Our objective was to assess the Postal Service’s Customer Service and Delivery Operations to identify opportunities for savings and streamlining operations.
Reliable, affordable, universal mail delivery is the Postal Service’s mission. In fiscal year (FY) 2018, the Postal Service delivered more than 140 billion letters and flats and 6.4 billion packages to over 158 million delivery points on more than 231,000 routes. The Postal Service carries out these operations each day in over 29,000 delivery units across the country.
To accomplish this mission, the Postal Service budgeted 1.1 billion workhours and $47.9 billion in salaries and benefits in FY 2018. The Postal Service budgeted over 788 million workhours (69 percent) and about $32 billion in salaries and benefits (66 percent) in Delivery and Customer Service Operations combined. Delivery Operations is the Postal Service’s largest cost center, with budgeted workhours totaling over 625 million (55 percent) and salaries and benefits totaling over $25 billion (52 percent). Customer Service is the third largest cost center, with budgeted workhours totaling over 163 million (14 percent) and salaries and benefits totaling over $6.5 billion (13 percent).
Clerk and carrier staff are paid at various workhour rates and categories, which include straight-time, overtime (OT), and penalty overtime (POT). However, the use of any workhour outside straight-time can increase the Postal Service’s operating costs, as OT is paid at the rate of one and one-half times the base hourly straight-time rate and POT is paid at twice the straight-time rate for each employee.
Customer Service Operations uses more than 50,000 clerks and about 13,000 non-career postal support employees to support Delivery Operations by sorting and distributing non-route sequenced letter and flat mail to the carriers. These employees also receive, sort, and distribute packages received from mail processing facilities as well as packages that are taken directly to delivery units by mailers for delivery to their customers.
Delivery Operations uses over 168,000 city letter carriers and over 70,000 rural carriers to deliver mail. These carriers are assisted by more than 42,000 city carrier assistants and over 59,000 rural carrier assistants.
Technology plays an important role in Customer Service and Delivery Operations each day. Clerks use technology to scan, sort, and distribute mail to carriers. Carriers use hand-held scanners, known as Mobile Delivery Devices, to facilitate the tracking and delivery of mail to their customers.
The changing mail mix, from letters and flats to packages along with growth in delivery points each year, has impacted the Postal Service’s Customer Service and Delivery Operations. More commercial mailers are taking advantage of worksharing, which allows for mail and packages to be taken directly to delivery units for sorting and delivery. In FY 2018, commercial mailers dropped off 45 percent of the total package volume directly to delivery units.
What the OIG Found
Customer Service Operations generally had the capacity at their facilities to sort and distribute mail. Although service targets have been challenging for the Postal Service, Delivery Operations generally had the capability to deliver mail to residential and business delivery points using available technology and vehicles. However, the Postal Service has operational challenges that hinder its capability to operate efficiently and effectively.
Based on our analysis of relevant data sources used to monitor operations and observations and interviews conducted at 17 delivery units across all seven Postal Service areas, we determined delivery units did not track and receive alerts of late incoming mail. We also noted Customer Service and Delivery Operations experienced staffing and position challenges which impacted their ability to efficiently sort, distribute, and deliver mail. We also noted inaccurate Mobile Delivery Device inventory.
Tracking and Alerting of Late Mail Arrivals
Customer Service Operations did not always track or receive alerts of late mail arrivals from mail processing facilities.
While late dispatched mail from processing facilities is recorded in the Surface Visibility system, this data is not linked to the late-arriving mail in delivery units. Instead, late-arriving mail at delivery units is manually recorded by delivery unit personnel in the Customer Service Daily Reporting System or other systems including the Mail Arrival Quality/Plant Arrival Quality and Staffing and Scheduling Tool, or via teleconferences or email. Although data for 30 days showed 16 of 17 delivery units (94 percent) had 503 trips averaging from 13 to 80 minutes late from mail processing facilities, no late mail was recorded at 15 of the 16 units. Because the Postal Service does not have a streamlined, automated process to record late mail arrival at delivery units, the national impact of the 1.7 million late dispatched trips to delivery units across the country, as recorded in Surface Visibility in FY 2018, cannot be directly visible.
Further, delivery units do not currently receive consistent alerts that mail will be arriving late from mail processing facilities. This occurred because the Postal Service does not have a standardized, automated process to alert delivery units of late arriving mail. Our analysis of Customer Service Operations at 12 of 17 delivery units (71 percent) showed that units received inconsistent notification of late mail arrivals from mail processing facilities.
