Audit Reports

Objective

Priority Mail Express, formerly known as Express Mail, is the fastest mail service the Postal Service offers. It is a competitive product that provides guaranteed 1-day or 2-day expedited shipping service for any mailable matter and provides customers with refunds when not delivered by the guaranteed service arrival time. The Postal Service has the authority to adjust the guaranteed 1-day or 2-day delivery commitment for Priority Mail Express in the point-of-sale system upon the request of district personnel. The Caribbean District, which includes Puerto Rico and the U.S. Virgin Islands, accounted for 22 percent of Priority Mail Express refunds issued in the Northeast Area. Between March 2018 and February 2019, about 168,000 Priority Mail Express pieces originated in the Caribbean District. During this period, the district issued the highest amount of Priority Mail Express refunds of all Postal Service districts nationwide, totaling over $380,000.

Our objective was to determine whether processes and procedures were effective to minimize the costs of Priority Mail Express service failures and refunds in the Caribbean District.

What the OIG Found

Postal Service processes and procedures were not effective to minimize the costs of service failures and refunds for Priority Mail Express originating in the Caribbean District. The Postal Service has a nationwide service performance (on-time delivery) goal of 96.85 percent for Priority Mail Express pieces. However, from March 2018 to February 2019, only about 84.78 percent of those pieces originating in the Caribbean District met on-time service standards. Further, during the past five fiscal years (FY), the Caribbean District had an on-time service performance score of only 87.64 percent and failed to meet service standards on about 93,000 pieces originating in the district.

Between September 2018 and July 2019, Priority Mail Express performance reports showed that over 70 percent of failed pieces originating in the Caribbean District were already identified as unable to meet guaranteed delivery times when they arrived at the destination delivery unit. This indicated that most of the service failures were the result of operational or logistical challenges. Based on our analysis of scan data, operating times, and transportation schedules and site visits to Caribbean District facilities, we found that the following transportation challenges contributed to the service failures:

• Ground transportation schedules may not accurately reflect travel congestion in the district and did not always align with operating times. The Postal Service uses the schedules to transport Priority Mail Express between facilities according to key operating times. However, during site visits, facility managers expressed concern that current schedules and operating times did not reflect actual travel time on routes.

Our analysis of scan data for Priority Mail Express originating in the Caribbean District from April 1 to July 10, 2019, found that about 16 percent of failed overnight pieces were accepted at post offices after the transportation departure time, about 61 percent of failed overnight pieces arrived at the San Juan Processing and Distribution Center (P&DC) after the latest time to receive pieces for on-time processing, and about 25 percent (included in the 61 percent above) arrived after the clearance time for timely dispatch. This degree of service failures prior to arrival at the P&DC suggests that management should reevaluate the feasibility of current ground transportation schedules.

• Personnel stated that district management sometimes directed personnel to hold trucks at the P&DC until they were filled with mail to improve efficiency. However, this caused the trucks to arrive late to pick up outbound mail at the main post offices for transportation back to the P&DC for processing. This negatively impacted timely transportation, processing, and delivery of Priority Mail Express originating in the Caribbean District.

• [Redacted] the Postal Service contracted air carrier to move Priority Mail Express, sometimes transported it out of the district behind schedule. Our evaluation of the carrier’s service performance data for the Caribbean District, between March 2018 and February 2019, found that, on average, it transported only about percent of originating Priority Mail Express containers on time. This indicates that operations may have played a role in the service failures of Priority Mail Express originating in the Caribbean District.

Postal Service management attributed much of these issues in the Caribbean District to lingering impacts of Hurricane Maria, which occurred from mid-September to early October 2017. However, our analysis demonstrated that Priority Mail Express service failures in the district occurred before Hurricane Maria and likely were not driven primarily by continued impacts of the storm.

Issues related to timely transportation of originating Priority Mail Express products have resulted in the Postal Service issuing over $500,000 in refunds to customers in the Caribbean District during FYs 2017 and 2018. We estimate that the Postal Service would issue about $300,000 annually in Priority Mail Express refunds over the next five fiscal years if it does not address these transportation challenges.

Processes and procedures also were not effective to minimize the costs of service failures for Priority Mail Express destinating to the district. We found transportation delays occurred when daylight savings time ended, and standard time was in effect in the continental U.S. During FYs 2018 and 2019, the service performance for Priority Mail Express pieces destined to the district when standard time was in effect was only 72.55 percent, which was a 12 percent decline from when daylight savings was in effect for the same period. This occurred because the Caribbean District does not observe the time change when most of the continental U.S. does, and the district’s operating times and service commitments generally remain the same.

In 2014, the Postal Service developed a dynamic next-day commitment for Priority Mail Express destined to 38 Caribbean District ZIP Codes most impacted by the standard time change. For those ZIP Codes, the Postal Service does not guarantee a next-day commitment during standard time. However, it maintains the next-day commitment for 30 ZIP Codes. While the dynamic commitment was designed to improve standard time service performance issues, it does not currently mitigate service failures effectively because the district’s on-time performance during standard time was still significantly lower than its performance during daylight savings time.

If the Postal Service does not adjust Caribbean District Priority Mail Express processing, transportation, and delivery procedures or service commitments to accommodate the time change, service failures and refunds will likely continue.

What the OIG Recommended

We recommended management:

• Evaluate the feasibility of current ground transportation schedules and, if necessary, adjust the schedules, operating times, or service commitments.

• Evaluate the impact that delaying dispatch to fill mail trucks has on Priority Mail Express service performance and, if necessary, develop a plan to balance mail truck efficiency with timely dispatch of Priority Mail Express.

• Assess capabilities to meet service standards and, as appropriate, .

• Reevaluate next-day commitments for Priority Mail Express destinating to the Caribbean District when standard time is in effect and implement a solution to reduce service failures caused by the time change.