The U.S. Postal Service Just Lost $8.8 Billion. Why That’s Actually Pretty Good.

The post office reported fiscal fourth-quarter numbers Thursday. The full year reported loss is enormous at $8.8 billion. But that’s only part of the story. Operating metrics were actually pretty good. And free cash flow was positive.

As is always the case with the USPS, the numbers are interesting (as well as confusing), and they hold important lessons for investors interested in shipping and logistics.

First the top-line: Postal sales grew slightly to $71.1 billion. That’s quite an achievement since first class mail volumes shrank another 3.1%. Package sales grew $1.3 billon, or 6.1%, on a 0.2% volume increase and a 5.9% increase in pricing. Price for parcels at the post office is always a useful read through for FedEx (ticker: FDX) and United Parcel Service (UPS).

The U.S. Postal Service intends to raise prices in its parcel shipping business by about 3% starting Jan. 26, 2020. The rate of change—while not reported directly—appears a little slower than 2018, but higher prices at the post office still help parcel competitors raise pricing.

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