery costs increased overall, costs for letter route street time decreasing, and costs for 

Special Purpose Routes increasing.67 This outcome is consistent with the change in volume 

and the product mix because package volume, which is more likely to be delivered by 

special purpose routes, has increased during the pandemic, and packages as a share of total 

mail have increased as well.

67 See Docket No. ACR2020, Library Reference USPS-FY20-32, Folder “B Workpapers”, Excel file “CS06&7-Public-FY20,” tab “6.0.3,” December 

29, 2020; Docket No. ACR2019, Library Reference USPS-FY19-32, December 27, 2019.

Between FY 2020 and FY 

2021, the net loss decreased 

by 46.3 percent. Total 

volume declined 0.2 percent 

during that same period.
Financial Analysis Report 2021

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Table IV-2

Change in Other Cost by Segment, FY 2017–FY 2021 ($ in Millions)

Source: Postal Service CSC Report, FY 2017–FY 2021.

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” 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.

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Annuitant Health Benefits $ (4,914) $ 14 $ 9 $ 71 $ 255

CSRS Supplemental Liability 1,550 (270) 204 225 64

City Carriers (95) 167 157 227 367

Rural Carriers 165 187 218 179 284

FERS Supplemental Liability 669 42 102 283 57

Transportation 580 99 112 92 142

Supplies and Services 74 3 (35) 188 16

Clerks and Mailhandlers 35 54 (25) 39 147

Other 405 (435) 349 422 (8)

Subtotal $ (1,531) $ (140) $ 1,091 $ 1,725 $ 1,323

Workers' Compensation (3,420) 1,002 3,495 (657) (3,431)

Total Change $ (4,951) $ 862 $ 4,585 $ 1,069 $ (2,108)
Financial Analysis Report 2021

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Table IV-3

Contribution Margin Income Statement, FY 2020 and FY 2021 ($ in Millions)

Source: Postal Service CSC Report, FY 2020 and FY 2021.

$ Change % Change

Total Revenue $ 73,224 $ 77,068 $ 3,844 5.3%

Volume Variable and Product Specific Costs:

Postmasters $ 302 $ 308 $ 6 2.0%

Supervisors and Technicians 1,954 1,963 8 0.4%

Clerks and Mailhandlers 12,520 13,016 496 4.0%

City Delivery Carriers – Office Activity 3,424 3,384 (41) (1.2%)

City Delivery Carriers – Street Activity 4,949 5,168 220 4.4%

Vehicle Service Drivers 516 552 36 7.1%

Rural Carriers 3,176 3,363 187 5.9%

Custodial and Maintenance Services 2,165 2,115 (50) (2.3%)

Motor Vehicle Service 614 667 53 8.7%

Miscellaneous Local Operations 308 313 5 1.6%

Purchased Transportation 7,004 7,702 697 10.0%

Building Occupancy 1,489 1,517 28 1.9%

Supplies and Services 1,524 1,494 (30) (2.0%)

Research and Development 0 0 0 n/a

Servicewide Personnel Benefits and HQ/Area Operations 3,193 3,336 142 4.5%

General Management Systems 0 0 (0) (45.1%)

Other Accrued Expenses (Servicewide) 1,446 1,394 (52) (3.6%)

Total Volume Variable and Product Specific Costs $ 44,585 $ 46,291 $ 1,706 3.8%

Contribution Margin $ 28,639 $ 30,778 $ 2,139 7.5%

Other Costs:

Postmasters $ 1,418 $ 1,446 $ 28 2.0%

Supervisors and Technicians 1,611 1,583 (29) (1.8%)

Clerks and Mailhandlers 2,743 2,889 147 5.4%

City Delivery Carriers – Office Activity 497 469 (29) (5.8%)

City Delivery Carriers – Street Activity 8,434 8,829 395 4.7%

Vehicle Service Drivers 338 361 24 7.1%

Rural Carriers 5,639 5,923 284 5.0%

Custodial and Maintenance Services 1,080 1,104 24 2.3%

Motor Vehicle Service 1,023 1,107 84 8.3%

Miscellaneous Local Operations 311 470 159 51.1%

Purchased Transportation 1,809 1,951 142 7.8%

Building Occupancy 613 588 (25) (4.0%)

Supplies and Services 1,805 1,821 16 0.9%

Research and Development 18 15 (3) (15.7%)

Servicewide Personnel Benefits and HQ/Area Operations 9,829 6,549 (3,280) (33.4%)

General Management Systems 15 12 (3) (18.6%)

Other Accrued Expenses (Servicewide) 633 589 (44) (7.0%)

Total Other Costs $ 37,815 $ 35,707 $ (2,108) (5.6%)

Total Costs $ 82,400 $ 81,998 $ (402) (0.5%)

Net Loss $ (9,176) $ (4,930) $ 4,246 (46.3%)

Total All Mail and Services Volume (in Millions) 129,184 128,895 (290) (0.2%)

FY 2021 over FY 2020

FY 2020 FY 2021
Financial Analysis Report 2021

89

As seen in Table IV-3, certain cost segments show large absolute increases from FY 2020. 

