508-7/13/21-mh

United States Postal Service

FY2018 

Annual 

Report to 

Congress

FY2018 Annual Report

FY2018 Comprehensive 

Statement of Postal Operations

FY2018 Performance Report and 

FY2019 Performance Plan

Contents

Report Structure and Purpose

1

 

United States Postal Service — FY2018 Annual Report to Congress

 2

FY2018 Annual Report 2

Letter from the Postmaster General and USPS Board of Governors Chairman . 3

United States Postal Service Board of Governors 4

FY2018 Comprehensive Statement 6

Overview of Postal Operations 6

Key Financial and Operating Statistics 8

Executive Compensation 14

FY2018 Performance Report and FY2019 Performance Plan 15

Corporate-Wide Goals and Targets 15

High-Quality Service 18

Excellent Customer Experiences 19

Safe Workplace and Engaged Workforce 21

Financial Health 23

Strategic Initiatives 31

Additional Information 33

Trademarks 33

Year References 33
2 United States Postal Service — FY2018 Annual Report to Congress

Report Structure and Purpose

This document consists of three reports:

 The Fiscal Year (FY) 2018 Annual Report, including 

a statement from the USPS Postmaster General 

and USPS Board of Governors Chairman on our 1

operations 

 The FY2018 Comprehensive Statement on our 

operations 

 The FY2018 Annual Performance Report and FY2019 

Annual Performance Plan 

This document’s purpose is to provide information to 

stakeholders It fulfills the requirements of the following 

articles in United States Code Title 39:

 414(f), on the reporting of financial information related 

to special postage stamps (p 6) 

 416(f), on the reporting of information related to 

semipostal stamps (p 6) 

 2401(e), on the submission of a Comprehensive 

Statement (pp 6–14) 

 2402, on the submission of an Annual Report 

(pp 2–5) 

 2803, on the submission of an Annual Performance 

Plan (pp 15–29) 

 2804, on the submission of an Annual Performance 

Report (pp 15–29) 

 3652(g), on the submission of the Comprehensive 

Statement, Annual Performance Report and Annual 

Performance Plan (pp 2–29) 

 3686(d), on the reporting of executive compensation 

in excess of Federal Level Executive 1 (p 14) 1

 The terms “we,” “us” and “our” refer to the United States Postal Service.

FY2018 Annual Report

Financial and Operational Highlights

Totals at Sept. 30, 2018 Percent change

FY2018 FY2017 FY2016 FY2018 FY2017

(in millions, except percentages)

Mail volume 146,402 149,590 154,342 (2.1%) (3.1)%

Total revenue with investment and interest income $ 70,783 $ 69,694 $ 71,530 1.6% (2.6)%

Total expenses $ 74,696 $ 72,436 $ 77,121 3.1% (6.1)%

Net loss $ (3,913) $ (2,742) $ (5,591) 42.7% (51.0)%

Purchases of capital property and equipment $ 1,409 $ 1,344 $ 1,428 4.8% (5.9)%

Debt $ 13,200 $ 15,000 $ 15,000 (12.0%) – %

Capital contributions of U.S. Government $ 3,132 $ 3,132 $ 3,132 – % – %

Deficit since 1971 reorganization $ (65,769) $ (61,856) $ (59,114) (6.3%) 4.6%

Total net deficiency $ (62,637) $ (58,724) $ (55,982) (6.7%) 4.9%

(in actual units indicated, unaudited)

Number of career employees 497,157 503,103 508,908 (1.2%) (1.1)%

Number of non-career employees 137,290 141,021 130,881 (2.6%) 7.7%

New delivery points served 1,229,580 1,234,496 1,142,352 (0.4%) 8.1%
United States Postal Service — FY2018 Annual Report to Congress 3

Letter from the Postmaster General and USPS Board of Governors Chairman

The United States Postal Service delivers for the American 

public With every business, mailbox, and doorstep we visit, 

we bind the nation together by providing prompt, reliable, and 

efficient mailing and shipping services 

As you review this report, you will see that the Postal Service 

is a $71 billion business structured by Congress We compete 

for every customer across each of our product lines We pay 

for our operations entirely through the sale of postal products 

and services and do not receive tax revenues to support our 

business If we were a private sector company, the Postal 

Service would rank 40th in the 2018 Fortune 500 

 We live, work, and serve in every community in America 

We operate 34,700 Post Offices and have 58,000 retail 

partners and other access points, more than 232,000 

delivery vehicles, and 8,500 pieces of automated 

processing equipment On a typical day, our 634,000 

employees physically deliver 493 million mailpieces to 159 

million delivery points For much of rural America we are 

often the only delivery option We deliver 47 percent of the 

world’s mail volume and more packages to the home than 

any other business 

 We deliver for the American economy The Postal Service 

maintains and continually strengthens mail as a powerful 

marketing and communications channel By delivering 

bills, statements, correspondence, catalogs, and a wide 

range of marketing materials we connect businesses 

with American consumers To companies in nearly every 

economic sector — including retail, health care, real 

estate, and financial services — we are a strategic and 

closely aligned business partner We are a major part of 

the nation’s financial infrastructure, facilitating millions of 

transactions daily for virtually every commercial entity in 

America 

 We are a driver of America’s rapidly expanding 

e-commerce sector The Postal Service enables retailers 

and e-tailers — no matter their size or geographical 

location — to grow their businesses and meet rising 

consumer delivery expectations Our unparalleled lastmile resources ensure universal access to online goods 

and services Continual product and service innovation 

and new business solutions for America’s shippers has 

propelled growth in our package revenues and in the 

broader package shipping sector 

 We are leveraging information and technology to transform 

the delivery experience Our new digital offerings — such 

as Informed Delivery — are powered by an amazing digital 

infrastructure that processes 4 terabytes a minute and 1 2 

billion scan records daily, providing a wealth of real-time 

information to our customers and employees about the 

movement of mail through our network 

However, while the Postal Service is a fundamentally strong 

organization — in terms of the value we deliver to our 

customers and the role we play in the economy — we are 

not financially strong In fiscal year 2018 the Postal Service 

recorded a net loss of $3 9 billion 

Revenues continue to be pressured by the ongoing erosion 

of First-Class Mail volumes Because mail products account 

for nearly 70 percent of our revenues, this ongoing decline 

puts significant financial strain on the organization To meet 

universal service obligations our network infrastructure costs 

are largely fixed or are growing as we add approximately 

1 million delivery points each year We are also subject to 

inflationary pressures and legislative mandates, particularly 

with regard to employee and retiree benefits 

While aggressive management actions have generated new 

revenue — principally in an expanding package business — 

and generated cost savings and productivity gains, the 

Postal Service’s business model is broken and will only 

produce widening losses in the coming years absent dramatic 

changes 

Our problems are serious, but solvable Through legislation, 

regulatory reforms and other measures, we can stabilize our 

financial condition and return the organization to a sustainable 

business model 

Ahead lies the hard work of reshaping the organization to 

meet the future needs of the nation In the coming year, 

we will work with our stakeholders including Congress, 

the Administration, the Postal Regulatory Commission, 

customers, unions, and others to determine the policies and 

business strategies necessary to put the Postal Service on a 

financially sustainable path 

As we do so, we know we must also build upon the strengths 

of today’s Postal Service to ensure that it continues to bind 

the nation together and serve as an engine of economic 

growth 

On behalf of the men and women of the Postal Service — 

who take great pride in serving the nation and our customers 

reliably, securely, affordably, and universally — we hope you 

find this report informative and useful 

Thank you for your interest in the United States Postal 

Service 

Megan J Brennan 

Postmaster General and Chief Executive Officer

Robert M Duncan 

Chairman, Board of Governors
4 United States Postal Service — FY2018 Annual Report to Congress

United States Postal Service Board of Governors

The Board of Governors of the U S Postal Service is 

comparable to a board of directors of a publicly held 

corporation The Board normally consists of up to nine 

Governors appointed by the President of the United 

States with the advice and consent of the Senate 

The nine Governors select the Postmaster General, 

who becomes a member of the Board, and those 10 

select the Deputy Postmaster General, who also serves 

on the Board The Postmaster General serves at the 

pleasure of the Governors for an indefinite term and the 

Deputy Postmaster General serves at the pleasure of 

the Governors and the Postmaster General The Board 

is required to have a quorum of six members to exercise 

certain powers In 2014, the Board issued a resolution 

establishing a Temporary Emergency Committee (TEC), 

consisting of all remaining members of the Board, to 

exercise powers reserved to the Board in the event that 

the number of Governors in office is insufficient to form 

a quorum 

As of Sept 30, 2018, the TEC consists of two 

appointed Governors, our Postmaster General and 

Deputy Postmaster General Three additional Governor 

nominations have been sent to the Senate and await 

confirmation For ease of use, references to the “Board” 

or “Board of Governors” encompass the TEC as 

appropriate 

Robert M. Duncan, USPS 

Board of Governors 

Chairman

Robert M Duncan’s 

appointment to the 

Postal Service Board of 

Governors by President 

Donald Trump was 

confirmed by the Senate in 

August 2018 At the end 

of our fiscal year, Sept 30, 

2018, Duncan was serving 

the remainder of a seven-year term that expired Dec 8, 

2018, and was nominated to serve another seven-year 

term expiring Dec 8, 2025 

Duncan was elected chairman of the Board of Governors 

on Sept 13, 2018, and also appointed vice chairman of 

the board’s Temporary Emergency Committee 

His federal government service began in 1989 with an 

appointment to the President’s Commission on Executive 

Exchange Duncan was also assistant director of the 

White House Office of Public Liaison under President 

George H W Bush, and he served as Chairman of the 

Republican National Committee from 2007 to 2009 

Duncan served as a member of the Board of Directors 

of the Tennessee Valley Authority from 2006 to 2011 

He was chairman of TVA’s board from 2009 to 2010 

In 2017, he was named the 17th chairman of the 

President’s Commission on White House Fellowships 

Outside of government service, Duncan was president 

and CEO of the American Coalition for Clean Coal 

Electricity He taught democracy to former communist 

leaders through the International Republican Institute, and 

he participated in the EastWest Institute’s U S China High 

Level Political Party Leaders Dialogue He is the chairman 

of the board of trustees at Alice Lloyd College, a private 

four-year liberal arts college in Pippa Passes, Kentucky, 

and chairman and CEO of the Inez Deposit Bank in Inez, 

Kentucky 

Duncan holds degrees from University of the 

Cumberlands and the University of Kentucky College of 

Law, and he has completed various executive education 

programs 

David C. Williams, USPS 

Board of Governors Vice 

Chairman

David C Williams’ 

appointment to the 

Postal Service Board of 

Governors by President 

Donald Trump was 

confirmed by the Senate in 

August 2018 Williams, a 

native of Illinois, is serving 

the remainder of a seven-year term expiring Dec 8, 2019 

He was elected vice chairman of the Board of Governors 

on Sept 13, 2018, and also appointed chairman of the 

board’s Temporary Emergency Committee 

Williams retired from the U S Postal Service Office of 

Inspector General (IG) in 2016 He had served as IG since 

Aug 20, 2003, and was responsible for a staff of more 

than 1,125 employees Since March of 2016, he has 

been a Distinguished Visiting Professor at George Mason 

University in Fairfax, Virginia 
United States Postal Service — FY2018 Annual Report to Congress 5

