Undeliverable as Addressed Mail
The U.S. Postal Service processed more than 158 billion mailpieces in fiscal year (FY) 2013. Of those, it identified almost 6.8 billion pieces (4.3 percent) as undeliverable as addressed (UAA) — mail that could not be delivered to the address on the mailpiece. Causes for UAA mail include individuals or businesses moving, illegible addresses, or deceased addressees. Depending on the mail class, UAA mail is forwarded, returned to sender, or treated as waste.
The Postal Service estimated it cost $1.5 billion in FY 2013 to process UAA mail. Reducing UAA mail is important to the Postal Service, which faces sizeable cost pressures, and to mailers who want to ensure their mailings reach their intended recipients. Our objective was to identify opportunities to reduce and recover costs associated with UAA mail.
What the OIG Found
The Postal Service has taken action to reduce and recover UAA mail costs by testing whether business mailers update their mailing lists regularly and assessing surcharges when mailings fail to meet an address accuracy threshold. The Postal Service, however, does not effectively or equitably determine surcharge amounts and does not always assess them. The Postal Service also automatically tests only 3 percent of mail for address accuracy and does not track UAA mail volume by mailer. The Postal Service could reduce and recover UAA mail costs by updating the amount and assessment of surcharges, increasing the address accuracy threshold, expanding mail verification, and tracking UAA volume by mailer.
We estimate these actions could have multiple benefits. First, they could generate additional revenue. Use of these strategies would have increased revenue by $11.9 million in FY 2013. Second, the Postal Service would more equitably recover costs from those mailers responsible for UAA mail. Third, such incentives would be consistent with legal requirements that the Postal Service maximize incentives to reduce costs and increase efficiency.
What the OIG Recommended
We recommended the Postal Service develop strategies to improve pricing and recover costs associated with UAA mail to include enhancing the methodology used to determine surcharge amounts and increasing the address accuracy threshold. We also recommended enhancing the assessment of surcharges, expanding mail verification by increasing the number of mailings tested using automated address verification, and tracking UAA mail volume by mailer.