The three largest absolute changes from the prior year, which occur in the cost segments 

for Servicewide Personnel Benefits and HQ/Area Operations, Purchased Transportation, 

and Clerks and Mailhandlers, are discussed below.

Servicewide Personnel Benefits and HQ/Area Operations consists of compensation and 

benefits costs of Headquarters, Field Service Units, Inspection Service, Security Force, Area 

Offices; and service-wide personnel expenses that are not reported by employee category,

such as supplemental costs of CSRS, Postal Retirees Health Benefits Fund (PRHBF), FERS 

Supplemental Liability and workers' compensation. The decrease in Component 0486 

(Workers’ Compensation) largely accounted for the decrease in this cost segment. The bulk 

of costs in this component consists of the discounted present value of current and 

projected payments for employee claims against the Postal Service resulting from current 

year workplace injuries (Subcomponent 531 Workers’ Compensation – Current Year) and 

changes in discount rates and/or changes in actuarial valuation of injuries occurring in past 

years (Subcomponent 205 Workers’ Compensation Prior Year). The number of employees 

directly influences changes in the amount of current year workers’ compensation expenses. 

Accordingly, current year workers' compensation costs are considered volume variable to 

the same degree as total labor costs. The prior year's workers’ compensation costs are not 

related to mail volume in the current fiscal year. Thus, they are treated as institutional 

costs. The Workers’ Compensation liability calculation is highly sensitive to changes in 

discount rates. The 0.7 percent increase in the discount rate to calculate compensation 

claims and medical claims68 from the prior fiscal year decreased the September 30, 2021 

liability and related expense by approximately $3.6 billion. Id. at 42.

 

Purchased Transportation consists of the costs of contracted air, trucking, rail, and water 

transportation. Six components comprise this cost segment: Domestic Air (Component 

142), Domestic Alaska Air (Component 681), Highway (Component 143), Railroad 

(Component 144), Domestic Water (Component 145), and International (Component 146). 

The largest portion of the increase from FY 2020 occurred in Domestic Air and Highway. 

Total accrued costs in these components increased by 4.3 percent and 14.2 percent, in 

contrast to the increase from the prior year when Domestic Air increased by 13.3 percent

while Highway increased by 5.3 percent. The Postal Service explains69 that an increase in 

the number of highway miles driven, the use of more expensive chartered flights when the 

COVID-19 pandemic limited commercial air carrier availability in the earlier part of the 

68 Postal Service FY 2021 Form 10-K at 81.

69 Id. at 43.
Financial Analysis Report 2021

90

year, and the shift of package volume from air to highway transportation resulted in 

comparatively higher Domestic Air and Highway costs. 

Table IV-4 shows the percentage change from the prior-year quarter in accrued Domestic 

Air and Domestic Highway costs. The third and fourth quarters, which historically have

been lower than the first two quarters, increased significantly in FY 2020 over FY 2019, 

resulting from the surge in shipping and packages volume, the use of chartered flights, and 

an increase in the number of highway miles driven. Postal Service FY 2020 Form 10-K at 

11, 12. The Postal Service explains that the continued use of chartered flights during the 

first half of FY 2021 resulted in comparatively higher air transportation costs and the 

change in the mode of transporting packages from air to highway towards the second half 

of the year resulted in comparatively higher highway costs. Postal Service FY 2021 Form 

10-K at 43.

Table IV-4

Percent Change from Same Period Last Year (SPLY) in Purchased Transportation Accrued Cost 

FY 2020 and FY 2021

Source: PRC derived from Docket No. ACR2020, Library Reference USPS-FY20-32, tab "Input-Costs," Docket No. ACR2021, Library Reference 

USPS-FY20-32, tab "Input-Costs.”

