Our objective was to assess the efficiency of the U.S. Postal Service’s transportation consolidation of mail (loading, unloading, and trailer utilization) for long-haul Highway Contract Routes (HCR) for the Chicago and San Francisco Network Distribution Centers (NDC).
Consolidation Deconsolidation Facility (CDF) contractors provide bedloading and recontainerization services for the Postal Service at 19 NDCs. Mail is loaded on shuttle trailers and transported to CDFs for consolidation into a single trailer when the combined mail contents of trailers exceeds the floor space of one trailer. This is known as bedloading. Recontainerization occurs when CDF contractors deconsolidate inbound long-haul trailers containing bedloaded mail from other CDFs. The mail is loaded into mail transport equipment and loaded onto multiple shuttles for dispatch to the NDC.
The Postal Service can conduct periodic operational inspections on a scheduled or unscheduled basis to ensure contract compliance, assess contractor performance, and determine if modifications are necessary. The Postal Service can make changes to CDF operations with seven days’ notice.
This is the third in a series of four audits examining CDF operations.
What the OIG found
We determined the Postal Service’s consolidation of long-haul HCR trips for the Chicago and San Francisco CDFs was inefficient.
Specifically, we found that trips were automatically sent to the CDFs based on the contract schedule even though they did not require bedloading or recontainerization. During our site visit the week of May 30, 2017, we observed that 21 of the 24 trips to the Chicago CDF did not need bedloading or recontainerization. Also, during the week of June 13, 2017, we observed a total of 10 trips that did not require bedloading or recontainerization. Further, our analysis of trip utilization data from calendar years (CY) 2015 and 2016 for the Chicago and San Francisco CDFs showed an increase in trips that did not need bedloading or recontainerization.
This occurred because Postal Service Standard Operating Procedures (SOP) do not stipulate the frequency of the inspections or whether onsite inspections are mandatory. The SOP also does not provide performance assessment measures. The Postal Service last inspected Chicago CDF operations in November 2016 and July 2015, and San Francisco CDF operations in October 2016. None of the inspections resulted in trip modifications.
Based on our review of trailer utilization data, we estimated the Postal Service unnecessarily incurred contractor costs of over $761,000 for CY 2015 and more than $795,000 for CY 2016 at the Chicago CDF and over $716,000 for CY 2015 and more than $877,000 for CY 2016 at the San Francisco CDF by sending trips that did not need bedloading or recontainerization.
Additionally, we found that CY 2017 trailer utilization data were unreliable and could not be used for our analysis. The discrepancy surfaced in September 2016 after the Postal Service retired the Transportation Information Management Evaluation System (TIMES), the system used to measure utilization, and replaced it with the Surface Visibility system. We reviewed CY 2017 trailer utilization data in the Surface Visibility system and found that since CY 2016, the average trailer utilization decreased 64 percent at the Chicago CDF and 66 percent at the San Francisco CDF. We believe this is significant because the Postal Service uses trailer utilization data to determine whether HCR trips are operating efficiently. Surface Operations management acknowledged the unreliability of the data and said the cause was dock personnel not properly scanning mail equipment being loaded onto trucks. They said they are working to improve this through better scan compliance and continue to address problems as they arise during their reviews. We are not making a recommendation because management is currently working on a solution. We will continue to monitor this issue for future audit work.
What the OIG recommended
We recommended management update the SOP to clarify the frequency of inspections and establish standards to assess the need for CDF trips and evaluate the Chicago and San Francisco CDFs to determine their transportation needs and modify their contracts as necessary.
USPS Proposed Resolution
R - 1 -- Update Postal Service Headquarters standard operating procedures to clarify the frequency of inspections and establish standards to assess the need for consolidation deconsolidation facility trips.
R - 2 -- Evaluate the Chicago and San Francisco consolidation deconsolidation facilities to determine transportation needs and modify the contracts as necessary.