Our objective was to assess the management of the U.S. Postal Service’s leased trailers.
The Postal Service uses trailers, including leased trailers, to transport mail products between plants, major mailers, and businesses. Routine evaluation of the trailer fleet is required to monitor daily trailer utilization and Postal Service policy requires the return or relocation of leased trailers not consistently used for periods of 10 days or more in a month.
The length of a leased trailer contract is usually three years with two optional, two-year periods (seven years maximum). Annual costs for leased trailers have increased from $55.8 million in fiscal year (FY) 2017 to $69.8 million in FY 2020 (a 25.1 percent increase). In FY 2020, the average cost of a leased trailer was $7,523. In addition, the budget for leased trailers increased from $35.8 million to $77.4 million (a 116.0 percent increase) between FY 2017 and FY 2020. The budget in FY 2021 is $80.2 million (a 3.5 percent increase over FY 2020).
As of May 2020, the Postal Service had 9,544 (76.7 percent) leased trailers and 2,905 (23.3 percent) owned trailers. However, in March 2020, the Postal Service identified a need to replace all owned trailers because they were no longer serviceable. In May 2020, the Postal Service approved a business case to purchase 825 trailers for about $24.5 million. An additional request to replace the remaining 2,080 owned trailers is planned for FY 2021.
Postal Service management uses the Solutions for Enterprise Asset Management (SEAM) system to improve vehicle inventory tracking and visibility and to standardize asset tracking and maintenance/repair functions. Local management completes a Postal Service (PS) Form 5201, Mail Van or Trailer Inspection, at trailer acceptance, when there are maintenance/damage repairs, and when returning a leased trailer. Management is required to upload completed PS Forms 5201 into SEAM.
On August 7, 2020, the Postal Service restructured its organization from seven areas to a number of regions and divisions. The results of this audit do not reflect these changes since our fieldwork was performed before these operational changes.
Opportunities exist for the Postal Service to improve management of its leased trailer fleet.
On average, 13.0 percent (1,005 of 7,746) of leased trailers were not used for an entire calendar month between January 2019 to March 2020. Policy requires the Postal Service to identify, monitor, and evaluate trailer utilization consistently. However, the Postal Service primarily focused on reviewing trailer utilization when local sites were requesting additional trailers and did not ensure under-utilized trailers were returned or relocated, as required. As a result, the Postal Service spent about $5.7 million annually on idle trailers.
Additionally, the Postal Service does not know the optimal number of trailers it should have in its fleet, including how many to lease versus own. This occurred because the Postal Service has not performed an analysis to determine what the optimal number of trailers should be. Postal Service management is responsible for ensuring it maintains an optimal number of trailers to achieve cost control and operational efficiency. In addition, according to its May 2020 business case, the Postal Service determined that the replacement of leased trailers with owned trailers (over a 13-year cash flow period), would save a substantial amount of money over the lifetime of the trailers. Determining the optimal number of trailers and replacing a certain percentage of leased with owned trailers will save the Postal Service money and eliminate the need to work with the various contractors that have different pricing models and costs associated with leasing trailers.
Furthermore, we identified several data and documentation issues related to leased trailers in SEAM. Specifically, of the 12,235 leased trailer asset records reviewed, we determined that 9,070 contained errors (74.1 percent). The data issues included trailers assigned to an area rather than a facility, facilities with incorrect finance numbers, incorrect asset categories, incorrect Postal Service areas, and leased trailers assigned to closed facilities. The Postal Service is currently working on a national trailer validation initiative requiring field personnel to review, validate, and update vehicle information recorded in SEAM. While this initiative should correct most of the issues we identified, it will not correct one data issue and one documentation issue.
Specifically, when the Postal Service leases trailers, headquarters personnel – not field personnel – categorizes the trailers by how they will be used: during Peak Season, moving mail transport equipment, or transporting mail between processing and distribution centers. However, we found about 14.0 percent of the SEAM errors were due to leased trailers being incorrectly categorized. This occurred because headquarters personnel are required to enter the asset category into SEAM, but they have not updated or verified the accuracy of this information. As a result of inaccurate and incomplete data, the Postal Service is at risk of making misinformed decisions that can affect operational efficiency.
In addition, documentation was incomplete. Specifically, every active leased trailer should have at least one PS Form 5201 uploaded into SEAM at trailer acceptance and additional forms should be uploaded when maintenance or damage repairs occur. However, we found only 12.6 percent of active leased trailers had a PS Form 5201 entered into SEAM.
We recommend management:
- Issue supplemental guidance to review leased trailer utilization consistently to ensure under-utilized trailers are returned or relocated.
- Perform an analysis to determine an optimal number of trailers in the fleet, including the mix of leased versus owned trailers.
- Develop a plan to ensure asset categories for leased trailers are continuously reviewed and updated with the correct information and Postal Service Forms 5201 are uploaded to Solutions for Enterprise Asset Management or another centralized database.