Clerks and mailhandlers consist of compensation and benefits costs of clerks and 

mailhandlers working at postal facilities and include mail processing, window services, and 

administrative and support activities. Whereas clerk work occurs in all component groups 

in this segment, mailhandler work is mainly mail processing work and involves loading, 

unloading, and moving mail. The bulk of costs in this cost segment are in Component 0035 

(Mail Processing), Component 0040 (Window Service), and Component 00476 

(Administrative Clerks). The largest portion of the increase in FY 2021 in this cost segment 

occurred in total accrued cost for Mail Processing, increasing 4.6 percent, the highest 

increase over a prior year in a decade. Costs in this component are fully volume variable 

with small portions classified as non-volume variable. The Postal Service explains that the 

increase in costs from FY 2020 is a product of “increased work hours, contractual wage 

increases, and costs associated with general inefficiencies in the workplace....” Id. at 30.

To analyze the effect of the pandemic on Cost Segment 3 compensation, Figures IV-1 and 

IV-2 break down the share of Cost Segment 3 total compensation percentage increase from 

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

Domestic Air (4.5%) 3.9% 20.3% 34.3% 13.7% 18.4% (4.4%) (6.1%)

Domestic Highway 7.3% (1.7%) 7.3% 7.8% 7.2% 16.7% 16.2% 18.5%

Purchased Transportation Total Cost 2.4% 0.4% 10.8% 18.9% 8.5% 16.7% 8.4% 5.2%

FY 2020 over FY 2019

Percent Change from SPLY

FY 2021 over FY 2020

Percent Change from SPLY
Financial Analysis Report 2021

91

SPLY by type of craft, type of employee, and type of compensation for each half of FY 2021. 

As shown in Figures IV-1 and IV-2, during the first half of FY 2021, the largest percentage 

share of the total compensation increase from SPLY was in the non-career employee 

categories; Mailhandler Assistants and Clerk PSE. Compared to SPLY, the share of these 

non-career employees’ straight-time salary and overtime costs increased in the first half of 

FY 2021 and decreased in the latter half of the year. The Postal Service explains that in the 

first half of the year, the surge in e-commerce and a record holiday season lasting through 

January 2021, combined with a high level of employee absenteeism,

70 resulted in additional 

employees and workhours to process the surge in packages. Postal Service FY 2021 Form 

10-K at 21. As shown in Figures IV-2 and IV-3, the share of the increase in total Cost 

Segment 3 compensation from SPLY has decreased in the latter half of the year. The Postal 

Service notes that the surge has begun to abate as the economy begins to recover. 

70 Library Reference USPS-FY21-17, December 29, 2021, at 35 (FY 2021 Annual Report).
Financial Analysis Report 2021

92

Figure IV-1

Share of Change in Mailhandler Compensation from Prior Year, FY 2021

Source: PRC derived from National Payroll Hours Summary Report, Pay Period 20, 2021, September 2021, October 1, 2021; 

National Payroll Hours Summary Report, Pay Period 20, 2020, October 7, 2020.

-100%

-50%

0%

50%

100%

150%

200%

October to March April to September

Percentage Share of Change from SPLY

Overtime Salary Cost -

Part-Time Employee

Straight Time Salary

Cost - Part-Time

Employee

Overtime Salary Cost -

Mail Handler Assistant

Straight Time Salary

Cost - Mail Handler

Assistant

Overtime Salary Cost -

Full-Time Employee

Straight Time Salary

Cost - Full-Time

Employee
Financial Analysis Report 2021

93

Figure IV-2

Share of Change in Clerks Compensation from Prior Year, FY 2021

Source: PRC derived from National Payroll Hours Summary Report, Pay Period 20, 2021, September 2021, October 1, 2021; 

National Payroll Hours Summary Report, Pay Period 20, 2020, October 7, 2020.

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 Servicewide Personnel Benefits and 

HQ/Area Operations (CS18). See Table IV-2.

-20%

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

October to March April to September

Percentage Share of Change from SPLY

Overtime Salary Cost - PSE

Straight Time Salary Cost - PSE

Overtime Salary Cost - Part-Time

Employee

Straight Time Salary Cost - Part-Time

Employee

Overtime Salary Cost - Full-Time

Employee

Straight Time Salary Cost - Full-Time

Employee
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Figure IV-3

Share of Total Costs by Major Cost Segment, FY 2017–FY 2021

* 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 2017–FY 2021.

From FY 2017 to FY 2021, the rate of growth in total costs in these five cost segments (16.2 

percent) was higher than the rate of growth in the Postal Service’s total costs (13.2 

percent).

