• on Jul 6th, 2011 in Mail Processing & Transportation | 29 comments
    The Postal Service has evolved with the needs of a growing country for more than 230 years. A vast and complex network of processing facilities and transportation links was created to meet its universal service obligation. Today, the Postal Service has 260 Processing and Distribution Centers located throughout the country. This highly automated processing technology network provides incentives for its customers to presort the mail and drop ship it deeper into the network. As the likelihood of stagnant or decreasing mail volumes grows, there is a mismatch between the existing network capacity and user needs. For several years, the Postal Service has introduced plans to consolidate its mail processing plants and reconfigure its transportation network. The Postal Service has made some progress, closing all but two Air Mail Centers (AMCs), initiating and implementing numerous AMP consolidations, and transforming the Bulk Mail Center (BMC) network in the Network Distribution Centers. Despite these efforts, the fundamental question still remains: what should the mail processing and transportation network look like to meet future demand? And how many plants will be needed? A former deputy postmaster general suggested that in order for the Postal Service to be fully efficient, its footprint must be much smaller, possibly comprising 150 plants, and 400,000 employees. Another stakeholder said the current network is twice the size it should be. Are these reasonable assessments? What do you think? To learn more, read our recently released white paper "A Strategy for a Future Mail Processing and Transportation Network."

    This blog is hosted by the OIG’s Risk Analysis Research Center (RARC).

  • on Jun 27th, 2011 in Mail Processing & Transportation | 5 comments
    The U.S. Postal Service has experienced a significant decline in mail volume in recent years, yet its contracted surface transportation remains largely unchanged. While mail volume dropped almost 16 percent from fiscal year 2008 to 2010, the Postal Service contracted out around 1 percent more miles of highway transportation over the same period. During the same time, the Postal Service has had considerable success minimizing the number of labor hours employees spend on mail processing. The following factors may have mitigated the effects on transportation from a volume drop: • Network Distribution Center restructuring. • Postal Service efforts to move more mail from air to surface transportation. • Postal Service efforts to sell the newly empty space to other shippers through a collaborative logistics program. Transportation represents the second largest cost component for mail delivery after labor, but the Postal Service has substantially more authority to cut contracted miles. The Postal Service could use its greater flexibility to end unnecessary contracts, alter necessary contracts, or redesign the system altogether. Highway transportation provides a strong opportunity for cost savings. What do you think of the current contracted surface transportation infrastructure? How would you adjust to new mail volumes? This blog is hosted by the OIG’s Risk Analysis Research Center (RARC).
  • on Mar 7th, 2011 in Mail Processing & Transportation | 3 comments
    [dropcap style="font-size: 60px; color: #9b9b9b;"] E [/dropcap]very day, thousands of containers holding letters and large envelopes are flown across the country to meet Postal Service standards. As you might expect, in almost every case, it costs more to fly mail than to ship it on a truck or by train. Because of this, from a cost standpoint, it’s important that each mail container is filled to capacity. While conducting prior audits on other issues, we observed that large mail processing facilities were running multiple processing machines – even with declining mail volume. Running one machine full time to process mail results in full mail trays and tubs, while running multiple machines to process the same amount of mail results in multiple partially-filled trays and tubs. Running multiple machines may be efficient for processing facilities, but it results in transportation inefficiencies and increases costs. When you consider that it costs the Postal Service about a $1 per pound to fly mail, the cost of flying partially loaded mail trays and tubs could be substantial. In our current audit, we plan to look at information related to the density of First Class Mail on air transportation and assess the related costs, and we’d like your views. What do you think? How can the Postal Service make sure only full containers fly? One option might be to identify mail needing air transportation and process it separately from other mail? Is that a good option or would you recommend other methods? The Office of Audit Transportation team is hosting this topic.