Management Advisory - Managing Package Growth: Southern Area
Background
Shipping and Packages volume is expected to grow 13 percent, to 4.5 billion pieces in 2015. Priority Mail®, Parcel Select®, and First-Class® package service, the three largest Shipping and Packages categories, are expected to grow by double-digit rates, driven by their highly competitive prices and consistent, reliable, services.
The Southern Area covers eight states, has 24,516 city delivery routes, and over 17 million possible deliveries in fiscal year (FY) 2014. City delivery operations averaged 720 possible deliveries per route, 15 percent higher than the national average of 624, and the highest average of all areas. Southern Area had a 13 percent growth in packages on city delivery routes, increasing from 150 million in FY 2013 to 170 million in FY 2014. Our objective was to assess the Southern Area’s package growth management strategies in city delivery operations.
What The OIG Found
The Southern Area implemented strategies in their districts to manage increased package volumes in city delivery operations. Their strategies included redesigning workroom floor space, maximizing delivery vehicle capacity, and utilizing an alternate package delivery option during the holiday season. Management has available data to monitor routes in realtime and to forecast volumes. They can also use flexibility when making operational decisions to manage the expected continued package growth.
However, our assessment of a selected city delivery unit showed actual package volumes were higher than route base package volume estimates, ranging from 18 to 242 percent in FY 2014. Therefore, we concluded additional strategies could be employed to improve the use of workhours. The Southern Area could evaluate and modify route base package volume estimates, and use dedicated package routes during peak seasons and on highvolume days during non-peak seasons. It could also add shelving units in vehicles, reallocate existing larger vehicles, and use alternate delivery times for delivering packages.
Other strategies for future implementation include gopost® locker units, next generation mail boxes, and delivery unit automated sortation equipment. Management stated they did not pursue the future strategies because of a lack of funding. Implementation of these strategies could help city delivery operations meet both business and residential package delivery needs.
What The OIG Recommended
We recommended the vice president, Southern Area, evaluate city delivery actual package volume and modify route base package volume estimates on routes, use dedicated package routes during peak and non-peak seasons, add shelving units in vehicles, reallocate larger vehicles and use alternate delivery times. We also recommended requesting from Postal Service Headquarters funding assistance for gopost locker units, and inclusion in pilot tests for next generation mailboxes and delivery unit automated sortation equipment.