I’m thrilled to sit down with Rohit Laila, a seasoned expert in logistics and supply chain management with decades of experience in the industry. Rohit has a deep understanding of the complexities of postal services and delivery systems, and his passion for technology and innovation has made him a thought leader in driving efficiency and sustainability in this space. Today, we’ll dive into the recent financial report of the US Postal Service (USPS) for Q3 2025, exploring the challenges of rising losses, revenue trends, and the strategic vision for a financially stable future.
Can you break down the most striking financial takeaways from the USPS Q3 2025 report and what they signal about the organization’s current state?
Absolutely. The USPS reported controllable losses of $1.6 billion for Q3 2025, which is a significant jump of $522 million compared to the same period last year. On top of that, net losses climbed to $3.1 billion, up from $2.5 billion. These numbers point to deep-rooted challenges in managing costs and adapting to a shifting landscape. While operating revenue remained flat at $18.8 billion, the growing losses suggest that expenses are outpacing any gains, putting pressure on the organization to rethink its approach to financial stability.
What do you see as the primary drivers behind this increase in losses, and how concerning are they for the long term?
The report highlights a few key culprits. First, there’s a $237 million hit from unfavorable non-cash workers’ compensation adjustments, which often stem from changes in claims or actuarial estimates. Then you’ve got a $360 million increase in compensation and benefits expenses, likely tied to wage growth or staffing needs. Lastly, other operating expenses rose by $205 million, which could include anything from maintenance to technology costs. These are concerning because they’re not one-off issues; they reflect systemic cost pressures that need strategic intervention to prevent further erosion of financial health.
Turning to revenue, how do you interpret the flat operating revenue of $18.8 billion compared to last year, and what does it tell us about the market?
Flat revenue in this context is a mixed bag. On one hand, holding steady at $18.8 billion shows resilience in a tough market where mail volumes are declining. But it also signals a lack of growth, which is problematic when costs are rising. It tells me that USPS is heavily reliant on existing streams like shipping and packages, which grew by $58 million despite a volume drop, likely due to pricing strategies. Meanwhile, declines in First Class mail revenue by $86 million reflect broader trends of digital communication replacing traditional mail, pushing USPS to innovate or risk stagnation.
How do you think USPS can adapt to these revenue challenges, especially with declining mail volumes in key categories?
Adaptation is critical here. For declining categories like First Class mail, strategic price increases are already helping to offset volume losses, but that’s not a long-term fix. USPS needs to double down on growth areas like shipping and packages by optimizing delivery networks and leveraging technology for efficiency. They could also explore partnerships with e-commerce platforms to capture more parcel volume. Diversifying services—think hybrid digital-physical offerings—could open new revenue streams while addressing the shift away from traditional mail.
There’s a strong emphasis on financial strength from USPS leadership. From your perspective, what does a financially strong postal service look like in today’s environment?
A financially strong postal service today balances affordability with operational efficiency. It’s about evolving with the times—integrating technology to cut costs, like automated sorting or route optimization, while growing revenue through innovative services. It means maintaining high-quality service without passing excessive costs to consumers. Leadership’s focus on cutting expenses and boosting income is spot on, but it requires a cultural shift toward agility and a willingness to rethink traditional models in a digital-first world.
What broader trends are driving these financial struggles, and how can USPS tackle them head-on?
The biggest trends are the decline in traditional mail due to digital alternatives and the rising expectations for fast, cheap delivery in the parcel space, fueled by e-commerce giants. Add to that escalating labor and operational costs, and you’ve got a perfect storm. USPS can tackle this by investing in automation to reduce labor dependency, refining pricing models to reflect true costs, and focusing on customer-centric innovations—like better tracking or flexible delivery options—to stay competitive while addressing these structural challenges.
Looking ahead, what is your forecast for the future of postal services like USPS in terms of financial sustainability and innovation?
I’m cautiously optimistic. Postal services like USPS have a unique role in society, but financial sustainability will hinge on their ability to pivot quickly. I foresee a future where technology plays a bigger role—think AI-driven logistics and drone deliveries becoming mainstream to cut costs. Innovation in product offerings, like secure digital mailboxes or expanded e-commerce solutions, could drive revenue. But it won’t be easy. Without bold reforms and investments now, the risk of ongoing losses remains high. The next few years will be a defining moment for whether USPS can truly transform into a self-sustaining, modern entity.
