Our objective was to evaluate U.S. Postal Service’s preparedness for the fiscal year (FY) 2022 peak mailing season.
Each year, increased mail volume during the Postal Service’s peak mailing season —November through January — significantly strains the Postal Service’s processing and distribution network.
During the peak mailing season of FY 2021, package volume increased by about [redacted] million pieces, or 37 percent, compared to package volume during the prior peak mailing season. This increase in packages was largely due to the impact of the COVID-19 pandemic. Service performance for all mail classes declined by 13 percent during the FY 2021 peak season, including a nearly [redacted] percent decline in service performance for packages.
In our prior audit, Nationwide Service Performance (Report Number 21-120-R21, September 20, 2021), we found that reduced employee availability and transportation challenges that occurred during the COVID-19 pandemic, coupled with increased parcel volume, added even more strain on the distribution network during the FY 2021 peak mailing season. This led to a national decline in service performance scores.
Typically, the Postal Service increases staffing and facility space right before peak season in anticipation of increased mail and package volume. However, Postal Service management stated that approach no longer provides the needed staff and facility space for peak season, especially in high demand areas of the country. Therefore, management implemented a new year-round strategy focused on a consistent build-up of employee complement, multi-year leases for facility space, and processing capacity to help ensure it would be sufficient for the FY 2022 peak season.
The Postal Service also developed several other initiatives and tasks to prepare for the FY 2022 peak mailing season. To help track those critical tasks and initiatives, the Postal Service developed the Peak Season Readiness Tracking Tool. The tool allows management to see what tasks have been completed, those that still need to be completed, and any tasks that are past due.
Postal Service management implemented a new year-round strategy in preparation for the FY 2022 peak season by implementing permanent operational changes, including increasing employee complement and facility space to help meet the needs of peak season. The Postal Service’s year-round approach coupled with initiatives for the FY 2022 peak season are intended to address the main causes of low performance from the last peak mailing season. Management stated that they feel confident the Postal Service is prepared to process, transport, and deliver the increased volume during the upcoming peak season.
These initiatives include:
- Increasing employee complement by 33,000 since January 2021 to help prepare for peak staffing needs.
- Hiring approximately 45,000 additional temporary employees (30,000 processing employees and 15,000 retail and delivery employees) to start on or after October 9, 2021 and hiring 1,100 additional truck drivers.
- Leasing 46 package support annexes with two- to five-year lease terms for use beyond peak season to help acquire space in high demand areas.
- Leasing 70 temporary mail processing and logistics annexes to process packages during the FY 2022 peak mailing season.
- Deploying and installing 112 package sorting machines, with 89 in processing facilities and 23 in delivery units.
- Increasing air transportation capacity by 12 percent over last peak season.
- Expanding six surface transfer centers (STC) and ensuring they are not co-located at processing facilities to help alleviate dock congestion and reduce transportation trips.
- Better utilizing trailer space on surface transportation trips.
However, some of these initiatives are at risk of not being fully implemented before the upcoming peak season. Specifically, as of October 25, 2021, management has secured leases for 40 of the 70 (or 57 percent) peak season annexes. Additionally, while all 23 sorting machines have been installed at delivery units, the Postal Service has installed 84 of the planned 89 package processing machines for processing facilities. Management anticipates all package processing machines will be installed by December 2021. Management stated they will implement contingency and alternative processing plans if they are not able to acquire the desired facility space, and added they are confident that all processing machines will be installed according to schedule.
Additionally, there is a nationwide labor shortage that could impact the Postal Service’s plan to hire 45,000 temporary employees for this peak season. While the Postal Service was able to hire its planned number of temporary employees last peak season, it fell short the prior two years. Further, Logistics regional management stated that a nationwide shortage of commercial truck drivers could affect the Postal Service’s surface transportation capacity. Management added that they are in negotiations with the union to ensure that they hire Postal Vehicle Service (PVS) truck drivers in time for peak mailing season. Management also stated that to help mitigate this risk, they plan to consolidate mail at the STCs to better utilize surface transportation by having more mail go on fewer trips.
Finally, we surveyed all 13 Processing division directors and all 13 Logistics division directors to assess their confidence in whether the Postal Service would be able to timely process and transport mail and packages during the upcoming FY 2022 peak season. Processing division directors felt very confident or confident that they would have sufficient facility space, sorting machines, and processing employees to timely process mail volume during the FY 2022 peak season. Logistics division directors felt very confident or confident that there would be sufficient air capacity to timely transport mail and packages during the FY 2022 peak season. However, they only felt somewhat confident there would be sufficient surface transportation to timely transport packages.
While it is unclear whether or not the Postal Service can fully implement its initiatives prior to the start of the FY 2022 peak mailing season, it has already increased the number of full-time employees by 8 percent, facility floor space by 48 percent, and package processing capacity by 16 percent compared to last peak season. Postal Service management expects those percentages to increase even more as the remaining initiatives are implemented.
In recent audit reports, we made recommendations that can help the Postal Service improve its oversight of peak season hiring, improve communications to customers on service disruptions and identify at-risk facilities. Specifically, we recommended the Postal Service: establish a monitoring program over the peak season hiring process to help ensure hiring activities are completed timely, develop a plan to promptly communicate information about major service disruptions to mailers, and identify facilities at risk of having their volume exceed processing and staging capacity and alleviate those conditions before they affect mail processing.
The Postal Service is working on implementing those recommendations and plans to deploy the Industry Connect Dashboard in November 2021, which will allow mailers to see real-time status of mail processing operations, logistics, and yard conditions at processing facilities. Additionally, the Postal Service recommends customers mail First-Class mail and packages by December 17, 2021, for expected delivery by December 25, 2021.
Because the Postal Service has implemented several initiatives to address the causes of low performance during last peak season and is working to implement other OIG recommendations, we are not making any additional recommendations at this time. However, we encourage the Postal Service to be proactive and transparent in communicating network issues and service disruptions to its customers and the general public throughout the FY 2022 peak season as they occur. We plan to monitor conditions and evaluate service performance throughout the FY 2022 peak mailing season and issue a report on any challenges identified.