Table IV-5 shows the share of costs that are “other costs” for each cost segment. For three 

out of the five cost segments identified in Figure IV-4, more than 60 percent of total costs 

are “other costs.” 
Financial Analysis Report 2021

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Table IV-5

Other Cost Share of Total Costs, FY 2017–FY 2021

Source: Postal Service CRA Report, FY 2017–FY 2021.

Analysis of Employee Labor Cost

Employee labor costs, including compensation and benefits, are 75.7 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 2012–FY 2021), 

the Postal Service has reduced its full-time 

and part-time workforce by approximately 

12,000 employees and added 

approximately 36,000 non-career 

employees. See Figure IV-4.

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

CS1 Postmasters 82.4% 82.4% 82.4% 82.4% 82.4%

CS2 Supervisors and Technicians 45.7% 45.9% 45.5% 45.2% 44.6%

CS3 Clerks and Mailhandlers 18.0% 18.2% 18.0% 18.0% 18.2%

CS6 City Delivery Carriers – Office Activity 16.2% 16.5% 16.6% 12.7% 12.2%

CS7 City Delivery Carriers – Street Activity 63.1% 62.3% 62.2% 63.0% 63.1%

CS8 Vehicle Service Drivers 39.6% 39.6% 39.6% 39.6% 39.6%

CS10 Rural Carriers 65.6% 64.9% 64.1% 64.0% 63.8%

CS11 Custodial and Maintenance Services 31.9% 31.9% 26.4% 33.3% 34.3%

CS12 Motor Vehicle Service 61.8% 61.0% 61.5% 62.5% 62.4%

CS13 Miscellaneous Local Operations 54.2% 59.2% 53.8% 50.3% 60.1%

CS14 Purchased Transportation 20.8% 20.4% 21.0% 20.5% 20.2%

CS15 Building Occupancy 29.3% 29.0% 29.1% 29.2% 27.9%

CS16 Supplies and Services 51.3% 50.8% 52.5% 54.2% 54.9%

CS17 Research and Development 99.9% 100.0% 100.0% 100.0% 99.6%

CS18 Servicewide Personnel Benefits and HQ/Area Operations 63.3% 64.1% 76.0% 75.5% 66.3%

CS19 General Management Systems 100.0% 99.9% 99.9% 99.5% 99.7%

CS20 Other Accrued Expenses (Servicewide) 27.9% 28.3% 30.2% 30.4% 29.7%

Cost Segments

Other Costs Share of Total Accrued Costs

Over the past decade (FY 2012–FY 

2021), the Postal Service has reduced 

its full-time and part-time workforce 

by approximately 12,000 employees 

and added approximately 36,000 

non-career employees.
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Figure IV-4

Breakdown of Workforce, FY 2012–FY 2021

Source: Postal Service September 2021 ORPES Report; Postal Service September 2020 ORPES Report; Postal Service September 2019 ORPES 

Report; Postal Service September 2018 ORPES Report; Postal Service September 2017 ORPES Report; United States Postal Service, On-Roll and 

Paid Employee Statistics Report, September 2016, October 6, 2016; United States Postal Service, On-Roll and Paid Employee Statistics Report, 

September 2015, September 24, 2015; United States Postal Service, On-Roll and Paid Employee Statistics Report, September 2014, September 

26, 2014; United States Postal Service, On-Roll and Paid Employee Statistics Report, September 2013, September 27, 2013; United States Postal 

Service, On-Roll and Paid Employee Statistics Report, September and October 2012, November 28, 2012; United States Postal Service, On-Roll 

and Paid Employee Statistics Report, July, August, and September 2011, October 27, 2011.

From FY 2012 to FY 2014, the Postal Service reduced 

workhours each year. That trend changed in FY 2015, 

and workhours have generally been increasing since 

then. 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 the 

current fiscal year. During FY 2021, workhours 

increased 1.4 percent compared to the prior year, the 

highest annual rate in the past 5 years. Figure IV-5

depicts annual workhours during the past 10 years.

During FY 2021, workhours 

increased 1.4 percent 

compared to the prior 

year, the highest annual 

rate in the past 5 years. 
Financial Analysis Report 2021

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Figure IV-5

Total Workhours ($ in Millions), FY 2012–FY 2021

Source: Docket No. ACR2021, Library Reference USPS-FY21-17, compressed folder “FY21.17.Annual Report.zip”, File folder “TFP Materials,”

Excel file “Table Annual 2021 ACR (Public).xls” Postal Service FY 2021 TFP, tab "Lab-13b.”, December 29, 2021.

