Postal Service flats have a problem. As a group, they don’t cover their costs.Last year, they collectively lost the Postal Service about $630 million.

First, what are flats? They are not European apartments or a type of shoe. In the postal context, “flats” are large mailpieces between the size of a typical letter and a thicker parcel. Full-size envelopes, magazines, and catalogs are all considered flats. It’s a very popular format.

Some flats products have been underwater — meaning their attributable costs exceed revenue — for many years. Starting in fiscal year (FY) 2010, the Postal Regulatory Commission (PRC) required the Postal Service to provide information on the operational changes it was making to lower flats costs when it filed its Annual Compliance Report every December. This requirement was expanded to include additional information in FY 2019. The PRC has also developed a list of what it considers to be some of the causes of inefficient flat operations.

Last December, the Postal Service described its top initiatives to reduce flats costs. We examined them in our recent audit, Flats Cost Coverage, and found that most of the initiatives did not have specific, measurable objectives that would directly reduce these costs. The initiatives also did not fully address the causes the PRC had identified.

Image

In addition, the Postal Service was not collaborating as fully with the mailing industry as it could. While it started a joint task force with flats mailers in FY 2019 to identify initiatives to reduce flats costs and had some successes, it put the task force on hiatus as it examined the future of its networks.

We recommended the Postal Service further collaborate with mailing industry stakeholders to develop specific, measurable initiatives to reduce flats costs and address the causes of inefficiencies the PRC identified. The Postal Service agreed.

What kind of flats, such as catalogs or magazines, do you appreciate receiving? Do you have ideas to reduce the costs of flats? Let us know in the comments below.