on Jun 18th, 2010
in Mail Processing & Transportation
| 40 comments
The U.S. Postal Service’s current fleet of more than 219,000 vehicles includes approximately 146,000 delivery vehicles, most of which are long-life vehicles (LLVs). The first LLVs were produced in 1987, and they average about 10 miles per gallon. The vehicles are right-hand drive to accommodate drivers delivering numerous mailpieces to curbside mailboxes. These iconic right-hand drive delivery trucks are nearing the end of a 24-year life cycle and are costly to maintain. In a recent audit, we noted that it cost the Postal Service about $524 million to fix the LLVs in fiscal year 2009. More than 40,000 trucks required more than $3,500 each in maintenance and another 19,000 of these required an average of $5,600 in repairs consecutively in 2008 and 2009. At this rate, for the high maintenance segment of the fleet, repairs in the next eight years will cost $342 million more than it would to buy new trucks. Considering the growing costs of maintaining this unique but aging fleet, what are your thoughts on a cost-effective, but practical replacement delivery vehicle fleet? To read the full report go to http://www.uspsoig.gov/foia_files/DA-AR-10-005.pdf.The Office of Audit Engineering & Facilities team is hosting this topic.
on Apr 26th, 2010
| 195 comments
The debate about the Postal Service’s future is heating up and Pushing the Envelope is interested in your views. Last week the Senate Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security held a hearing on the Future of the Postal Service. The week before there was a hearing in the House on the Postal Service’s financial crisis and future viability, and on April 12, the Government Accountability Office issued a report laying out the strategies and options to maintain the Postal Service’s viability. Some of the strategies under discussion include: • Ending Saturday delivery. • Reducing the size of the workforce. • Making postal employees pay the same share of health and life insurance premiums that other federal employees pay. • Generating revenue through new products. • Allowing the Postal Service more pricing freedom. • Restructuring the Postal Service’s network of mail processing facilities. • Moving retail services from Post Offices to alternative access options. One item that is generating a great deal of discussion is whether the large payments the Postal Service must make for retiree health benefits should be restructured. One option is to give back some of the excess pension funding and allow the Postal Service to use these funds for other purposes. In January, the Office of Inspector General for the Postal Service issued a report that found the Postal Service had been overcharged $75 billion for its pension obligations from 1971 to 2009 because of an inequitable method of calculating the size of those obligations. Adding to this inequity is the fact that the Postal Service is currently required to fund 100 percent of its retiree health and pension obligations. Very few in private industry do this, and the rest of the federal government’s pension funding level is only 41 percent. In addition, the OIG believes that the forecast of the Postal Service’s future retiree health care costs is too high. Fixing these issues could save the Postal Service $7 billion a year. What do you think? Which strategies will be most useful to the Postal Service? Should the mix of strategies include cutting delivery service?This topic is hosted by the OIG’s Risk Analysis Research Center (RARC).
on Apr 19th, 2010
in Delivery & Collection
| 152 comments
Public policy debates about solving the Postal Service’s financial crisis have largely focused on reducing costs by cutting service such as Saturday delivery, transitioning from brick and mortar post offices to alternative retail sales channels, or limiting other functions performed by the Postal Service. There has been less talk about the costs of meeting delivery service standards, which were reviewed following the passage of the Postal Accountability and Enhancement Act of 2006. Can the Postal Service relax some of its requirements to save money in transportation or processing costs? Right now, its goals are to deliver First-Class Mail in 1 to 3 days and Standard Mail in 3 to 10 days. A slight adjustment of these standards in particular areas might make it possible to save a great deal of costs. Instead of developing the goal first and trying to reach those levels, no matter how costly it is, maybe the Postal Service should closely analyze its infrastructure and develop goals that allow for reaching the greatest efficiencies. For example, if the service standards for bulk mail from Chicago to Los Angeles were given an additional day the Postal Service could avoid the expense of trucks and instead utilize economical rail transportation. A First-Class Mail package that currently travels by air could be carried by truck if given another day. By relaxing service standards, the Postal Service can move further towards a hub and spoke network, which could result in substantial savings. Currently, plants may have lots of half-empty, smaller trucks fanning out to a multiplicity of plants only once or twice a day. Under this new strategy, many trucks would go to a mail consolidation facility, which consolidates the mail and ships it on larger, fuller trucks to the destination facilities throughout the day. This design has the additional benefits of network stability and is capable of scaling up or down with changing mail volume. The bottom line is that the Postal Service and its stakeholders need to decide what service standards are worth the cost. The Postal Service should have an honest and informed discussion about the cost savings that it can pass on to the public by relaxing some of the present delivery service standards. Do you think the Postal Service should adjust its delivery standards to cut its costs? This topic is hosted by the OIG’s Risk Analysis Research Center (RARC).
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