As illustrated in Figure IV-6, the Postal Service reduced its workforce and workhours from 

FY 2012 to FY 2014. Decreases in workhours and workforce during this period reflect 

declines in mail volume, delivery optimization initiatives, streamlining area and district 

offices, incentives for employees to retire or resign, and the slowing growth rate of new 

delivery points due to lower housing starts. Savings from the reduction in career 

employees during FY 2012 were partially offset by higher retirement costs due to increases 

in the FERS contribution rate from 11.2 percent in FY 2010 to 11.7 percent in FY 2011 and 

higher health benefit premiums. Increases in overtime hours of 3.4 percent in FY 2012 also 

offset the savings. The number of total employees remained essentially unchanged from FY 

2013 to FY 2014, with a slight decrease (0.3 percent) in workhours.

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. 
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98

Although there was a reduction in the workforce in FY 2018 and FY 2019, workhours and 

compensation, and benefits costs continued to increase. 

Figure IV-6

Percent Change from Prior Year in Compensation and Benefits, 

Workforce and Workhours, FY 2012–FY 2021

Source: Postal Service FY 2021 Form 10-K at 30; Postal Service FY 2020 Form 10-K at 34, 31; United States Postal Service, 2019 Report on 

Form 10-K, November 14, 2019, at 25(Postal Service FY 2019 Form 10-K); United States Postal Service, 2016 Report on Form 10-K, 

November 28, 2016, at 20 (Postal Service FY 2016 Form 10-K); United States Postal Service, 2013 Report on Form 10-K, November 15, 

2013, at 28 (Postal Service FY 2013 Form 10-K); Docket No. ACR2021, Library Reference USPS-FY21-17, compressed folder “FY21.17.Annual 

Report.zip”, File folder “TFP Materials,” Excel file “Table Annual 2021 ACR (Public).xls” Postal Service FY 2021 TFP, tab "Lab-13b.”, 

December 29, 2021; Docket No. ACR2020, Library Reference USPS-FY20-17, .compressed folder “FY20.17.Annual Report.zip”, Excel file “TFP 

Table Annual 2020 ACR Public.xls”, tab "Lab-13b.”, December 29, 2020 Postal Service September 2021 ORPES Report; Postal Service 

September 2020 ORPES Report; Postal Service September 2019 ORPES Report; Postal Service September 2018 ORPES Report; Postal Service 

September 2017 ORPES Report; United States Postal Service, On-Roll and Paid Employee Statistics Report, September 2016, October 6, 

2016; United States Postal Service, On-Roll and Paid Employee Statistics Report, September 2015, September 24, 2015; United States Postal 

Service, On-Roll and Paid Employee Statistics Report, September 2014, September 26, 2014; United States Postal Service, On-Roll and Paid 

Employee Statistics Report, September 2013, September 27, 2013; United States Postal Service, On-Roll and Paid Employee Statistics 

Report, September and October 2012, November 28, 2012; United States Postal Service, On-Roll and Paid Employee Statistics Report, July, 

August, and September 2011, October 27, 2011.
Financial Analysis Report 2021

99

The composition of the postal workforce is a significant factor in compensation and 

benefits costs. Between FY 2011 and FY 2013, the Postal Service reduced its career 

employees by 11.8 percent and increased its non-career employees by 42.7 percent. This 

lowered the hourly wage in FY 2013 and FY 2014 because the Postal Service does not cover 

health benefit premiums for non-career employees or the cost of benefits as well. 

Consequently, the Postal Service was able to decrease total compensation and benefits 

costs at a pace that exceeded the decrease in total workforce and workhours.

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.

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. Drivers of 

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 
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100

increase in overtime workhours of approximately 23 million, offsetting a decrease of 

straight-time hours of approximately 7 million.

The total postal workforce increased in FY 2020 and FY 2021 due to conversions of noncareer employees to full-time career employees and the hiring of additional casual 

employees to handle higher shipping volume. 

COVID-19 Pandemic Impact on Postal Finances

This section examines the impact of the COVID-19 pandemic on revenue, volume, and 

compensation in FY 2021. Figure IV-7 below compares FY 2021 mail revenue by quarter to 

the SPLY to illustrate the effect of the pandemic on annual mail revenue and volume. 

Beginning in late March 2020, the effects of the 

pandemic were seen in mail revenue and volume 

as businesses operated at limited capacity and 

reduced their advertising costs.71 Market 

Dominant revenue declined significantly. Id.

During the same period, Competitive products 

revenue grew substantially72 from a surge in ecommerce caused by travel restrictions. As seen 

in Figure IV-7, during the first half of FY 2021, 

Market Dominant revenue was lower and 

Competitive products revenue higher compared 

to SPLY, which corresponds with the period before the onset of the pandemic. Postal Service 

FY 2020 Form 10-K at 21.

