• on Nov 28th, 2011 in Pricing & Rates | 14 comments
    Have you ever heard of Alaska Bypass? It’s a service the U.S. Postal Service offers only in Alaska, allowing shippers to send shrink-wrapped pallets of goods at Parcel Post rates using private airlines. The Postal Service pays airlines to carry the goods to rural Alaskan communities by delivering these goods directly to the stores located in rural areas. The shippers effectively and entirely “bypass” the Postal Service’s delivery network. The Postal Service has to pay the airlines much more than it receives in postage for this program. In FY 2010, the Postal Service lost $73 million on Alaska Bypass. In addition, the people receiving the shipments are usually retail merchants, because the orders must be at least 1,000 pounds. The Postal Service doesn’t provide this kind of service for retailers anywhere else in the country. Alaska Bypass began when it was much more difficult to get goods to rural Alaskans than it is today. There are even some that say it no longer seems to fit with the Postal Service’s mission. The Office of Inspector General Risk Analysis Research Center has developed a white paper, Alaska Bypass: Beyond Its Original Purpose, which outlines the history of the program and the shift away from its original purpose. The paper offers various options to improve the program. Should the Postal Service continue to pay for sending large shipments of goods to retailers and be permitted to charge the shippers more for this service? Should the 1,000-pound minimum order requirement, targeted to retailers, be eliminated in order to extend the benefit directly to consumers shopping online? What do you think? Click here to read the white paper and we invite you to share your thoughts about this program on our blog. This blog is hosted by the OIG’s Risk Analysis Research Center.
  • on Oct 31st, 2011 in Pricing & Rates | 12 comments
    When mailing a letter that weighs about one ounce, the U.S. Postal Service’s 44 cents is one of lowest First Class postage rates. Whether you are mailing a letter locally or sending a greeting card across country, it still only costs 44 cents now, but will increase to 45 cents in January. The graph below compares the U.S. Postal Service’s postage rate with other countries. As you can see, Norway charges the highest rate, which is nearly four times the cost U.S. rate.

     

    Source: 2011 Office of Inspector General analysis of Universal Postal Union data

    Some might feel it is reasonable for the Postal Service to increase rates and charge a fee comparable to those in other countries. On the contrary, others might say the Postal Service’s rate must remain at an affordable level, especially for people with lower incomes. They might also say raising the rate to a level found elsewhere would drive customers away even faster. When you think about prices paid for other goods and services, just how far does 44, 50, or even 75 cents go? By comparison, a small cup of coffee at McDonalds costs a dollar, a gallon of gasoline is over $3, and a gallon of milk is about $4. Share your thoughts below. This topic is hosted by the OIG’s Financial Reporting Directorate.
  • on Dec 6th, 2010 in Finances: Cost & Revenue | 8 comments
    Mailings that meet minimum volume and preparation requirements to qualify for reduced postage rates are called business mail. Properly accepting business mailings is critical for the Postal Service since it accounted for $25 billion in revenue in 2010. Several types of Postal Service facilities accept business mail. Business Mail Entry Units have acceptance clerks with specialized training and systems for accepting business mail. Local Post Offices can also accept business mail. Most revenue for bulk business mailings is recorded using a system called PostalOne!. PostalOne! has built-in controls that assist clerks in properly accepting the mail. However, approximately 11,000 units that recorded more than $114 million in Permit Imprint and Periodicals transactions in FY 2010 have been forced to operate without PostalOne!. Regardless of the level of training or type of system used, each unit must accept, verify, and collect postage for mail according to required policies and procedures, a process for which it is crucial to have PostalOne!. If classified and accepted improperly the Postal Service risks accepting improperly prepared mail or mail paid at an improper rate. For the past several years, the Postal Service has faced significant revenue losses due in part to decreased mail volume and increased competition from other media alternatives. The Postal Service must continue to explore opportunities to improve processes and eliminate redundancies in their system. Because business mail acceptance generates a significant amount of revenue, the Postal Service may want to reevaluate the number of entry points for accepting business mailings, including the 11,000 units not on PostalOne!. Do you think that the Postal Service should restructure the entry points for business mail? Give us your comment below. The topic is hosted by the Office of Audit Field Financial – East team.

Pages