Background

The U.S. Postal Service transitioned its primary air cargo contract from one carrier to another on September 30, 2024, to further align its transportation strategy with anticipated Delivering for America network changes. This new agreement, valued at approximately $10 billion for the contracting period, is expected to streamline operations by consolidating volumes and reducing overall transportation costs. During the first quarter of fiscal year (FY) 2025, the Postal Service assigned 7 percent less volume to the air network and reduced spending by 43 percent compared to FY 2024.

What We Did

Our objective was to evaluate the U.S. Postal Service’s air transportation network changes under its new air agreement. Specifically, we compared key provisions of the new carrier agreement to the previous carrier agreement, focusing on cost and service performance, and reviewed execution of services by both the new carrier and the Postal Service. We also conducted site visits at the new carrier’s hub, seven processing facilities, and 11 post offices to observe and validate performance related to processing, scanning, hazardous material (HAZMAT) mail acceptance, loading and unloading of containers, and surface transportation.

What We Found

The new contract allows lower contract rates and improved supplier flexibility, while providing opportunities to increase service performance. However, we could not determine whether the new carrier met the service performance requirement because the Postal Service’s Air Carrier Performance report does not provide accurate service performance scores. We also found packages identified as HAZMAT were mistakenly entering the new carrier’s network. Acceptance of HAZMAT to the wrong network could risk physical damage to air cargo transportation. Additionally, Postal Service employees at the surface feeder sites failed to perform required scans. These issues could limit the Postal Service’s ability to assess performance, ensure timely mail delivery, and maintain mail visibility. 

Recommendations and Management’s Comments

We made five recommendations to address the issues identified in the report. Postal Service management agreed with all five recommendations, and its comments and our evaluation are at the end of each finding and recommendation. The U.S. Postal Service Office of Inspector General (OIG) considers management’s comments responsive to the recommendations, as corrective actions should resolve the issues identified in the report.