In the second half of FY 2021, the effect of a recovering U.S. economy and the diminishing 

impact of the pandemic resulted in increases in Marketing Mail revenue, a slower decline in 

First-Class Mail revenue, and a decrease in Competitive products revenue. As seen in Figure 

IV-7, in Quarters 3 and 4, compared to SPLY, Market Dominant revenue grew, and 

Competitive products revenue declined. Postal Service FY 2021 Form 10-K at 20, 21. In FY 

2021, revenue from Competitive products exceeded First-Class Mail revenue. Id. at 23.

71 United States Postal Service, Form 10-Q Quarter III FY 2020 , August 7, 2020, at 31 (Postal Service FY 2020 Form 10-Q)

72 Postal Service FY 2021 Form 10-K at 20.

During the first half of FY 2021, 

Market Dominant revenue was 

lower and Competitive products 

revenue higher compared to 

SPLY, which corresponds with 

the period before the onset of 

the pandemic.
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Figure IV-7

Growth in Mail Revenue by Quarter, FY 2021 compared to SPLY

Source: Postal Service RPW Report, FY 2020 and FY 2021.

This section examines changes in compensation in FY 2021 across the three cost segments 

where labor costs are highest by comparing compensation costs (salary before benefits) in 

FY 2021 to the prior year. 

Four 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. 
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Figure IV-8

Cost Segment Share of Total Compensation Cost, FY 2021

Source: PRC derived from Docket No. ACR2021, Library Reference USPS-FY21-7, Excel file “Wkyrcalc.xls,” tab "Calculations." 

Total compensation cost increased by 2.7 percent in FY 2021, a 0.1 percent increase from 

the previous fiscal year’s cost growth rate. Postal Service FY 2020 Form 10-K at 30. Figure 

IV-9 presents the relative shares of the growth in compensation for FY 2020 and FY 2021. 

This shows how each cost segment’s share of the total growth rate changed significantly 

from the prior year. Notably, the share of growth in Clerks and Mailhandlers and Rural 

Carriers doubled, and City Delivery Carriers decreased by half. 
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Figure IV-9

Cost Segment Shares of Growth Rate of Total Compensation Cost,

FY 2020-FY 2021

Source: PRC derived from Docket No. ACR2021, Library Reference USPS-FY21-7, Excel file “Wkyrcalc.xls,” tab "Calculations."
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These differences, driven by changes in the mix of the workforce and type of workhours, 

caused individual cost segment growth rates to change between FY 2020 and FY 2021. The 

result was a change in each segment’s share of total compensation costs.

In FY 2021, the total compensation cost for City Delivery Carrier increased by 2 percent 

($318 million), half of the 4 percent ($453 million) increase in the prior year. As shown in 

Figure IV-10, compensation costs for overtime increased by 22 percent ($602 million), 

compared to 15 percent ($368 million) in FY 2020. Straight-time compensation for fulltime employees decreased by 4 percent, reversing the 2-percent increase in the prior year. 

Straight-time compensation for part-time employees increased by 4 percent ($52 million), 

reversing the decreasing trend in the prior 2 fiscal years of 9 percent ($134 million) in FY 

2020 and 2 percent ($35 million) in FY 2019. 

Figure IV-10

Composition of Cost Segments 6 & 7 City Delivery Carriers Change from Prior Year

Source: PRC derived from Docket No. ACR2021, Library Reference USPS-FY21-7, Excel file “Wkyrcalc.xls,” tab "Calculations."

In FY 2021 and FY 2020, total compensation costs for Rural Carriers increased by 6 percent 

($395 million) and 2 percent ($115 million), respectively. In both years, compensation 

costs for overtime increased by 31 percent ($121 million) in FY 2021 and by 16 percent 
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($54 million) in FY 2020. Straight-time compensation for full-time employees increased by 

5 percent ($205 million), reversing the prior year’s decrease of 1 percent ($40 million). 

Straight-time compensation for part-time employees increased in both years: 5 percent 

($69 million) and 7 percent ($101 million), respectively. 

Figure IV-11

Composition of Cost Segment 10 Rural Carriers Change from Prior Year,

FY 2020 and FY 2021

Source: PRC derived from Docket No. ACR2021, Library Reference USPS-FY21-7, Excel file “Wkyrcalc.xls,” tab "Calculations."