In July 2011, Williams was appointed by President Barack 

Obama to serve as vice chairman of the Government 

Accountability and Transparency Board He also served 

as the deputy assistant administrator for Aviation 

Operations at the Transportation Security Administration 

from August 2002 until August 2003, where he managed 

the Aviation Inspection Program at federalized airports 

Williams has served as IG for five federal agencies He 

was first appointed by President George H W Bush to 

serve as IG for the U S Nuclear Regulatory Commission 

from 1989 to 1996 President William Clinton next 

appointed him IG for the Social Security Administration 

from 1996 to 1998, and then as IG for of the Department 

of the Treasury in 1998 In 1999, President Clinton 

named him as the first IG for Tax Administration of 

the Department of Treasury, where he directed a staff 

of 1,050 to detect fraud, waste and abuse In 2001, 

President George W Bush named Williams the acting IG 

for the Department of Housing and Urban Development, 

while he was also serving at the Department of the 

Treasury 

A U S Army veteran, Williams is the recipient of the 

Bronze Star and the Vietnamese Medal of Honor for 

service in Vietnam He began his civilian federal career 

as a special agent with the U S Secret Service Moving 

up the career ladder, he served as Director of Operations 

in the Office of Labor Racketeering at the Department of 

Labor; supervisory staff investigator for the President’s 

Commission on Organized Crime; and as Director of 

the Office of Special Investigations at the U S General 

Accounting Office 

Williams graduated from Southern Illinois University and 

received master’s degree in education from the University 

of Illinois He also attended the U S Military Intelligence 

Academy, the Federal Law Enforcement Training Center 

and the U S Secret Service Training Academy 

Megan J. Brennan, USPS 

Postmaster General and 

Chief Executive Officer

Megan J Brennan is the 

74th and the first female 

Postmaster General of 

the United States and the 

Chief Executive Officer of 

the world’s largest postal 

organization 

Appointed by the Governors of the Postal Service, 

Brennan began her tenure as Postmaster General in 

February 2015 In the prior four years, Brennan served as 

Chief Operating Officer and Executive Vice President of 

the Postal Service, and held prior roles as Vice President 

of both the Eastern Area and Northeast Area Operations 

Brennan began her 30-year Postal Service career as a 

letter carrier in Lancaster, Pennsylvania 

Brennan earned a master of business administration 

degree as a Sloan Fellow at the Massachusetts Institute 

of Technology She is also an alumna of Immaculata 

College in Pennsylvania 

Ronald A. Stroman, USPS 

Deputy Postmaster General 

and Chief Government 

Relations Officer

Ronald A Stroman was 

named the 20th Deputy 

Postmaster General 

(DPMG) in March 2011 As 

the second-highest ranking 

postal executive, he serves 

on the Postal Service 

Board of Governors and 

on Postmaster General Megan Brennan’s Executive 

Leadership Team 

Stroman has more than 30 years of professional 

experience in government, legislative affairs and 

leadership before becoming DPMG From 1978 to 1984, 

he was an attorney with the Department of Housing and 

Urban Development He then moved into a position as 

counsel on the Judiciary Committee of the U S House 

of Representatives He also worked for the Committee 

on Government Operations and became a minority 

staff director and counsel for the House Committee on 

Oversight and Government Reform 

In 1997, Stroman took a director’s position with the U S 

Department of Transportation In 2001, he joined the 

General Accounting Office as managing director for the 

Office of Opportunity and Inclusiveness He returned to 

the House in 2009, where he served as staff director, 

Committee on Oversight and Government Reform, before 

joining the Postal Service 

Stroman earned his Juris Doctorate from Rutgers 

University Law Center 
6 United States Postal Service — FY2018 Annual Report to Congress

FY2018 Comprehensive Statement

Overview of Postal Operations

Mission

According to Title 39 of the United States Code, “The 

United States Postal Service shall be operated as a 

basic and fundamental service provided to the people 

by the Government of the United States, authorized 

by the Constitution, created by an Act of Congress, 

and supported by its people The Postal Service shall 

have as its basic function the obligation to provide 

postal services to bind the Nation together through 

the personal, educational, literary, and business 

correspondence of the people It shall provide prompt, 

reliable and efficient services to patrons in all areas and 

shall render postal services to all communities ”

Services

Postal services are provided at 34,772 Post Offices, 

stations and branches; including approximately 3,500 

additional Contract Postal Units, Village Post Offices 

and Community Post Offices; a network of commercial 

outlets; and our website, www.usps.com We deliver to 

nearly 159 million city, rural, Post Office Box (PO Box) 

and highway delivery points In planning and building 

new facilities, and in renovating existing facilities, we aim 

to make our retail locations convenient, accessible and 

cost-effective 

In fulfilling our universal service obligation, we provide 

services to patrons in all areas and communities in the 

United States This includes rural areas, communities 

and small towns where Post Offices are not financially 

self-sustaining We use a variety of transportation 

methods to move mail through this large network, 

including highway and air transportation 

Postal Rates

Postal rates are established to be fair, equitable and 

affordable Prices and fees are reviewed and approved 

by our Governors and subject to a review process by 

the Postal Regulatory Commission (PRC) In FY2018, 

our retail price for a First-Class Mail stamp ($0 50) 

continued to be the most affordable postal rate among 

all posts in industrialized nations 

We offer two categories of products, which are 

classified for regulatory purposes as Market-Dominant 

products and Competitive products Market-Dominant 

products include, among others, First-Class Mail, USPS 

Marketing Mail (more commonly known as Marketing 

Mail) and Periodicals Currently, price increases for 

Market-Dominant products are subject to a price cap 

based on the Consumer Price Index for All Urban 

Consumers (CPI-U) Our most profitable MarketDominant product, First-Class Mail, experienced a 

decline in volume with decreases of 3 6 percent in 

FY2018, 3 9 percent in FY2017 and 2 2 percent in 

FY2016, because of the continued migration toward 

electronic communication and transaction alternatives 

Competitive products, such as Priority Mail, Priority 

Mail Express, Parcel Select, Parcel Return Service, 

First-Class Package Services — Retail and First-Class 

Package Services — Commercial (formerly combined 

and known singularly as First-Class Package Services) 

and some types of International Mail, have greater 

pricing flexibility Our Board of Governors sets prices 

for Competitive products and the PRC reviews them 

for legal compliance By law, prices must cover costs 

attributable to each product (i e , the direct and indirect 

costs attributable to such products) and must contribute 

a reasonable share (currently 5 5 percent) of our 

institutional costs, as determined by the PRC Prices for 

these Competitive products increased an average of 4 1 

percent, 3 9 percent and 9 5 percent in January 2018, 

January 2017 and January 2016, respectively 

Semipostal Stamps

The Semipostal Authorization Act, Pub L 106–253, 

grants the U S Postal Service discretionary authority to 

issue and sell semipostal fundraising stamps to advance 

such causes as it considers to be “in the national public 

interest and appropriate ” Under the program, the Postal 

Service intends to issue five semipostal fundraising 

stamps over a 10-year period, with each stamp to be 

sold for no more than two years In November 2017, the 

Alzheimer’s semipostal stamp was the first in the new 

series and will be followed by a Post-Traumatic Stress 

Disorder semipostal stamp to be issued in 2019 As of 

Sept 30, 2018, the next three discretionary semipostal 

stamps have not yet been determined 

These semipostal stamps are postage stamps with 

a postage value equal to the First-Class Mail single-
United States Postal Service — FY2018 Annual Report to Congress 7

piece, one-ounce stamp rate in effect at the time of 

purchase, plus an amount to fund a designated cause 

By law, revenue from sales of semipostal stamps, less 

the postage paid and the reasonable costs incurred by 

us, is distributed to designated agencies to support the 

designated causes 

In FY2018, we sold three congressionally mandated 

semipostal stamps, the Breast Cancer Research

semipostal stamp, the Save Vanishing Species

semipostal stamp, and the Alzheimer’s semipostal 

stamp 

Breast Cancer Research 

The Breast Cancer 

Research semipostal 

stamp generated 

approximately $1 9 million 

in funds in excess of the 

postage value in FY2018 

We did not deduct any 

costs in connection with 

these stamps in FY2018 

The Postal Service 

distributed approximately 

$1 3 million (70 percent) 

to the National Institute 

of Health within the 

Department of Health 

and Human Services and approximately $570,000 (30 

percent) to the Breast Cancer Research Program within 

the Department of Defense 

Save Vanishing Species

The Save Vanishing 

Species semipostal stamp 

generated approximately 

$1 1 million in funds in 

excess of the postage 

value in FY2018 We did 

not deduct any costs in 

connection with these 

stamps in FY2018 All of 

the funds collected in excess of the postage value were 

given to the U S Fish and Wildlife Service to support the 

Multinational Species Conservation Funds 

Alzheimer’s

The newest semipostal 

stamp, Alzheimer’s, 

helps raise funds to fight 

Alzheimer’s disease 

In FY2018, the sale of 

the Alzheimer’s stamp 

generated approximately 

$626,500 in funds in 

excess of the postage 

value in FY2018 We did 

not deduct any costs in 

connection with these 

stamps in FY2018 Net proceeds were distributed to the 

National Institute on Aging within the U S Department of 

Health and Human Services 

Public Opinion 

Public interest and opinion of our organization remain 

strong, despite our changing business model In a 

December 2017 Gallup Poll, 74 percent of Americans 

rated the job performance of the organization as 

“excellent” or “good,” placing the United States Postal 

Service as the highest rated governmental agency 

Additionally, a Pew research poll released in February 

2018 found that 88 percent of Americans held a 

favorable opinion of the United States Postal Service, 

ranking the Postal Service as the highest rated federal 

agency 
8 United States Postal Service — FY2018 Annual Report to Congress

Key Financial and Operating Statistics

Financial History Summary

(in millions)

FY2018 FY2017 FY2016

Operating results

Total revenue 1 $ 70,660 $ 69,636 $ 71,498

Operating expenses

Compensation and benefits 2 50,004 49,108 48,441

Unfunded retirement benefits amortization 2,398 2,658 248

Retiree health benefits 4,481 4,260 9,105

Workers’ compensation 4 (797) 2,682

Transportation 7,861 7,238 6,992

All other operating expenses 9,697 9,743 9,431

Loss from operations $ (3,785) $ (2,574) $ (5,401)

Investment and interest income (expense), net (128) (168) (190)

Net loss $ (3,913) $ (2,742) $ (5,591)

Financial position

Cash and cash equivalents 3 $ 10,061 $ 10,513 $ 8,077

Property and equipment, net 14,616 14,891 15,296

All other assets 2,011 1,990 1,846

Total assets $ 26,688 $ 27,394 $ 25,219

Retiree health benefits $ 42,641 $ 38,160 $ 33,900

Workers' compensation costs 16,409 17,910 20,039

Debt 13,200 15,000 15,000

All other liabilities 17,075 15,048 12,262

Total liabilities $ 89,325 $ 86,118 $ 81,201

Total net deficiency $ (62,637) $ (58,724) $ (55,982)

1 Includes other non-operating income such as sale of land and buildings, sale of miscellaneous equipment, and sale of motor vehicles.