As a result, delivery unit managers or anyone temporarily acting as a manager may not have readily available data on late mail arrivals to make staffing decisions and efficiently manage workhours and unit operations. In a subsequent discussion, Postal Service Headquarters Delivery Operations indicated the Volume Arrival Profile, currently being piloted, would provide delivery units alerts for all late mail arrivals.
Customer Service and City Delivery Staffing Challenges
Customer Service and Delivery Operations experienced staffing and position challenges which impacted their ability to efficiently sort, distribute, and deliver mail. Our analysis of the FY 2018 national complement data from the Postal Service Field Staffing and Support Workforce Dashboard showed:
- The number of career clerk and carrier staff on the rolls was less than the earned/authorized complement.
- The number of non-career city carrier staff on the rolls was less than the number of staff that districts could hire based on the percentage outlined in the labor agreement.
- Vacant clerk and city carrier positions (unfilled positions).
- Overages – representing unassigned employees pending job placement -- in clerk and city carrier positions.
Our detailed review of 17 delivery units identified similar challenges, but determined that while actual staffing at some units was under the earned/authorized complement, staffing at other units was over the earned/authorized complement. Further, while we noted vacancies, we also noted position overages at some locations, which could be used to optimize staffing at facilities where needed.
Overall, career and non-career staffing challenges increased labor costs, as delivery management reassigned workload to other employees, which contributed to an increased use of overtime hours. In FYs 2017 and 2018, the Postal Service paid straight-time of $28.5 billion, of which $12.1 billion was paid to clerks and $16.4 billion to city carriers. In addition, the Postal Service paid $7.7 billion in overtime (OT) and penalty overtime (POT), including $3 billion to clerks and $4.7 billion to city carriers. OIG analysis showed the Postal Service exceeded its workhour plan (budget) for overtime and penalty overtime by 10 percent in FY 2017 and 28 percent in FY 2018, respectively for both functional areas.
These staffing challenges were caused by multiple factors, including:
- Restrictions for filling residual vacancies for clerks and carriers in the National Labor Agreements.
- Complement credit for career clerk positions, which is not given if an employee is off work for an extended period of time.
- Hiring and retaining non-career carriers in some districts that are considered to have a high cost of living or competitive labor market.
- A lengthy hiring process for non-career staff.
- Retention challenges with non-career employees.
Cost effective alternatives to manage staff and associated labor cost to achieve planned budgets can include right-sizing the clerk and carrier staffing complements, where appropriate, and can include:
- Staff reallocations using unassigned regular career employees.
- Staff reallocations using non-career employees.
- Maximizing non-career hiring.
- Non-career employee conversions.
Managing daily mail operations and the associated labor costs to perform them in a declining mail environment is critical to ensuring appropriate management of labor costs. We estimated the increased overtime usage resulted in $482 million annually in questioned costs for FYs 2017 and 2018.
Inaccurate Mobile Delivery Device Inventory
Our review of Ethos, the Postal Service system used to track mobile delivery devices, identified there were 243,519 operable devices to cover over 231,000 delivery routes as of April 2019. However, we noted Ethos did not always accurately reflect the correct number of operable devices in inventory at delivery units.
This condition occurred because there is no requirement to conduct an annual physical inventory of devices and record inventory results. According to Postal Service Headquarters Delivery Operations, they relied on a report of transmitted data from mobile delivery devices to validate the number in inventory. They also stated they relied on local management to ensure Ethos data correctly reflects the operable mobile delivery devices. In our review at the selected 17 units, we identified discrepancies between Ethos and our physical observations of operable devices at 15 of the 17 delivery units (88 percent).
Although the Postal Service does not designate these devices as sensitive items, these devices can be expensive to replace. In April 2019, the Ethos system, which only provides a data snapshot as of a point in time, reported 1,586 (less than one percent) lost devices. Each device costs an estimated [redacted] to replace, a total of about [redacted] million. The Postal Service is considering the purchase of new data devices to replace the current units, therefore tracking of these items is critical.
What the OIG Recommended
We recommended management:
- Modernize the various mail condition reporting methods into one system to capture all mail delays from mail processing facilities.
- Enable management to track and receive alerts for all late arriving mail in delivery units by expanding Informed Facility and Informed Mobility or identify another solution.
- Coordinate with Labor Relations to identify cost effective alternatives and opportunities to address career clerk and carrier staffing issues.
- Implement a policy to conduct a physical inventory of Mobile Data Devices and maintain inventory results.