In FY 2021 and FY 2020, total compensation costs for Clerks and Mailhandlers increased by 

4 percent ($497 million) and 1 percent ($132 million), respectively. Compensation costs for 

overtime increased by 10 percent in both years ($194 million in FY 2021 and $183 million 

in FY 2020). Straight-time compensation for full-time employees slightly increased in both 

years by 0.2 percent ($11 million) and 0.3 percent ($25 million), respectively. Straight-time 

compensation for part-time employees increased by 14 percent ($291 million) compared 

to the 3-percent ($76 million) decrease in FY 2020. 
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Figure IV-12

Composition of Cost Segment 3 Clerks and Mailhandlers Change from Prior Year,

FY 2020 and FY 2021

Source: PRC derived from Docket No. ACR2021, Library Reference USPS-FY21-7, Excel file “Wkyrcalc.xls,” tab "Calculations."

As shown in Figures IV-10, IV-11, and IV-12, compensation costs for overtime73 increased 

in both years for all three cost segments. Generally, compensation cost for additional 

overtime is lower than for additional straight time because benefit costs do not increase 

with overtime workhours.74

In addition to the increased use of overtime in FY 2021, there were notable changes to the 

mix of postal career and non-career employees. In FY 2021, total postal employees 

increased by a net of 9,134 or 1.4 percent; career headcount increased by 20,695 

employees or 4.2 percent, and non-career headcount decreased by 11,561 employees or 

7.8 percent. FY 2021 Annual Report at 28.

73 Postal overtime is compensation paid at 150 percent of the employee’s basic hourly rate. Penalty overtime is compensation paid at two times 

the employee’s basic hourly straight-time rate for hours described in applicable labor agreements. Employee and Labor Relations Manual ELM 

49, at 162, September 2020. 

74 Generally, benefits such as retirement are based on straight time basic wage which is defined “as higher level pay but does not include 

Territorial Cost of Living Allowances, overtime pay, night differential, military pay, allowances, premium pay, or lump-sum terminal leave 

benefits.” Employee and Labor Relations Manual ELM 49, at 513, September 2020. 
Financial Analysis Report 2021

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Appendices

Appendix A: Fiscal Year 2021 Volume, Revenue, 

Incremental Cost, and Cost Coverage by Class 

Current Classification (Products)
Financial Analysis Report 2021

108

Attributable Contribution to Contribution to

Volume Revenue (Incremental) Institutional Rev./Pc. Cost/Pc. Institutional Cost

(000) ($ 000) Cost Cost (Cents) (Cents) Cost/Pc. Coverage

($ 000) ($ 000) (Cents)

COMPETITIVE MAIL

Priority Mail Express 28,722 819,971 311,662 508,308 2,854.841 1,085.096 1,769.745 263.1%

Priority Mail 1,394,268 13,211,669 9,005,540 4,206,130 947.570 645.897 301.673 146.7%

Total Ground 3,545,729 9,708,549 4,791,421 4,917,128 273.810 135.132 138.677 202.6%

First-Class Package Service 2,056,424 7,388,096 4,614,163 2,773,933 359.269 224.378 134.891 160.1%

Competitive Domestic Services 1,138,994 364,170 774,825 312.8%

Competitive International Mail & Services 230,365 1,965,493 1,342,597 622,897 853.209 582.813 270.396 146.4%

Total Competitive Group Specific & Non-Product Inframarginal Costs 610,325

Total Competitive Mail and Services 7,255,508 34,232,772 21,039,877 13,192,895 471.818 289.985 181.833 162.7% MARKET DOMINANT MAIL

First-Class Mail

Single-Piece Letters and Cards 13,920,659 7,636,945 5,127,360 2,509,585 54.861 36.833 18.028 148.9%

Presort Letters and Cards 35,621,927 14,134,274 5,049,409 9,084,865 39.679 14.175 25.504 279.9%

Flats 1,176,290 1,543,653 1,560,309 (16,656) 131.231 132.647 (1.416) 98.9%

First-Class Non-Product Inframarginal Costs 250,613

Seamless Acceptance Incentive Payments (16,134)

Total Domestic First-Class Mail 50,718,876 23,298,738 11,987,691 11,311,047 45.937 23.636 22.301 194.4% MARKETING MAIL

High Density & Saturation Letters 6,531,621 1,128,753 618,794 509,959 17.281 9.474 7.808 182.4%

High Density & Saturation Flats & Parcels 9,994,303 1,790,490 1,427,393 363,097 17.915 14.282 3.633 125.4%