2 Excludes amortization of unfunded retirement benefits, retiree health benefits and workers’ compensation.

3 Cash and cash equivalents are unrestricted.
United States Postal Service — FY2018 Annual Report to Congress 9

Revenue, Pieces and Weight Statistics

(in millions of units indicated, unaudited)

FY2018 FY2017 FY2016

First-Class Mail 1

Revenue $ 24,976 $ 25,689 $ 27,508

Number of pieces 56,714 58,834 61,240

Weight, pounds 2,750 2,867 3,058

Marketing Mail 2

Revenue $ 16,512 $ 16,626 $ 17,622

Number of pieces 77,269 78,329 80,885

Weight, pounds 7,346 7,577 7,961

Shipping and Packages 3

Revenue $ 21,507 $ 19,529 $ 17,427

Number of pieces 6,152 5,758 5,159

Weight, pounds 12,088 10,887 9,454

International Mail

Revenue $ 2,630 $ 2,614 $ 2,674

Number of pieces 941 1,001 1,005

Weight, pounds 504 501 484

Periodicals

Revenue $ 1,277 $ 1,375 $ 1,507

Number of pieces 4,993 5,301 5,586

Weight, pounds 1,744 1,922 2,058

U.S. Postal Service Mail 4

Number of pieces 291 322 422

Weight, pounds 113 106 118

Free matter for the blind 5

Number of pieces 42 45 45

Weight, pounds 15 20 18

Other services – revenue 3 $ 3,720 $ 3,760 $ 3,630

Change in accounting estimate 6 $ — $ — $ 1,061

Postal Service totals

Operating revenue $ 70,622 $ 69,593 $ 71,429

Number of pieces 146,402 149,590 154,342

Weight, pounds 24,560 23,880 23,151

Note: We have reclassified the totals for certain mail categories for prior years to conform with classifications used in the current year.

1 Excludes First-Class Mail Parcels.

2 Excludes Marketing Mail Parcels.

3 See Shipping and Packages and Other Services Statistics table on the following page.

4

 No revenue is received or recorded for this category of mail.

5 By law, USPS is required to offer below-cost postage prices to certain categories of mailers including blind individuals. Congress reimbursed the Postal 

Service for revenue it had forgone by offering these below-cost postage prices.

6 During FY2016, we revised the methodology used to estimate our deferred revenue — prepaid postage liability for Forever stamps. As a result, deferred 

revenue — prepaid postage was decreased by nearly $1.1 billion. In accordance with accounting principles generally accepted in the United States (GAAP), 

the change was accounted for as a change in accounting estimate.
10 United States Postal Service — FY2018 Annual Report to Congress

Shipping and Packages and Other Services Statistics

(in millions of units indicated; pieces, articles and weights unaudited)

FY2018 FY2017 FY2016

Priority Mail Express

Revenue $ 751 $ 766 $ 809

Number of pieces 28 30 33

Weight, pounds 30 33 37

First-Class Packages 1

Revenue $ 3,871 $ 3,353 $ 2,782

Number of pieces 1,275 1,157 1,028

Weight, pounds 491 455 371

Priority Mail 2

Revenue $ 9,387 $ 8,717 $ 8,206

Number of pieces 1,089 1,045 1,029

Weight, pounds 2,793 2,542 2,581

Parcel Select Mail and Marketing Mail Parcels

Revenue $ 6,450 $ 5,707 $ 4,662

Number of pieces 3,031 2,837 2,414

Weight, pounds 7,202 6,347 5,014

Parcel Return Service Mail

Revenue $ 220 $ 183 $ 168

Number of pieces 89 69 64

Weight, pounds 230 195 188

Package Services

Revenue $ 828 $ 803 $ 800

Number of pieces 640 620 591

Weight, pounds 1,342 1,315 1,263

Total shipping and packages

Revenue $ 21,507 $ 19,529 $ 17,427

Number of pieces 6,152 5,758 5,159

Weight, pounds 12,088 10,887 9,454

Other services

Certified Mail

Revenue $ 614 $ 672 $ 672

Number of articles 179 201 198

Return Receipts

Revenue $ 323 $ 340 $ 359

Number of articles 142 147 154

USPS Tracking

Revenue $ 1 $ 1 $ 1

Number of articles 5,338 4,951 4,318

PO Box Services revenue $ 999 $ 964 $ 951

Money Orders

Revenue $ 147 $ 147 $ 153

Number of articles 83 87 90

Insurance

Revenue $ 79 $ 74 $ 79

Number of articles 18 15 16

Shipping and mailing supplies

Revenue $ 109 $ 109 $ 109

Number of articles 54 55 54

Miscellaneous other services revenue $ 1,448 $ 1,453 $ 1,306

Total other services revenue $ 3,720 $ 3,760 $ 3,630

Note: We have reclassified the totals for 

certain mail categories in prior years to 

conform with classifications used in the 

current year.

1

 Includes First-Class Mail Parcels, 

First-Class Package Services — Retail 

and First-Class Package Services — 

Commercial.

2

 Includes USPS Retail Ground (formerly 

Standard Post), which is a retail-only 

product classified as Market-Dominant. 

USPS Retail Ground is priced identically 

to Priority Mail for Zones 1–4 and is 

functionally equivalent to Priority Mail for 

those zones.
United States Postal Service — FY2018 Annual Report to Congress 11

Post Offices and Delivery Points

(in actual units indicated, unaudited)

FY2018 FY2017 FY2016

Post Offices, stations and branches

Postal Service-managed

Post Offices 26,365 26,410 26,611

Classified stations, branches and carrier annexes 4,959 4,967 4,974

Total Postal Service-managed 31,324 31,377 31,585

Contract Postal Units 2,240 2,331 2,458

Village Post Offices 743 821 877

Community Post Offices 465 476 503

Total offices, stations and branches 34,772 35,005 35,423

Residential delivery points

City delivery 83,279,977 82,855,611 82,411,214

Rural 43,591,733 42,805,252 42,065,134

PO Box 15,960,945 15,954,141 15,926,420

Highway contract 2,959,424 2,924,386 2,880,500

Total residential delivery 145,792,079 144,539,390 143,283,268

Business delivery points

City delivery 7,709,827 7,690,284 7,664,927

Rural 1,673,267 1,639,505 1,614,185

PO Box 3,301,930 3,379,418 3,452,198

Highway contract 81,153 80,079 79,602

Total business delivery 12,766,177 12,789,286 12,810,912

Total delivery points 158,558,256 157,328,676 156,094,180

Change in delivery points 1,229,580 1,234,496 1,142,352

Number of Routes by Type of Delivery

(in actual units indicated, unaudited)

Route FY2018 FY2017 FY2016

City 143,358 143,937 144,571

Rural 78,737 75,433 74,724

Highway contract route 9,748 9,810 9,809

Total 231,843 229,180 229,104
12 United States Postal Service — FY2018 Annual Report to Congress

Postal Vehicle Inventory

(in actual units indicated, unaudited)

Vehicle type FY2018 FY2017 FY2016

Delivery and collection (0.5–2.5 tons) 208,133 205,997 203,853

Mail transport (tractors and trailers) 5,566 5,379 5,511

Mail transport (5–11 tons) 1 2,389 2,080 2,100

Administrative and other 7,196 7,507 6,357

Service (maintenance) 6,398 7,034 7,191

Inspection Service and law enforcement 2,920 2,942 2,884

Total 232,602 230,939 227,896

1

 Previously referred to as Mail transport (3-9 tons).

Real Estate Inventory

(in actual units indicated, unaudited)

Real estate inventory FY2018 FY2017 FY2016

Owned properties 8,362 8,448 8,484

Owned interior square feet 192,842,955 191,745,056 192,521,396

Leased properties 23,147 23,184 23,214

Leased interior square feet 79,047,136 78,335,141 78,735,195

GSA1

/other government properties 294 285 285

GSA/other government interior square feet 1,797,769 1,839,972 1,885,956

1 General Services Administration.

Real Estate Inventory Actions

(in actual units indicated, unaudited)

Real estate inventory actions FY2018 FY2017 FY2016

Lease actions (alternate quarters, new leases and renewals) 4,667 3,927 5,050

Property disposals 1 14 18 27

New construction 2 77 69 52

Repair and alteration projects 58,653 53,694 53,466

Repair and alteration expense totals (rounded) $ 215,000,000 $ 217,000,000 $ 245,000,000

Repair and alteration projects (capital) 4,464 4,598 5,102

Repair and alteration capital totals (rounded) $ 483,400,000 $ 389,500,000 $ 314,000,000

1

 Total partial and complete property sales (does not include non-property sales such as right-of-ways/easements, sale of rights, defaults, installment 

payments, etc.).

2

 Includes the build-out of pre-existing spaces that we did not previously own (alternate quarters), the new construction of leased or owned space and 

the expansion of existing spaces.
United States Postal Service — FY2018 Annual Report to Congress 13

Employees

(actual numbers, unaudited)

FY2018 FY2017 FY2016

Headquarters and HQ-related employees

Headquarters 3,254 3,252 3,098

Headquarters – field support units 3,491 3,581 3,640

Inspection Service – field 2,389 2,439 2,411

Inspector General 1,029 1,067 1,134

Total HQ and HQ-related employees 10,163 10,339 10,283

Field employees

Area offices 899 825 821

Postmasters/installation heads 13,742 13,641 14,398

Supervisors/managers 25,590 25,281 24,832

Professional administration and technical personnel 4,672 4,580 4,526

Clerks/nurses 121,622 128,256 130,178

Mail handlers 37,535 39,307 39,405

City delivery carriers 168,199 166,569 170,885

Motor vehicle operators 8,411 8,147 7,723

Rural delivery carriers – full-time 70,852 69,462 68,261

Building and equipment maintenance personnel 30,219 31,366 32,307

Vehicle maintenance employees 5,253 5,330 5,289

Total field employees 486,994 492,764 498,625

Total career employees 497,157 503,103 508,908

Non-career employees

Casuals 879 922 1,633

Postal support employees 26,386 26,823 26,368

Non-bargaining temporary 285 304 355

Rural part-time 59,183 59,655 53,183

Postmaster relief and leave replacements 2,168 2,368 3,626

City carrier assistant 42,115 44,486 40,436

Mail handler assistant 6,274 6,463 5,280

Total non-career employees 137,290 141,021 130,881

Total employees 634,447 644,124 639,789
14 United States Postal Service — FY2018 Annual Report to Congress

Executive Compensation

The Board establishes executive officer compensation 

and benefits, subject to the requirements and limitations 

of federal law Although our governing law provides 

that executives should be compensated at a level 

comparable to the private sector, we do not have 

the resources to achieve this level of compensation 

Compensation for our executive officers remains 

significantly below that of similarly-ranked senior 

executives in the private sector 

In most circumstances, we cannot compensate 

our executives more than the rate for Level 1 of the 

Executive Schedule ($207,800 in Calendar Year 2017) 

Under certain programs, we can award bonuses or 

other rewards, which raise the level of compensation 

beyond this limit; however, compensation is still limited 

by federal law 

Performance-based payments for FY2016 were paid 

in Calendar Year 2017 and were approved by the 

Governor in place in 2016 

In accordance with legal reporting requirements, 

the following table reports Calendar Year 2017 

compensation information including 1) our executives 

compensated in excess of Federal Executive Level 1 

in Calendar Year 2017, and 2) the amount of bonus 

or other payments that caused pay to exceed Level 

1 of the Executive Schedule in Calendar Year 2017 

The terms “bonus or other payment” in the second 

column of the table are statutory terms that represent 

various amounts which are a part of an executive’s total 

compensation; these amounts are predicated on the 

Postal Service’s maintenance of a performance appraisal 

system that makes meaningful distinctions based on 

relative performance 

Executive Name

CY2017 Bonus or 

Other Payment

CY2017 

Compensation in 

Excess of Level 1 of 

Executive Schedule

Megan J. Brennan $ 79,728 $ 79,728

Robert Cintron 1,648 1,648

James P. Cochrane 53,484 53,484

Joshua D. Colin 10,648 10,648

Joseph Corbett 54,261 54,261

Guy J. Cottrell 2,199 2,199

Gregory G. Graves 2,387 2,387

Linda M. Malone 1,648 1,648

Thomas J. Marshall 52,020 52,020

Kevin L. McAdams 1,574 933

Maura McDevitt 2,163 2,163

Julie S. Moore 2,779 2,779

Shaun E. Mossman 1,624 1,624

Edward F. Phelan Jr. 1,624 1,624

Gary C. Reblin 1,553 756

William C. Rucker III 16,382 16,382

Tom Samra 2,417 2,215

Kristin A. Seaver 51,178 51,178

Jacqueline K. Strako 10,648 10,648

Ronald A. Stroman 60,793 60,793

Douglas A. Tulino 1,574 1,450

David E. Williams Jr. 51,178 51,178

Jeffrey C. Williamson 52,020 52,020

Note: Legislation requires reporting compensation in the last full calendar year. 

