• 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.
  • on Jan 24th, 2011 in Mail Processing & Transportation | 21 comments
    The Postal Service established International Service Centers (ISCs) in 1996 to become more competitive in the international mail market. ISCs distribute and dispatch both incoming and outgoing international mail. The ISC network has facilities located in five major cities: New York, Miami, Chicago, Los Angeles, and San Francisco. The Postal Service hoped that ISCs would improve service and provide the structure needed to support new products and increase revenue. However, International Mail volume has not increased as projected by the ISC marketing and sales plan. During the period FY 2007 to FY 2010, International mail volume declined by approximately 29 percent (from 858 million to 609 million mailpieces). Although the Postal Service reduced expenses by nearly $6 billion in fiscal year (FY) 2009 and by almost $789 million during the first three quarters of FY 2010, the reductions have not been sufficient to offset declines in mail volume revenue. Consequently, the Postal Service is reviewing its mail processing and retail networks to remove duplication and make them more efficient to reflect current mail volumes. In light of international mail volume declines and the Postal Service’s current financial condition, does the Postal Service still need a separate network to handle international mail? Are there other options the Postal Service could pursue to increase International mail volumes and revenue? Please share your comment(s) on how to make the ISC network more profitable, effective, efficient and economical. This topic is hosted by the OIG’s Network Processing Audit Team.

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