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).