This does not align with our fiscal year, which is from October to September.
United States Postal Service — FY2018 Annual Report to Congress 15

FY2018 Performance Report 

and FY2019 Performance Plan

Corporate-Wide Goals and Targets

We are a self-supporting, independent federal agency 

and the only delivery service that reaches every address 

in the United States Everyone living in the United States 

and its territories has access to postal products and 

services and pays the same for a First-Class postage 

stamp regardless of their location 

The United States Postal Service puts information and 

technology at the center of its business strategies 

We are speeding the pace of innovation, developing 

mobile and digital tools to play a larger role in the daily 

digital lives of customers, and use the world’s most 

advanced tracking and information systems to speed 

the flow of mail and packages throughout our network 

We leverage the information derived from our robust 

scanning and tracking systems to add value to the 

senders and receivers of mail and packages — and to 

create new products and services to spur growth in the 

mailing industry 

We continue to play an indispensable role as a driver 

of commerce and as a provider of delivery services 

that connects Americans to one another — reliably, 

affordably and securely, and to every residential and 

business address 

To provide reliable, efficient, trusted and affordable 

universal delivery service, we established four strategic 

areas of focus:

 Deliver a World-Class Customer Experience

 Equip, Empower and Engage Employees

 Innovate Faster to Deliver Value

 Invest in our Future Platforms

To assess our efforts in achieving these strategies, we 

measure our performance through progress against 

corporate performance outcomes:

 High-Quality Service

 Excellent Customer Experiences

 Safe Workplace and Engaged Workforce

 Financial Health

For each of these outcomes, the following subsections 

describe both the outcomes and measures used to 

assess our progress, a report of our performance in 

FY2018 and our plan for FY2019, including indicator 

targets The table on the following page shows our 

performance from FY2015–FY2018 and our targets for 

FY2018–FY2019 for each outcome 

These targets are aligned with the FY2019 Integrated 

Financial Plan (IFP), which includes our planned revenue 

and expenses for FY2019 Every fiscal year, we develop 

a budget and plan that we intend to be sufficient for 

our field offices to meet their non-financial performance 

outcomes We design all of our corporate-wide targets 

to be achievable given the planned finances in the IFP 

We measure “Controllable Income (Loss)” as one of 

our indicators for the outcome “Financial Health ” 

This measure is based on planned expenditures 

and revenues for every program activity (i e , 

budget item contributing to controllable income 

[loss]) outlined in the IFP Controllable income (loss) 

is a non-GAAP (accounting principles generally 

accepted in the United States) measure defined as 

total revenue less controllable expenses and onetime accounting adjustments Controllable expenses 

consist of compensation and benefits; transportation; 

depreciation; supplies and services; and rent, utilities 

and other controllable expenses They do not include 

non-controllable expenses, discussed in detail later 

in this document In the subsection “Controllable 

Income (Loss),” we provide the planned revenues and 

expenditures for FY2019, as well as actual revenues 

and expenditures for FY2018 This plan yields a target 

controllable loss for FY2019, which is our target for 

the FY2019 IFP, for the reasons discussed in that 

subsection 

In the day-to-day operation of our business, we focus 

on costs within our control, such as salaries and 

transportation We calculate controllable income (loss) 

by excluding items we cannot control, such as Postal 

Service Retiree Health Benefits Fund (PSRHBF) actuarial 

revaluation and amortization expenses, workers’ 
16 United States Postal Service — FY2018 Annual Report to Congress

compensation expenses caused by actuarial revaluation 

and discount rate changes, retirement expenses caused 

by actuarial revaluation, and adjustments for nonrecurring items, such as the 2016 change in accounting 

estimate for Deferred revenue-prepaid postage 

Controllable income (loss) should not be considered 

a substitute for net income (loss) and other GAAP 

reporting measures 

We developed the budget in the IFP to be consistent 

with our planned work hours, which are used in the 

calculation of the targets for the measure “Deliveries per 

Total Work Hours, % Change ”
United States Postal Service — FY2018 Annual Report to Congress 17

FY2015–FY2018 Results and FY2018–FY2019 Targets for Corporate-Wide Performance Outcomes

Corporate 

Performance 

Outcome Measure

FY2019 

Target

FY2018 

Actual

FY2018 

Target

FY2017 

Actual

FY2016 

Actual

FY2015 

Actual

High-Quality 

Service 1

Single-Piece First-Class Mail

Two-day 96.50 93.78 96.50 94.72 94.66 93.28

Three-to-five-day 95.25 82.48 95.25 85.57 83.66 76.56

Presort First-Class Mail

Overnight 96.80 96.00 96.80 96.46 96.16 95.74

Two-day 96.50 94.92 96.50 95.58 95.05 93.56

Three-to-five-day 95.25 91.96 95.25 93.16 91.68 87.78

First-Class Mail Letter and Flat Composite (FCLF) 2 96.00 92.07 96.00 93.29 92.34 89.44

Marketing Mail and Periodicals Composite 3 91.80 89.26 91.80 91.44 90.01 86.77

Excellent 

Customer 

Experiences

Customer Experience Composite Index 4 80.00 67.47 80.93 88.30 87.62 85.73

Business Service Network (BSN) 96.73 95.90 96.73 96.25 95.13 94.32

Point of Sale (POS) 90.42 87.98 90.42 88.53 86.38 86.28

Delivery 86.33 80.47 86.33 83.22 76.26 77.49

Customer Care Center (CCC) 5 55.00 39.19 69.17 86.80 85.18 76.00

Enterprise Customer Care (eCC) 6 70.00 36.73 70.00 3.78 5.19 NA

Large Business Panel NA 72.34 78.00 76.75 75.88 74.61

USPS.com7 65.00 57.54 66.33 NA NA NA

Business Mail Entry Unit (BMEU) 7 95.13 95.33 95.00 NA NA NA

Safe Workplace 

and Engaged 

Workforce

Total Accident Rate 15.00 15.09 15.00 15.43 16.09 16.44

Engagement Survey Response Rate 8 0.51 0.42 0.75 0.46 0.30 0.47

Financial 

Health

Controllable Income (Loss) ($ in billions) (3.10) (1.95) (1.40) (0.81) 0.61 1.19

Deliveries per Total Work Hours, % Change 9 1.40 (0.50) 2.10 (0.50) 0.10 0.20

Note: NA indicates that either no data was collected or no target was set for the relevant indicator and year.

1

The Postal Service is providing nonpublic service performance data for certain competitive products as part of the Nonpublic Annex in the Annual Compliance Report

proceeding conducted by the Postal Regulatory Commission.

2 For our FY2015–FY2018 actuals and FY2018–FY2019 targets, we report the First-Class Mail Letter and Flat (FCLF) Composite in lieu of the First-Class Composite,

which we reported in previous Annual Reports to Congress. FCLF Composite does not include First-Class Mail parcels. FCLF Composite numbers are based on the

externally-measured quarterly service performance data that we file with the PRC pursuant to Part 3055 of Title 39 of the Code of Federal Regulations; they do not

include mitigating factors used internally for compensatory purposes. Additionally, service measurement adjustments altered one previously reported end-of-year

actual (FY2017 First-Class Mail Letter and Flat Composite), which is accurately reflected in this table.

3

 For our FY2015–FY2018 actuals and FY2018–FY2019 targets, we report the Marketing Mail and Periodicals Composite in lieu of Standard Composite, which we

reported in previous Annual Reports to Congress.

4

 In FY2017, the Customer Insights Composite Index was based on BSN, POS, Delivery, CCC and eCC. In FY2018, the Customer Insights Composite Index was based on

BSN, POS, Delivery, CCC, eCC, Large Business Panel, USPS.com and BMEU. In FY2019, the renamed Customer Experience Composite Index will be based on BSN,

POS, Delivery, CCC, eCC, USPS.com and BMEU.

5 The FY2019 target is based on satisfaction with both live agents and our Interactive Voice Response system, while the FY2015–FY2018 actuals and FY2018 target are

based on satisfaction with live agents only. Because of this change in measurement, the FY2019 target is not directly comparable to the FY2018 target.

6

 The FY2019 target is based on overall customer satisfaction with the resolution quality received and year-to-date overall satisfaction improvement as compared to the

same period last year, while the FY2015–FY2017 actuals are based on the percentage of cases that were reopened.

7

 The USPS.com and BMEU performance indicators were added to the Customer Experience Composite Index in FY2018.

8 In FY2015–FY2018, and for the FY2019 target, we used the Postal Pulse survey. For FY2018, we chose a significant stretch goal to emphasize the importance of this

measure.