Carrier Route 5,041,577 1,364,234 1,441,599 (77,365) 27.060 28.594 (1.535) 94.6%

Letters 41,221,741 8,986,138 5,143,469 3,842,668 21.800 12.478 9.322 174.7%

Flats 2,869,265 1,240,585 2,057,825 (817,240) 43.237 71.720 (28.483) 60.3%

Parcels 36,216 55,423 75,784 (20,361) 153.034 209.253 (56.220) 73.1%

Every Door Direct Mail - Retail 541,716 104,383 42,041 62,342 19.269 7.761 11.508 248.3%

Marketing Mail Non-Product Inframarginal Costs 413,004

Seamless Acceptance Incentive Payments (25,069)

Total Marketing Mail 66,236,440 14,644,936 11,219,909 3,425,027 22.110 16.939 5.171 130.5%

Periodicals Within County 447,172 48,652 108,059 (59,406) 10.880 24.165 (13.285) 45.0%

Outside County 3,231,853 894,876 1,661,410 (766,534) 27.689 51.407 (23.718) 53.9%

Periodicals Non-Product Inframarginal Costs 465

Seamless Acceptance Incentive Payments (1,244)

Total Periodicals 3,679,025 942,284 1,769,934 (827,650) 25.612 48.109 (22.496) 53.2%

Package Services

Alaska Bypass 1,336 34,869 26,874 7,996 2,610.255 2,011.715 598.540 129.8%

Bound Printed Matter Flats 181,487 140,106 119,442 20,664 77.199 65.813 11.386 117.3%

Bound Printed Matter Parcels 227,242 259,975 274,817 (14,842) 114.405 120.936 (6.531) 94.6%

Media and Library Mail 107,260 399,835 474,101 (74,266) 372.773 442.012 (69.239) 84.3%

Package Services Non-Product Inframarginal Costs 711

Seamless Acceptance Incentive Payments (32)

Total Package Services 517,324 834,754 895,945 (61,191) 161.360 173.188 (11.828) 93.2%

U.S. Postal Service Mail 281,854

Free Mail 19,909 29,528 (29,528) 148.315

Total Market Dominant Mail 121,453,428 39,720,712 25,903,007 13,817,705 32.704 21.328 11.377 153.3% MARKET DOMINANT SERVICES

Ancillary Services

Certified Mail 569,046 491,732 77,314 115.7%

COD 3,476 2,392 1,083 145.3%

Insurance 105,256 27,462 77,793 383.3%

Registered Mail 22,286 17,205 5,080 129.5%

Stamped Envelopes 11,828 8,410 3,418 140.6%

Stamped Cards 566 224 343 253.1%

Other Ancillary Services 383,790 271,694 112,095 141.3%

Money Orders 147,253 166,429 (19,177) 88.5%

Post Office Box Service 299,262 136,710 162,551 218.9%

Caller Service 87,774 28,327 59,446 309.9%

Other Special Services 46,160 15,746 30,414 293.2%

Market Dominant Services Non-Product Inframarginal Costs 22,480

Total Market Dominant Domestic Services 1,676,695 1,188,813 487,882

Outbound Single-Piece Mail Intl 104,603 167,180 109,434 57,745

Inbound Single-Piece Mail Intl 81,650 60,267 49,322 10,945

International Services 9,053 7,095 1,958

Market Dominant Intl Non-Product Inframarginal Costs 14 Market Dominant International Mail & Services 186,253 236,499 165,865 70,634

Other Income 1,119,606 1,119,606

Other International Mail Attributable 66,886 (66,886)

Total Mail and Services 128,895,188 76,986,284 48,364,448 28,621,837 59.728 37.522 22.206 159.2%

Institutional Costs 33,633,611

Appropriations: Revenue Forgone 54,294

Investment Income 27,739

Total Revenues 77,068,318

Total Costs 81,998,056

Net Income (Loss) (4,929,739)
Financial Analysis Report 2021

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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 (resources 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 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 2020 and FY 2019, TFP decreased by 1.0 percent and 0.3 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.

Figure B-1 shows the trend in TFP from FY 1972 through FY 2021.
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Figure B-1

Postal Service Total Factor Productivity, FY 1972–FY 2021

Source: Postal Service FY 2021 TFP, tab “Tfp-52.”

100

105

110

115

120

125

130

135

140

19721974197619781980198219841986198819901992199419961998200020022004200620082010201220142016

20182020

Index (1972 = 100)

Fiscal Year

Average Annual Growth

1972 - 2006 =0.51%

2007 - 2021= 0.36%