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Audit Reports

Dec
23
2014
Report Number:
CP-AR-15-001
Report Type:
Audit Reports

Package Price Simplification

Background

Since fiscal year (FY) 2012, the number of U.S. Postal Service package prices has grown from 7,180 to 8,779, a 22 percent increase. Of the current total, 2,148 are retail prices and 6,631 are commercial prices.

In FY 2012, the U.S. Postal Service Office of Inspector General issued a report (Postal Service Pricing Strategy, Report Number CI-AR-12-002) that recommended the Postal Service develop a strategic plan to simplify pricing to eliminate unnecessary barriers to mail use. To address the recommendation, the Postal Service created Delivering Results, Innovation, Value, and Efficiency Initiative 15, Integrate Costing and Pricing for Profitable Revenue Growth. However, the initiative did not specifically address package price simplification and the Postal Service closed the initiative in April 2014.

Our objective was to identify and evaluate opportunities the Postal Service has to simplify package prices for the retail and commercial customer segments.

What the OIG Found Opportunities

Opportunity exist for the Postal Service to offer new products and simplify package prices. The Postal Service has not expanded the number of Flat Rate Box dimensions offered since FY 2009. Although the Postal Service has conducted studies on Flat Rate Box market demand, it has not used the studies to introduce new dimensions to Flat Rate offerings. Offering new products would enable the Postal Service to meet changing customer needs, thereby helping it to be competitive and retain or gain customers. Furthermore, the Postal Service has 1,092 unused Parcel Select prices and 5,840 prices for packages weighing more than 20 pounds, which have low or no volume. Unnecessary prices create complexity and barriers to entry for new customers.

Report Recommendations

# Recommendation Status Value Management Response OIG Response USPS Proposed Resolution
1

R - 1 -- Periodically evaluate market demand for Flat Rate and other package products in the retail and commercial marketplace.

Closed $0 Agree
2

R - 2 -- Develop a strategic plan to simplify package prices by adjusting or eliminating low or no volume package prices to reduce complexity for customers.

Closed $0 Agree