9

 FY2015 has been recast to account for the adjustment to workhours based on earned workload.
18 United States Postal Service — FY2018 Annual Report to Congress

High-Quality Service

Our commitment to execute our mission to “...bind 

the Nation together through the personal, educational, 

literary, and business correspondence of the people It 

shall provide prompt, reliable and efficient services to 

patrons in all areas and shall render postal services to 

all communities” (Title 39 CFR) forms the core of our 

operations 

To measure our performance relative to our mission, we 

evaluate our delivery service performance continuously 

by randomly sampling mailpieces and measuring the 

time between when mail is deposited in a postal facility 

and when a USPS employee delivers it at a home, 

business or PO Box 

Below we describe the categories of mail standards that 

we use to gauge service performance 

Single-Piece First-Class Mail. The measures for 

Single-Piece First-Class Mail represent the performance 

of Single-Piece First-Class Mail letters, postcards and 

flats throughout the fiscal year The indicators show 

the estimated percent of total mail by service standard 

(two-day and three-to-five-day) that was delivered to 

customers on time 

Presort First-Class Mail. The measures for Presort 

First-Class Mail represent the performance of 

commercial presorted First-Class Mail letters, postcards 

and flats delivered throughout the fiscal year The 

indicators show the estimated percent of total mail by 

service standard (overnight, two-day and three-to-fiveday) that was delivered on time 

First-Class Mail Letter and Flat Composite. The 

First-Class Mail Letter and Flat (FCLF) Composite 

category is the weighted average of the performance of 

Single-Piece First-Class Mail and Presort First-Class Mail 

across all service standards, weighted by volume 

Marketing Mail and Periodicals Composite. The 

Marketing Mail and Periodicals Composite category is 

a composite indicator of the percent of all Marketing 

Mail and Periodicals that were delivered within the 

service standard established during the year This 

includes Marketing Mail letters, Marketing Mail flats and 

Periodicals Approximately two-thirds of mail volume 

in this composite is Marketing Mail letters, while the 

remainder is Marketing Mail flats and Periodicals 

FY2018 Performance Report

We did not meet any of our FY2018 service 

performance targets for our Market-Dominant 

product categories: Single-Piece First-Class Mail (all 

service standards), Presort First-Class Mail (all service 

standards), First-Class Mail Letter and Flat Composite 

and Marketing Mail and Periodicals Composite 

During the first half of FY2018, when we process our 

highest mail and package volumes, we experienced 

considerable service disruptions because of extreme 

weather and natural disasters across the nation 

including three major hurricanes, wildfires, mudslides, 

heavy rainfall, ice and snow These natural disasters 

significantly affected three of seven USPS Areas and 

disrupted operations across our network 

In the second quarter of FY2018, in response to the 

continued decline of First-Class Mail volume, doubledigit growth in package volume, and over a million 

more delivery points, we conducted a network-wide job 

realignment and bidding process This effort limited our 

ability to quickly normalize operations and return service 

performance to standards, but will benefit operations in 

FY2019 and beyond 

Our annual service performance metrics are cumulative 

and volume weighted Thus, performance during the 

first half of the year (when volume is highest) sets the 

pace for the remainder of the year Service performance 

scores improved in the Marketing Mail and Periodicals 

Composite and exceeded target during the second half 

of FY2018 

To address and recover from these network disruptions, 

we leveraged tools such as Lean Six Sigma to 

coordinate network-wide improvement initiatives aimed 

at improving service across our mail processing and 

delivery operations As an example, we developed and 

deployed several advanced service diagnostics tools 

and created or overhauled numerous dashboards to 

proactively identify and resolve systemic issues affecting 

our service and improve operational efficiencies 

Additionally, we trained employees on the use of these 

diagnostic tools through formal classes, webinars and 

training videos 
United States Postal Service — FY2018 Annual Report to Congress 19

FY2019 Performance Plan

We have experienced and anticipate further significant 

weather events in FY2019 We have incorporated 

lessons learned from the 2018 weather disruptions into 

our response efforts to normalize operations quickly with 

the least amount of disruptions 

To meet our FY2019 targets, we will continue 

implementing operational, technological and training 

initiatives to improve the mail delivery process We will 

leverage data analytics to better monitor systems and 

analyze scans, track mail at every step of the mailhandling process, and proactively identify potential root 

causes of lower service performance We will deploy 

tools to more accurately generate daily processing and 

operational plans and predict transportation capacity 

needs 

In FY2019, we will use Service Performance 

Measurement (SPM) as the official measurement system 

which will replace the External First Class Measurement 

(EXFC) system This change was approved by the Postal 

Regulatory Commission in 2018 This measurement 

system will provide more accurate, reliable and 

representative service performance reporting by 

gathering data from multiple sources including live 

scans of the billions of pieces moving through the postal 

network, rather than relying on samples of test pieces 

and test recipients This system will allow us to provide 

a much more accurate reflection, in near real-time, of 

the organization’s service performance and better use 

data analytics to identify systemic or localized areas for 

improvement 

Finally, we will prioritize capital investments on key 

infrastructure upgrades that best achieve improvements 

in service, processing capacity, labor efficiencies and 

maintenance costs We will also continue our efforts 

to actively engage our employees to implement these 

process changes and technologies to better serve our 

customers 

Excellent Customer Experiences

The Customer Experience composite measurement 

system provides a comprehensive view of the customer 

experience across the most frequently used postal 

customer contact channels and is measured as a 

composite index of component survey scores The 

measure — Customer Experience (CX) Composite 

Index — is comprised of component surveys of each 

of these customer touchpoints The components are:

2

Point of Sale (POS) survey. The POS survey measures 

customers’ overall satisfaction with their experiences at 

retail locations 

Delivery survey. The Delivery survey measures the 

overall satisfaction of Residential and Small/Medium 

Business customers’ delivery experience In FY2018, 

this metric was changed to a single overall satisfaction 

(OSAT) question measuring customers’ experience with 

USPS delivery about mail or packages recently received 

The OSAT score is itself a composite of Residential and 

Small/Medium Business survey scores, including both 

street addressed and PO Box deliveries 

Business Service Network (BSN) survey. The BSN 

provides nationwide support to qualified business 

customers on service issues, information and requests 

The BSN survey measures businesses’ overall 

satisfaction with their BSN account representative in 

resolving their issue 

Business Mail & Entry Unit (BMEU) survey. The 

BMEU survey measures each commercial mailers’ 

experience with their overall satisfaction and customer 

opinion of BMEU employees, the service they received, 

and suggestions for areas of improvement It was added 

in FY2018 as part of the CX Composite Index 

Enterprise Customer Care (eCC) customer survey.

The eCC survey measures resolution satisfaction 

of customers who file a complaint through either a 

Customer Care Center live agent or on USPS com 

Customer Care Center (CCC) survey. The CCC survey 

measures customer satisfaction with calls made to our 

customer care centers 

2

 Beginning in FY2019, Customer Insights (CI) Composite Index has been 

renamed to Customer Experience (CX) Composite Index.
20 United States Postal Service — FY2018 Annual Report to Congress

USPS.com survey. The USPS com survey measures 

customer satisfaction with the USPS website as well 

as solicits customer opinion of website elements In 

FY2018, USPS com survey was added to the CX 

Composite Index 

Large Business Panel survey. The Large Business 

Panel survey measures large business customer 

satisfaction and opinion on Market-Dominant products 

and satisfaction with shipping services 

FY2018 Performance Report

In FY2018, we continued to evolve and improve 

our measurement, reporting and evaluation of our 

customers’ experiences with our organization We 

identified important customer touchpoints that had 

previously not been measured and implemented surveys 

to measure experience Additionally, we evaluated each 

pre-existing survey for effectiveness in measuring overall 

customer satisfaction These survey improvements 

increased the number of survey participants while 

simplifying the overall survey process 

In FY2018, the CX Composite Index score for FY2018 

was 67 47 percent, lower than our FY2018 target 

of 80 93 percent With the exception of the BMEU 

component metric, customer experience scores across 

all surveyed touchpoints missed their FY2018 targets 

The two primary contributors for missing the composite 

target were the eCC and CCC survey results 

The following sections address FY2018 actual scores, 

FY2018 target, accomplishments achieved throughout 

the year and other related information if the FY2018 

target was not met for each CX Composite index 

component 

POS survey. In FY2018, we achieved a score of 

87 98 percent, lower than our target of 90 42 percent 

Throughout the fiscal year, enhanced retail associate 

training was provided to improve customer service and 

employee knowledge of U S Postal Service products 

and services 

Delivery survey. In FY2018, we achieved a score of 

80 47 percent, lower than our target of 86 33 percent 

Our underperformance relative to FY2018 target was 

largely due to significant service disruptions including 

weather and natural disasters in the first half of the year 

BSN survey. In FY2018, we achieved a score of 95 90 

percent, slightly lower than the target of 96 73 percent 

We continued to implement BSN process improvements 

aimed at improving customer experiences, improving 

the number of respondents, and better representing our 

business customers’ overall satisfaction with our BSN 

services versus just the last transaction 

An example of a process improvement was our 

deployment of the Single Package Look-Up (SPLU) tool, 

which enables our BSN representatives to seamlessly 

search all postal tracking systems to more quickly 

assess and effectively resolve package delivery issues 

BMEU survey. In FY2018, we achieved a score of 

95 33 percent, exceeding our target of 95 00 percent 

During the year, we provided training focused on 

instructing low-performing BMEU units on best-in-class 

business mail acceptance workflow procedures These 

additional training touchpoints enabled our employees 

to deliver superior performance within this customer 

channel 

eCC survey. In FY2018, we achieved a score of 36 73 

percent, substantially lower than our target of 70 00 

percent The primary reason cited by customers was 

that their issues were not adequately resolved quickly 

CCC survey. In FY2018, we achieved a score of 

39 19 percent, significantly lower than our target of 

69 17 percent The primary root causes identified 

by customers were long wait times before speaking 

to a USPS representative and the inability to resolve 

their issues at first contact with our Interactive Voice 

Response system 

Another contributing factor to the decrease in customer 

satisfaction scores was a change we made to streamline 

the Customer Care Center customer satisfaction survey 

In order to increase survey response rates, we both 

reduced the number of questions and asked customers 

to participate in the survey during the call, resulting in a 

six-fold increase in survey responses as compared to 

the prior year 

USPS.com survey. In FY2018, we achieved a score of 

57 54 percent, lower than our target of 66 33 percent 

Survey respondents identified both website functionality 

and design as contributors to their dissatisfaction To 

address their concerns and improve the customer 

experience, we refreshed the USPS com website with 

new user interfaces, better navigation and improved 

functionality throughout the year 
United States Postal Service — FY2018 Annual Report to Congress 21

Large Business Panel survey. In FY2018, we achieved 

a score of 72 34 percent, lower than our target of 78 00 

percent Survey respondents identified two contributing 

factors to our underperformance: ease of contacting a 

Large Business Panel representative and issue/claim 

resolution 

FY2019 Performance Plan

In FY2019, excellent customer experiences will continue 

to be a focus of the organization, from improving the 

way we engage with customers to enhancing how we 

measure customer experiences Across all channels, 

we will strive to better provide our customers with the 

experience they desire 

To emphasize the organization’s commitment to improve 

our customer experiences, the Postmaster General 

realigned her leadership team in FY2018, establishing 

the Vice President of Customer Experience position 

to provide leadership, organizational coordination 

and focused attention on improving the customer 

experience 

In FY2019, we will calculate the CX Composite 

Index differently than in the previous year The CX 

Composite Index will measure the aggregate variance 

of customer satisfaction scores across each touchpoint 

relative to the performance target we establish for 

each touchpoint Previously, the weighted average of 

customer satisfaction raw scores was totaled to create 

the CX Composite Index This will better enable us to 

incent performance improvements appropriate for each 

touchpoint 

We opted to remove the Large Business Panel survey 

in FY2019 to reduce customer segment survey 

redundancies as business customer experience is 

captured in our expanded BSN and BMEU surveys 

In FY2019, we will modify how we gauge success of our 

Enterprise Customer Care operations by measuring both 

overall satisfaction with the resolution quality received 

and year-to-date overall satisfaction improvement as 

compared to the same period last year This change 

differs from FY2018 where we measured the overall 

satisfaction with the quality of service received in 

response to the issue This will allow us to both measure 

the current success of our employees’ efforts to satisfy 

our customers and provide incentive for our employees 

to continually improve customer satisfaction efforts We 

believe that this change will better align with our goal to 

equip, engage and empower our employees to more 

swiftly resolve customer issues 

We plan to improve our ability to identify root causes 

of undesirable customer experiences in FY2019 by 

better enabling our workforce to enact actionable plans, 

allocate resources efficiently, and deliver a world-class 

customer experience 

Safe Workplace and Engaged Workforce

Employee Safety 

Employee safety is a top priority for the organization 

For the fourth year in a row we reduced total accidents 

Prevention is the guiding principle for occupational 

safety and health legislation and the underlying 

philosophy of the USPS Safety Program To avoid 

accidents and occupational diseases, we have adopted 

standard requirements for safety and health protection 

at the workplace and have established compliance 

protocols to ensure effective implementation 

Risk assessment and management are fundamental 

to the prevention and control of risks to safety and 

health in the workplace This includes taking into 

account all relevant risks, checking the efficiency of the 

safety measures adopted, documenting the outcomes 

of the assessment and reviewing and updating the 

assessment regularly 

Our safety performance is measured by using a total 

accident rate metric This metric is the total accident 

count for the year, multiplied by the approximate number 

of annual work hours per employee (2,000), multiplied 

by 100 and divided by the total yearly number of work 

hours This yields, approximately, the annual accident 

frequency per 100 employees This rate uses the same 

calculation developed by the Occupational Safety and 

Health Administration (OSHA) for OSHA Illness and 

Injury (I&I) rates but expands it to include accidents that 

do not result in medical expenses, days away from work 

or restrictions from performing full duty Using the total 

accident rate is an industry best practice that enables 

us to design targeted prevention strategies designed to 

eliminate accidents and reduce the severity of impact on 

both the employee and the organization 
22 United States Postal Service — FY2018 Annual Report to Congress

