The U.S. Postal Service considers mail to be delayed when it is not processed in time to meet its established delivery day. Delayed mail can adversely affect Postal Service customers and harm the organization’s brand.
We used our Performance and Results Information System model to identify the Queens, NY, Processing and Distribution Center (P&DC) as having over 25 percent more delayed mail than the national delayed mail percentage of about 0.5 percent.
The Queens P&DC processes small and irregularly shaped packages from the New York Morgan P&DC, local Priority Mail, and inbound international packages (IIP) received from the John F. Kennedy International Service Center (JFK ISC) for delivery throughout the country. The Queens P&DC processed about 78 million mailpieces and reported almost 22 million of those (or 28 percent) as delayed in quarters (Qs) 1 and 2 of fiscal year (FY) 2016. This was the highest delayed mail percentage in the nation during this period. Of the almost 22 million delayed mailpieces, about 17.8 million were IIP.
Our objective was to determine the cause of delayed mail at the Queens P&DC.
What the OIG Found
Mail was delayed because the Queens P&DC did not have enough machine capacity for the volume of packages it needed to process. On average, the facility received about 82,000 more packages than it could process per day in Qs 1 and 2, FY 2016, when processing machines were operating at full operational performance levels (the optimal rate and time at which a machine processes mail). The plant manager initiated a project to divert IIPs to other facilities, which decreased delayed mail in Q3, FY 2016, by about 80 percent.
The plant manager stated two additional package processing machines are scheduled to be operational in September and October of 2016. During our site visit we observed adequate floor space for these machines. Our analysis shows the additional machines will provide about 10 percent excess machine capacity, assuming there is no change to current package volume. But, it is likely that volume will increase. The JFK ISC IIP volume has grown by over 200 percent in Qs 1 and 2, FY 2016, compared to the same period in FY 2014.
We also found package processing machines are not operating at full operational performance levels. They process, on average, about 8,100 packages per hour, which is about 25 percent below the full performance level of over 10,800 packages per hour. Even though the machines are not performing at full operational performance levels, they are running them more hours than they were designed to run in order to meet volume demand.
During our site visit, we observed international labels without U.S. barcodes or with multiple barcodes. Employees had to manually key in ZIP Codes for each piece causing fewer packages to be processed per hour. Foreign mail requires additional preparation, which causes an inconsistent flow of packages to some of the processing machines. The plant manager initiated a project in April 2016 to improve package processing machine performance through service talks, training, and employee performance incentives. He also instituted a tour turnover sheet to monitor mail counts and the hourly count of machine processing at the end of every tour. However, further machine performance improvement is needed to meet performance targets.
Senior plant management had an inadequate operating plan because it did not reflect critical entry, clearance, and dispatch times. There have been ongoing changes to the original processing plan and the plant manager is currently working to finalize a new operating plan. These time schedules are critical in ensuring mail is processed on time.
In Qs 1 and 2, FY 2016, the Queens P&DC exceeded the Northeast Area’s FY 2016 target of about 10 percent overtime. Specifically, of over 640,000 mail processing workhours used, more than 94,000 (or about 15 percent) were overtime hours. The plant manager said he has to pay overtime to staff that manually sort oversized packages. In addition, overtime is paid
to employees to consolidate mail transported to and from other facilities to maximize trailer capacity, which was not originally included in the P&DC’s staffing plan.
The plant manager said staffing is not properly aligned to meet the required mail processing machine staffing requirements. As a result, the employees are paid overtime to work on their scheduled days off. The plant manager said that in June 2016 he submitted a proposal requesting additional staff to perform manual sort and mail consolidation functions and a proposal to realign positions for the two additional package processing machines. The plant manager has also requested additional package processing machines to process oversized packages more quickly and efficiently. We consider the nearly 29,000 overtime hours that exceeded the 10 percent budgeted overtime hours as excess, at a cost of about $1.1 million. Increased overtime beyond the budgeted amount increases the Postal Service’s costs.
When a facility does not have sufficient machine capacity, operating plans, and staffing, there is an increased risk that mail will not be processed in time to meet its established delivery day. This adversely affects service scores nationwide. Delayed packages reflect poorly on the Postal Service’s brand and can cause customers to move to alternative service providers for package delivery, thereby reducing revenue. Excess overtime can also result in unnecessary costs to the Postal Service.
What the OIG Recommended
We recommended the vice president, Northeast Area, develop a 2-5 year staffing and mail processing machine plan for the Queens P&DC to match processing capability with current and projected mail volume, reduce overtime to budgeted levels, and, in the interim, redirect volume to facilities with excess capacity where possible, and ensure a plan is established at the facility in the next 6 months for all packaging processing machine performance to meet targets.
We also recommended the vice president, Northeast Area, instruct the area in-plant support manager to ensure the Queens P&DC consistently uses an updated and complete mail processing operating plan.