Our objective was to assess the efficiency of the U.S. Postal Service’s transportation consolidations of mail (loading, unloading, and trailer utilization) for long-distance Highway Contract Routes (HCR) at the Atlanta Network Distribution Center (NDC).
Consolidation Deconsolidation Facility (CDF) contractors provide bedloading and recontainerization services for the Postal Service at 19 NDCs. Bedloading is when mail is loaded on shuttle trailers and transported to CDFs for consolidation into a single trailer when the combined mail contents of trailers exceed the floor space of one trailer. Recontainerization occurs when CDF contractors deconsolidate inbound long-haul trailers containing bedloaded mail from other CDFs. The mail is loaded into mail transport equipment (Postal Paks, Over-the-Road containers, etc.) and onto multiple shuttles for dispatch to the NDC.
Per CDF Standard Operating Procedures (SOP), the Postal Service can conduct periodic operational inspections on a scheduled or unscheduled basis to ensure contract compliance, assess contractor performance, and determine if modifications are necessary. The Postal Service can also make changes to CDF operations with seven days’ notice.
This is the fourth and final in a series of audits examining CDF operations. We reviewed operations at the Memphis, Dallas, New Jersey, Chicago, and San Francisco CDFs in previous audits. Based on a recommendation from our Chicago and San Francisco CDF audit, the Postal Service agreed to review CDF operations at all locations.
What the OIG Found
We determined the Postal Service’s consolidation of long-haul HCR trips at the Atlanta CDF was not effective. During the week of January 8, 2018, we observed that three of five trips to the Atlanta CDF did not require recontainerization. This occurred because inspection of the Atlanta CDF did not result in changes to CDF operations. The Postal Service’s Standard Operating Procedures do not provide performance assessment measures, resulting in inefficient transportation of the mail and unnecessary costs to the Postal Service. This is a consistent finding across all CDFs reviewed.
Management took corrective action to address this finding and determined that it was more cost effective for the Postal Service to bring the consolidation operations in-house for all 19 CDFs. The Postal Service plans to complete the transition by September 2018. The Postal Service estimated that the ending of the CDF contracts could result in a one-time savings of up to $29 million.
Additionally, we found missing trailer utilization data at all 14 CDF sites reviewed for this audit. Specifically, we found that trailer utilization data was missing from about 4 to 87 percent of the time during calendar years 2016 and 2017. The Postal Service uses trailer utilization data to determine whether HCR trips are operating efficiently. Postal Service Surface Operations management identified equipment and oversight issues, as well as staffing issues at the NDCs during the transition from the Transportation Information Management Evaluation System to the Surface Visibility Web as the reasons for the missing data. As a result, the Postal Service could not evaluate long-haul HCR trailer utilization data and long-haul HCR trips were being unnecessarily sent to CDFs for bedloading and recontainerization. Insourcing CDF operations should solve the data reliability issues.
What the OIG Recommended
Due to management’s planned in-sourcing of CDF operations, we are not making any recommendations at this time, but will continue to monitor the process. We plan to conduct future audit work in this area.