FY2018 Performance Report

In FY2018, our total accident rate was 15 09 Total 

accidents for FY2018 decreased more than 3 5 percent 

compared with FY2017, while the employee base 

declined by 1 5 percent Nonetheless, we did not meet 

our aggressive accident rate target of 15 00 The table 

below shows accidents by type in FY2018 and FY2017 

Accident Count by Type

FY2018 FY2017 Percent 

change

OSHA I&I 36,690 38,653 (5.08)%

Non-Recordable 50,969 52,184 (2.33)%

Motor Vehicle1 29,944 29,425 1.76%

Total 87,659 90,837 (3.5)%

1 Motor vehicle accidents are included in both the OSHA I&I and non-recordable 

accident counts.

FY2019 Performance Plan

The FY2019 target for the total accident rate is 15 00 

To achieve this, we will continue to focus on prevention 

and a proactive approach to safety through efforts 

designed to address the most frequent hazards of 

the workplace such as dog bites, extreme weather, 

distracted driving and improper lifting 

We will also focus on the importance of leadership in 

maintaining a culture of safety Our safety initiatives 

will assist our processing facilities and Post Offices 

by establishing effective accident reduction plans, 

enlisting the cooperation and support of our employees 

and taking steps to address motor vehicle accidents 

through training, engineering controls and consistent 

communication In addition, we will continue to 

recognize Postal leaders who demonstrate exceptional 

commitment to creating a safe work environment 

Employee Engagement

We believe that an engaged workplace is one in which 

individuals and teams thrive, consistently perform at high 

levels and achieve positive organizational outcomes To 

measure the level of employee engagement within our 

organization, we administer the Postal Pulse survey, a 

13-question instrument developed by Gallup, Inc and 

have established the Engagement Survey Response 

Rate as the corporate measure of progress 

The Engagement Survey Response Rate measures the 

level of participation of all potential respondents during 

each survey administration In addition to participation 

rate, the grand mean score is used as a measurement 

of the overall level of engagement of surveyed 

respondents While the employee engagement grand 

mean score is not a corporate measure, it is important 

to note the grand mean score has increased since 

survey inception in 2015 

FY2018 Performance Report

Although we continued to improve our corporate grand 

mean employee engagement score in FY2018, we did 

not achieve our corporate target: Engagement Survey 

Response Rate In FY2018, our Engagement Survey 

Response Rate of 42 percent did not meet our stretch 

target of 75 percent 

Throughout the year, we continued delivering a program 

of engagement training to all executives, managers and 

non-bargaining employees across the organization, 

which included the instructor-led training “Creating 

an Engaging Workplace at USPS ” In total, more than 

47,000 leaders participated in engagement training 

Additionally, to increase the opportunity for employees 

to voice their opinions, we introduced a comment 

box feature to the Postal Pulse survey in FY2018 The 

received comments were used to identify additional 

employee engagement insights and actions 

FY2019 Performance Plan

Our FY2019 Postal Pulse Engagement Response Rate 

target is 51 percent To achieve this target, we will 

continue to improve our efforts to communicate the 

importance of employee participation in the survey and 

provide postal employees with the training and tools 

necessary to equip each employee to best identify, 

assess and address engagement strengths and areas 

of opportunity specific to improving their local work 

environments 

In addition, we will continue to showcase employee 

success stories by recognizing our Engagement Leader 

of the Year award recipients, recognizing teams that 

have created great work environments, and sharing 

employee work team tips in daily news articles published 

across the Postal Service 
United States Postal Service — FY2018 Annual Report to Congress 23

Financial Health

Several factors affected our FY2018 financial results 

including overall customer demand; the changing mix of 

postal services and contributions associated with those 

services; fluctuating volumes of mail and packages 

processed through our network; and our ability to 

manage our cost structure in line with declining levels 

of mail volume; growth in legacy retirement and retiree 

health benefit costs; growth in more labor-intensive 

shipping and package volume; and an increase in the 

number of delivery points 

First-Class Mail and Marketing Mail continued to provide 

the majority of our operating revenue in FY2018 As a 

percentage of operating revenue, First-Class Mail and 

Marketing Mail combined represented 58 7 percent, 

60 8 percent and 64 1 percent (before the 2016 change 

in accounting estimate) for the years ended Sept 30, 

2018, 2017 and 2016, respectively Combined FirstClass Mail and Marketing Mail volume represented 91 5 

percent, 91 7 percent and 92 1 percent in FY2018, 

FY2017 and FY2016, respectively 

While we continue to experience strong results in our 

Shipping and Packages business, it represented 30 5 

percent of our operating revenue for the year ended 

Sept 30, 2018, compared to First-Class Mail, which 

represented 35 4 percent Further, our Shipping and 

Package business generated 4 2 percent of our volume 

for the year ended Sept 30, 2018, while the costs 

to process and deliver these shipping and package 

services were higher than costs associated with FirstClass Mail (on a per-piece basis) 

Although revenue and volume are closely linked to the 

strength of the U S economy and changes in how our 

customers use the mail, we have proactively targeted 

opportunities to grow our business We continue to 

focus on our customers’ needs and have increased our 

marketing investment in mail and package innovation 

However, we also recognize that revenue growth is 

constrained by laws and regulations restricting the types 

of products, services and pricing we may offer to our 

customers, and the speed with which we can bring new 

products to market 

We anticipate that the volume of First-Class Mail will 

continue to decline in future years with the migration to 

electronic communication and transactional alternatives 

resulting from technological changes To address 

the long-term trend that such changes have had on 

our First-Class Mail revenue and volume, we have 

focused on providing new services and innovations with 

Marketing Mail We have expanded service offerings 

such as Informed Delivery, which enable customers to 

preview mail and packages scheduled to arrive as a 

means of merging digital and physical mail We believe 

these service offerings will help to stabilize Marketing 

Mail volume 

With our Shipping and Packages business, we have 

focused on growing e-commerce and implementing 

marketing campaigns that have helped us grow By 

offering day-specific delivery, improved tracking and 

text alerts and up to $50 of free insurance on most 

Priority Mail packages, we have demonstrated our 

responsiveness to our customers 

In FY2018 and years prior, we implemented price 

increases on various Market-Dominant and Competitive 

services to remain competitive within the industry 

However, these price increases have not fully offset our 

losses due to overall First-Class Mail volume decline 

Controllable Income (Loss)

Our financial results are significantly affected by 

expenses that are not reflective of our operational 

decisions and are subject to large fluctuations outside 

our control We use controllable income (loss), 

rather than net income (loss), to assess our financial 

performance as net income includes the effect of factors 

(such as interest rate changes) that cannot be controlled 

or influenced by management 

Non-Controllable Expenses

Non-controllable expenses include revaluations of the 

Postal Service Retiree Health Benefits Fund (PSRHBF) 

normal cost by OPM; the amortization of our unfunded 

PSRHBF liabilities; the amortization of our unfunded 

liabilities for our participation in the Federal Employees 

Retirement System (FERS) and Civil Service Retirement 
24 United States Postal Service — FY2018 Annual Report to Congress

System (CSRS); the 2016 change in accounting 

estimate of Deferred revenue — prepaid postage liabilit

for Forever stamps; and non-cash expenses related to 

the changes in our liability for participation in the federal

workers’ compensation program We exclude these 

items from the calculation of controllable income (loss) 

y 

Fluctuations in these expenses are caused by changes 

in actuarial assumptions, such as interest and inflation 

rates, and employee and retiree demographics We can 

only influence these expenses over the long-term by 

changing the number of employees or compensation 

rates, but this effect is very small and gradual compared 

to the effect of external factors For example, a 1 

percent increase in the discount rate would cause a 

decrease in the Sept 30, 2018, workers’ compensation 

liability and related expense by approximately $1 6 

billion Similarly, a 1 percent decrease in the discount 

rate would cause an increase in the Sept 30, 2018, 

workers’ compensation liability and related expense by 

approximately $2 0 billion 

The table on the following page includes revenue, 

controllable income (loss), net income (loss) and shows 

planned revenues and expenses by category for FY2018 

and FY2019, as well as actual data for FY2015–FY2018 
United States Postal Service — FY2018 Annual Report to Congress 25

Revenue and Expenses

(in billions, unaudited )

1

FY2019 

Plan (IFP)

FY2018 

Actual

FY2018

Plan (IFP)

Actual 

vs Plan 

FY2017 

Actual

FY2016 

Actual

FY2015 

Actual

First-Class Mail $ 24.2 $ 25.0 $ 24.8 $ 0.2 $ 25.7 $ 26.6 $ 27.2

Marketing Mail 16.8 16.5 16.2 0.3 16.6 17.6 16.9

Shipping and packages 23.1 21.5 21.4 0.1 19.5 17.3 15.0

International 2.9 2.6 2.7 (0.1) 2.6 2.7 2.7

Periodicals 1.2 1.3 1.3 — 1.4 1.5 1.5

Other 2 3.9 3.9 3.8 0.1 3.9 3.7 3.5

Revenue $ 72.1 $ 70.8 $ 70.2 $ 0.6 $ 69.7 $ 69.4 $ 66.8

Temporary Exigent Surcharge — — — — — 1.1 2.1

Total revenue $ 72.1 $ 70.8 $ 70.2 $ 0.6 $ 69.7 $ 70.5 $ 68.9

Compensation and benefits 3 52.5 51.4 50.7 0.7 50.5 53.2 51.8

PSRHBF normal cost 4 4.0 3.7 3.5 0.2 2.8 — —

Transportation 8.3 7.9 7.3 0.6 7.2 7.0 6.6

Depreciation 1.7 1.7 1.7 — 1.7 1.7 1.8

Supplies and services 3.0 3.0 3.0 — 3.0 2.8 2.7

Rent, utilities and other 5 5.7 5.3 5.4 (0.1) 5.3 5.2 4.8

Controllable expenses $ 75.2 $ 72.8 $ 71.6 $ 1.2 $ 70.5 $ 69.9 $ 67.7

Controllable income (loss) $ (3.1) $ (2.0) $ (1.4) $ (0.6) $ (0.8) $ 0.6 $ 1.2

PSRHBF pre-funding — — — — — (5.8) (5.7)

PSRHBF normal cost actuarial revaluation 4 — (0.1) — (0.1) (0.5) — —

PSRHBF unfunded liability amortization (1.1) (0.8) (1.2) 0.4 (1.0) — —

FERS unfunded liability amortization (1.0) (1.0) (0.9) (0.1) (0.9) (0.2) (0.2)

CSRS unfunded liability amortization (1.4) (1.4) (1.7) 0.3 (1.7) — —

Workers’ comp. fair value and other non-cash adjustments — 1.4 — 1.4 2.2 (1.3) (0.4)

Deferred revenue — prepaid postage change in estimate 6 — — — — — 1.1 —

Non-controllable items $ (3.5) $ (1.9) $ (3.8) $ 1.9 $ (1.9) $ (6.2) $ (6.3)

Net income (loss) $ (6.6) $ (3.9) $ (5.2) $ 1.3 $ (2.7) $ (5.6) $ (5.1)

1 Due to rounding, numbers presented throughout this table may not add up precisely to totals provided elsewhere in this report and percentages may not precisely 

reflect the absolute figures.

