USPS’s Ground Game: How Cost Cuts and Shipping Shifts Signal a Turnaround Play
12min read The U.S. Postal Service (USPS) has long been a poster child for institutional inertia, burdened by pension liabilities, declining mail volumes, and a bloated cost structure. But a closer look at its recent financials and strategic shifts reveals a tectonic shift: USPS is quietly recalibrating its business to focus on what it does best—shipping—and doing so with ruthless efficiency. The question is no longer whether USPS can survive, but whether investors can capitalize on its transformation.
The key to USPS’s turnaround lies in two interconnected moves: structural cost reforms and a strategic pivot to shipping dominance via its USPS Ground Advantage product. Let’s break down why this matters—and why the clock is ticking for investors to act.
The Cost Revolution: Cutting Waste, Not Service
USPS’s fiscal 2024 results were a mixed bag on the surface: a $9.5 billion GAAP net loss overshadowed by a $1.8 billion controllable loss—a metric that strips out non-cash pension and liability hits. The latter figure is what matters for evaluating management’s performance, and it’s down $434 million from the prior year. This is no accident.
The agency has slashed transportation costs by $116 million in Q2 2025 alone, saving 10 million work hours through optimized routes and streamlined operations. Under its Delivering for America 2.0 plan, USPS is modernizing its infrastructure to prioritize package delivery—a sector where it’s losing volume but gaining revenue through premium pricing.
This is no small feat. For years, USPS’s bloated cost structure—driven by maintaining a universal mail delivery network—made it a financial albatross. Now, by shifting focus to high-margin shipping and trimming fat, USPS is proving it can run like a leaner, more capital-efficient enterprise.
Ask Aime: What's the USPS's plan to turn around its finances?
Ground Advantage: The Killer App for the Shipping Wars
The crown jewel of USPS’s strategy is its Ground Advantage product, which offers 2–3 day shipping at prices undercutting UPS and FedEx. While Shipping and Packages volume dropped 6.9% in Q2 2025, revenue held steady at $7.77 billion—thanks entirely to Ground Advantage’s “cost-effective, reliable” appeal, as Acting Postmaster General Douglas Tulino noted.
Here’s the math: Ground Advantage is capturing customers fleeing pricier private carriers, while USPS leverages its universal network—the only one that reaches every American address—to undercut competitors on cost. Even as mail volumes crater (First-Class Mail fell 5.8% in Q2), Ground Advantage’s revenue growth is stabilizing USPS’s top line.
The lesson? USPS isn’t just a relic—it’s a disruptor in the $800 billion U.S. shipping market.
Leadership and Long Game: Steiner’s Crucial Test
The baton now passes to David Steiner, who becomes Postmaster General in July 2025. His challenge? To execute USPS’s vision while navigating two existential risks:
- Pension and Liability Time Bombs: Non-cash charges like a $1.2 billion Q2 workers’ comp adjustment remind us that USPS’s balance sheet is a political football. Until Congress fixes pension funding rules, these “uncontrollable” losses will linger.
- The Mail Death Spiral: First-Class Mail volume has fallen 3.2% annually since 2020. USPS can’t stop this decline, but it can pivot fully to shipping—and Steiner’s team must ensure Ground Advantage scales fast enough to offset it.
Why Investors Should Act Now: The Playbook
USPS itself isn’t a stock, but its transformation creates clear investment angles:
Logistics Competitors: USPS’s shift to shipping is a direct threat to FedEx and UPS. Both companies have underperformed in 2025 as Ground Advantage gains traction.
FDX, UPS Closing Price
Play: Short these stocks or go long on ETFs like IYT (Transportation Select Sector SPDR Fund) that could capitalize on industry consolidation.Modernization Plays: USPS’s infrastructure upgrades favor companies like Pitney Bowes (PBI), which provides logistics tech, or infrastructure firms like FedEx Ground Partners (FGP), which could benefit from USPS’s need to outsource last-mile delivery.
The Long Bet on USPS: While not investable today, Congress may finally act on USPS’s pension reforms. If so, the agency’s $1.8 billion controllable loss could vanish, unlocking its true value.
Risks? Yes. But the Clock is Ticking
Skeptics will cite USPS’s $9.5 billion GAAP loss and its reliance on legislative fixes. But the controllable loss trend—down 70% since 2020—is undeniable. Ground Advantage isn’t just a product; it’s a new business model.
The takeaway? USPS’s transformation is real. For investors, the question isn’t whether to bet on it—but how to position for the fallout. The shipping wars are heating up, and Ground Advantage is USPS’s Molotov cocktail.
Act fast—or risk being left behind.