2 Includes investment and interest income, gain or loss on sale and income from the outlease of property.

3 Excludes PSRHBF pre-funding, normal cost, amortization and actuarial revaluation; non-cash adjustments to workers’ compensation liabilities; and FERS and CSRS 

unfunded liabilities amortization, which are excluded from controllable expenses. Includes PSRHBF premiums (FY2015–FY2016) and workers’ compensation cash 

expenses.

4 Total PSRHBF normal cost in FY2018 was $3.7 billion, of which $3.5 billion was classified as a controllable expense. The remaining $0.2 billion was classified as an 

PSRHBF normal cost actuarial revaluation.

5 Includes interest expense.

6 During FY2016, we revised the methodology used to estimate our deferred revenue — prepaid postage liability for Forever stamps. As a result, deferred revenue — 

prepaid postage was decreased by nearly $1.1 billion. In accordance with accounting principles generally accepted in the United States (GAAP), the change was 

accounted for as a change in accounting estimate.
26 United States Postal Service — FY2018 Annual Report to Congress

FY2018 Performance Report

The major factors that affected our financial results 

include overall customer demand, the mix of postal 

services and contribution associated with those 

services, volume of mail and packages processed 

through our network and our ability to manage our cost 

structure in line with declining levels of mail volume, 

growth in more labor-intensive Shipping and Packages 

volume and an increasing number of delivery points 

and legacy costs for retirement and retiree health 

benefits We operate as a single segment and report our 

performance as such 

In FY2018, our total revenue, including interest and 

investment income was $70 8 billion and total expenses,

including interest expense, were $74 7 billion, resulting 

in a net loss of $3 9 billion This was $1 3 billion less 

than the $5 2 billion net loss planned in the FY2018 IFP 

The lower-than-anticipated net loss was primarily due to 

a $700 million decrease in FERS and CSRS unfunded 

liabilities payable to OPM caused by actuarial changes 

to assumptions and $1 4 billion of favorable non-cash 

adjustments to our workers’ compensation liability, 

primarily arising from higher interest (discount) rates 

For FY2018, we had a controllable loss of $2 0 billion, 

compared to our planned controllable loss of $1 4 

billion This result was primarily attributable to higherthan-expected compensation and benefit expenses and 

transportation costs 

Revenue 

Revenue includes funds received from the sale of 

postage, mailing and shipping services; passports; 

PO Box rentals; gain or loss on sale and income from 

the outlease of property; and interest and investment 

income Our FY2018 total revenue of $70 8 billion was 

$0 6 billion more than planned, largely due to higherthan-expected Marketing Mail volume 

First-Class Mail primarily consists of single-piece and 

presort letters and postcards Revenue from FirstClass Mail was $25 0 billion, $0 2 billion above plan, 

mainly due to higher-than-expected presort letters and 

postcards volume 

Marketing Mail consists of mail that we do not require 

customers to mail as First-Class or Periodicals and may 

include advertising, newsletters, catalogs, small marketing parcels and other printed matter Revenue from 

Marketing Mail was $16 5 billion, $0 3 billion above the 

planned amount, due to higher-than-expected volume 

Shipping and Packages consist largely of Competitive 

services that can be priced to reflect current market 

conditions These include Priority Mail and Priority Mail 

Express, business-oriented services such as Parcel 

Select and Parcel Return, First-Class Mail parcels and 

certain other package delivery services Revenue from 

Shipping and Packages was $21 5 billion, $0 1 billion 

more than our planned amount, due to continued 

e-commerce growth and the successful implementation 

of various marketing and sales campaigns 

International Mail includes services that enable 

customers, both domestic and abroad, to send 

international mail and packages, with either standard 

or express delivery options The majority of our 

International Mail revenue is generated from outbound 

services that allow customers in the U S to send 

mail and packages to other countries Revenue from 

International Mail was $2 6 billion, $0 1 billion below our 

plan 

Periodicals mail is comprised primarily of newspapers, 

magazines and other periodical publications whose 

primary purpose is transmitting information to an 

established list of subscribers or requesters Revenue 

from Periodicals was $1 3 billion, in line with our plan 

Continued decline in hard-copy reading and advertising 

shifts away from print have depressed this segment for 

several years 

Other revenue includes ancillary services, such as 

Certified Mail, PO Box services, Return Receipt services, 

and money order and passport services Other revenue 

was $3 9 billion, $0 1 billion more than our FY2018 plan 

Controllable Expenses 

Controllable expenses exclude certain items that we 

consider non-controllable, discussed in the “NonControllable Expenses” section Our ability to affect the 

amount of controllable expenses is limited by various 

legal requirements, including our universal service 

obligation, our collective bargaining obligations and our 

obligation to participate in federal benefits programs 

This section describes the various categories of 

controllable expenses and their performance in FY2018 

Compensation and benefits expenses include salaries, 

basic retirement and employee health benefit expenses 

for our active employees and workers’ compensation 

cash outlays These expenses were $51 4 billion, $0 7 

billion more than planned, largely due to contractual 

wage adjustments and additional work hours, driven 
United States Postal Service — FY2018 Annual Report to Congress 27

by the more labor-intensive shipping and packages 

business as well as growth in our delivery network 

PSRHBF normal cost expense is the expense we 

incur to fund retirement health benefits for our active 

employees Our normal cost of $3 7 billion was $0 2 

billion above our planned amount; however, this excess 

is considered a non-controllable expense, as it is the 

result of differences between amounts forecast by 

OPM and their financial calculation, due to actuarial 

and experience differences The controllable portion of 

PSRHBF normal costs was in line with the plan 

Transportation expenses include the costs we incur to 

transport mail and other products between our facilities, 

including highway, air and international transportation 

contracts, plus contract delivery services Transportation 

expenses do not include the compensation and benefits 

of employees responsible for transporting mail and other 

products between our facilities or to delivery points 

The non-personnel costs of transportation to delivery 

points, excluding contract delivery services, are included 

in rent, utilities and other expenses Total transportation 

expenses were $7 9 billion, $0 6 billion above our plan 

and largely due to the nationwide shortage of long-haul 

truck drivers, highway contract rate increases and rising 

fuel costs 

Depreciation expense allocates the cost of long-lived 

assets to the periods in which they are used These 

assets include items such as buildings, equipment, 

vehicles, leasehold improvements and capitalized 

software Depreciation expense was $1 7 billion, in line 

with our IFP estimate 

Supplies and services expenses include minor 

equipment, spare parts, furniture, services, cost of sales 

and office supplies Supplies and services expenses 

in FY2018 were $3 0 billion, in line with the planned 

amount 

Rent, utilities and other expenses include the cost 

of leasing buildings, utilities, building repairs and 

alterations, vehicle fuel, information technology, interest 

expense and all other miscellaneous items These items 

collectively cost $5 3 billion, which was $0 1 billion 

below our plan 

FY2019 Performance Plan

In FY2019, we plan for a $3 1 billion controllable loss, in 

which revenue growth of $1 3 billion is more than offset 

by inflationary and contractual cost increases and an 

anticipated increase in the controllable portion of the 

PSRHBF normal cost 

Revenue 

Revenue is planned to increase by $1 3 billion compared 

to FY2018 This increase is driven primarily by increases 

in Shipping and Packages, International, and Marketing 

Mail First-Class Mail revenue is estimated to decrease 

by $0 8 billion due to continued electronic diversion, 

slightly offset by a planned CPI-U price increase in 

January 2019 Marketing Mail revenue is estimated to 

increase by $0 3 billion, as we expect the CPI-U price 

increase to offset a slight decrease in volume Shipping 

and Packages revenue is estimated to increase by $1 6 

billion, mainly because of continued volume growth 

and market price increases International revenue is 

estimated to increase $0 3 billion due to price increases 

Periodicals revenue is estimated to decrease marginally 

as electronic content continues to grow in popularity 

Other revenue is estimated to remain flat 

Controllable Expenses 

Compensation and benefits expenses are planned 

to increase by $1 1 billion in FY2019, due to wage 

increases by $0 6 billion resulting from contractual 

general increases and cost-of-living adjustments which 

we offset by the utilization of newer, less expensive 

employees in accordance with our labor agreements 

PSRHBF normal cost expense is planned to increase by 

$0 5 billion over the FY2018 controllable amount, in line 

with OPM projections of medical inflation rates and an 

expected reduction in the discount rate Transportation 

expenses are estimated to increase by $0 4 billion, 

largely due to growth in package volume and inflationary 

pressures Depreciation expense is expected to remain 

flat Supplies and services expenses are expected 

to remain flat, primarily accounting for information 

technology and cyber security enhancements Rent, 

utilities and other expenses are estimated to increase 

by $0 4 billion due to normal inflationary pressures, 

particularly those related to vehicle fuel, heating oil and 

vehicle repairs We also plan to reduce the number of 

work hours through increased efficiency 
28 United States Postal Service — FY2018 Annual Report to Congress

Non-Controllable Expenses 

The PSRHBF normal cost actuarial revaluation and 

amortization expense of $0 1 billion in FY2018 accounts 

for the difference in the PSRHBF normal cost charged 

by OPM over their previous estimate Our FY2018 IFP 

included $3 5 billion for PSRHBF normal cost as part 

of compensation and benefits, included in controllable 

expenses, based on projections from OPM In FY2018, 

OPM increased its normal cost calculation As this 

increase in PSRHBF normal costs was due to changes 

in the actuarial assumptions by OPM, we treated this 

amount as non-controllable There is no plan for a 

normal cost revaluation expense in FY2019 as we 

cannot predict calculation changes by OPM 

OPM calculates the PSRHBF amortization expense to 

allow us to pay down our unfunded liability obligations 

in the PSRHBF program The FY2018 IFP included 

$1 2 billion in expense, based on the most recent OPM 

data available at the time we published the IFP The 

actual billed amount in FY2018 was $0 8 billion This 

lower amortization requirement primarily resulted from 

a lower-than-expected actuarial liability resulting from 

OPM’s adoption of Postal Service-specific demographic 

assumptions Based on the latest available information, 

the FY2019 IFP includes a $0 9 billion expense for 

PSRHBF unfunded liability amortization 

OPM calculates both FERS and CSRS amortization 

payments to allow us to pay down our unfunded 

liability obligations in the FERS and CSRS programs 

We consider these expenses non-controllable because 

the amount depends on actuarial assumptions, including interest and inflation rates, over which we have no 

control FY2018 planned expenses for FERS and CSRS 

amortization were $0 9 billion and $1 7 billion, respectively, based on the most recent data available at the 

time we published the IFP The actual charged amounts 

in FY2018 were $1 0 billion and $1 4 billion, respectively, 

largely due to the adoption of postal-specific demographic assumptions by OPM Our FY2019 IFP includes 

CSRS and FERS amortization expenses equal to their 

actual FY2018 values 

3

GAAP requires us to record our Sept 30, 2018 workers’ 

compensation liability based on the prevailing interest 

rates on that date The adjustment to the liability is non3

 OPM periodically notifies the Postal Service regarding its revaluation of 

unfunded CSRS and FERS liabilities. In October 2017, OPM issued a new rule 

announcing its intent to calculate future unfunded CSRS and FERS obligations 

using Postal Service-specific demographic assumptions but not Postal Servicespecific salary growth assumptions, and OPM implemented this for its valuation 

as of Sept. 30, 2017, which impacts our FY2018 financial statements.

controllable, as it is a function of events taking place in 

the general economy and well outside our control We 

do not plan for this adjustment in our IFP, as we cannot 

predict future interest rates In FY2018, we recorded 

a $1 4 billion non-controllable reduction in workers’ 

compensation expense, due primarily to the favorable 

impact that increasing interest rates has on our workers’ 

compensation liability This represents a $0 8 billion 

lower benefit compared to the prior year This lower 

benefit primarily resulted from changes in rules for 

pharmaceutical compounding in FY2017 that were not 

repeated in FY2018, and to a lesser extent an increase 

in discount rates in 2018 

Forward Looking 

In order for the Postal Service to effectively leverage the 

best available technologies and solutions to enhance 

our operations and products, and best serve our 

customers by providing reliable postal services, we 

will continue to take aggressive management actions 

to control costs and increase efficiency However, we 

need both Congress and the PRC to make necessary 

statutory and regulatory business model changes 

to assist our internal efforts The Postal Service will 

continue to take aggressive management actions to 

enable our organization to return to long-term financial 

stability We are relying on Congress to enact effective 

postal reform legislation, the centerpiece of which must 

be a requirement that postal retirees enroll in Medicare 

This is a near-universal practice for businesses that still 

provide retiree health benefits and would ensure that the 

Postal Service’s retiree health benefits program aligns 

with private sector best practices 

Also critical to solving our long-term financial challenges 

is the 10-year statutory review of the system for 

regulating rates and classes for Market-Dominant 

products being conducted by the PRC Changes to 

the current pricing system are necessary because the 

current regulatory structure restricts our ability to adjust 

prices of Market-Dominant products This current model 

is predicated on a price cap that does not take changes 

in Postal Service volumes and costs into account As 

the past decade has illustrated, this system is unsuitable 

to ensuring the Postal Service’s continued ability to 

provide prompt and reliable universal services, and meet 

our other statutory obligations in a self-sufficient manner 

The Postal Service seeks a structure that gives us the 

ability to set prices at levels necessary to ensure our 

financial stability 
United States Postal Service — FY2018 Annual Report to Congress 29

Deliveries per Total Work Hours, % Change

Deliveries per Total Work Hours, % Change (DPTWH % 

Change) is a measure of our efficiency It is calculated 

by multiplying the total possible deliveries by the number 

of delivery days and dividing that product by total work 

hours We target our percent improvement in DPTWH % 

Change from year to year 

We adjust work hours to reflect changes in workload 

compared to the prior year This adjustment accounts 

for changes in the network size (the addition of delivery 

points), changes in the number of non-Sunday delivery 

days and changes in the mix of mail types (for example, 

a package usually contributes much more to workload 

than a letter or flat) The adjustment ensures that 

DPTWH % Change is comparable from year to year 

Finally, DPTWH % Change is calculated by comparing 

the current year DPTWH % Change (based on adjusted 

work hours) with prior year DPTWH % Change (based 

on unadjusted work hours) The following table shows 

how the annual percent change in DPTWH % Change is 

calculated 

Deliveries per Total Work Hours, % Change Calculation

FY2019 

Plan

FY2018 

Actual

FY2018

Plan

FY2017 

Actual

FY2016 

Actual

FY2015 

Actual 1

Work hours (millions) 1,161.0 1,169.6 1,141.0 1,163.9 1,157.6 1,127.9

Less adjustment to work hours based on earned workload (millions) 2 (4.9) (5.4) (4.0) (5.4) 18.0 15.4

Adjusted work hours (millions) 1,165.9 1,175.0 1,145.0 1,169.3 1,139.6 1,112.4

Total deliveries (millions) 48,358 47,825 47,835 47,604 47,366 46,829

Deliveries per total work hours (unadjusted) 41.7 40.9 41.9 40.9 40.9 41.5

Deliveries per total work hours (adjusted) 41.5 40.7 41.8 40.7 41.6 42.1

Deliveries per total work hours, % change 2 1.4% (0.5)% 2.1% (0.5)% 0.1% 0.2%

1 FY2015 actuals have been recast to account for the adjustment to workhours based on earned workload.

2 The percent change in DPTWH is the percent difference between current year DPTWH % Change (based on adjusted work hours) and prior year DPTWH % Change 

(based on unadjusted work hours).

FY2018 Performance Report

Package volume and delivery points grew in FY2018; 

however, both letter and flat volumes decreased 

significantly The total number of deliveries grew by 

approximately 221 million, due to the addition of about 

1 2 million new delivery points, a decrease in nonSunday delivery days by one (from 303 to 302), as well 

as a small impact from increased Sunday deliveries The 

FY2018 plan anticipated a 2 1 percent improvement 

in DPTWH % Change However, in FY2018, DPTWH 

% Change instead decreased by 0 5 percent primarily 

due to overrunning our workhour plan With a decline 

in letters and flats volume and an increase in package 

volume, we used additional overtime hours along with 

our lower cost, flexible non-career workforce in an 

attempt to improve service 

FY2019 Performance Plan

The FY2019 DPTWH % Change target of 1 4 percent 

assumes we will capture work hour reductions from 

declining mail volume and from operational initiatives 

to improve efficiencies in Mail Processing, Delivery, and 

Customer Service 

Other Productivity Measures

Total Factor Productivity (TFP) measures how efficiently 

we use our resources An increase in TFP indicates 

that the ratio of work completed to the resources used 

is increasing and we are operating more efficiently Work 

completed depends on three primary components: 1) 

the number of delivery points, 2) mail volume weighted 

by product type and 3) miscellaneous output (such as 

other services we provide, including passport services) 

4

4

 We use DPTWH % Change rather than TFP as our primary indicator for two 

reasons: 1) DPTWH % Change is easier to understand and target at the area 

and district level and 2) DPTWH % Change can be calculated in a more timely 

manner than TFP, allowing us to more quickly assess our performance.
30 United States Postal Service — FY2018 Annual Report to Congress

Labor productivity measures the efficiency of labor An 

increase in the labor productivity index indicates that 

more workload is being handled per unit of labor 

Labor productivity increased for the ninth year in a 

row in FY2018 Excluding 2009, labor productivity has 

increased each year since 1997 TFP has increased 

significantly since FY2009, though it decreased slightly 

in FY2016 and FY2017, before increasing by 0 1 in 

FY2018 The increase in TFP is largely attributable to 

positive labor productivity due to a more cost-effective 

workforce, offset by declining mail volume, increased 

transportation expenses, and increased investments A 

number of factors, including the decline in mail volume in 

recent years, have made it more challenging to generate 

additional productivity growth For both indices, 

resource usage is based on the constant-dollar amounts 

of labor, capital and materials used Because some 

productivity improvements take years for the effects to 

be realized, it is more informative to consider changes in 

TFP and labor productivity over a period of years, rather 

than year-to-year 

The following chart starts with the cumulative TFP and 

labor productivity improvement from 1971 to 2007 and 

then shows the cumulative change each year since 

then 

Total Factor Productivity and Labor Productivity, Cumulative Change Since 19711

10

20

30

40

50

60

70

Labor Productivity

Total Factor Productivity

2007 2008 2009

Fiscal Year

2010 2011 2012 2013 2014 2015 2016 2017 2018

46.1

21.6 21.0

19.8

22.2

23.9

25.1

27.4 27.8 27.9 27.7

47.1 46.2

49.9

52.7

54.1

57.9

59.2 59.9

61.3

27.0 27.1

61.4

62.3

1

 TFP and Labor Productivity for FY2018 is preliminary until the final Cost and Revenue Analysis (CRA) report is released in January 2019.
United States Postal Service — FY2018 Annual Report to Congress 31

Strategic Initiatives

We have established strategic goals as described 

in our FY2017-2021 5-Year Strategic Plan To 

help achieve these goals, we have implemented a 

portfolio of strategic initiatives and a rigorous portfolio 

management process This process is based on wellestablished methods to apply strategic and financial 

rigor to decision-making and to navigate significant 

organizational changes 

Each strategic initiative has a specific set of measures 

to track performance aligned to achieve both shortterm performance and build long-term capabilities 

The portfolio of initiatives is dynamic and changes as 

priorities and resources change, and as programs are 

completed or adjusted based on external events 

The changes to our initiatives from FY2018 to FY2019 

fall into the following categories:

1. Continued: Initiative continued into FY2019 with 

minimal changes from FY2018 

2. Refined: Initiative was modified to achieve greater 

alignment with organizational goals and the current 

business environment 

3. Combined: Initiative was combined with one or more 

similar initiatives to more accurately reflect the current 

business environment and provide greater alignment 

organizationally 

The table on the following page shows how the strategic 

initiatives implemented in FY2018 and planned for 

FY2019 align to the strategies from our 5-Year Strategic 

Plan and to the corporate-wide performance metrics 
32 United States Postal Service — FY2018 Annual Report to Congress

FY2018 and FY2019 Strategic Initiatives

Accessible Table

 
Additional Information

For more information on our programs and policies, please visit usps.com 

Trademarks

The eagle logo, the trade dress of USPS packaging, the letter carrier uniform, trade dress of the round top collection 

box and the postal truck and the following word marks are among the many trademarks owned by the United States 

Postal Service®: Certified Mail®, First-ClassTM, First-Class Mail®, First-Class Package®, Forever®, Informed Delivery®, 

Informed Visibility®, Parcel Select®, P O BoxTM, PO BoxTM, Post OfficeTM, Postal Pulse®, Postal ServiceTM, Priority 

Mail®, Priority Mail Express®, Priority Mail Express International®, Priority Mail International®, Standard Mail®, Standard 

PostTM, United States Postal Inspection Service®, United States Postal Service®, U S Mail®, U S Postal Service®, 

USPS®, USPS BlueEarth®, USPS Marketing Mail®, USPS Retail Ground®, USPS Tracking®, usps com®, Village Post 

OfficeTM, and ZIP CodeTM 

Year References

All references to a specific year or “the year” refer to the Postal Service fiscal year ending Sept 30, 2018 

However, specific month and year references pertain to the calendar date 

United States Postal Service — FY2018 Annual Report to Congress 33