USPS OIG – Service Performance – First‑Class Single Piece Letter Mail
Our objective was to evaluate service performance for First‑Class Single Piece (FCSP) letter mail nationally and in 17 selected districts. This report responds to a congressional request regarding concerns of low service performance in these districts in the last month leading up to the November 2020 general election. The OIG addressed issues on election mail service performance in a prior report. This audit focuses on overall service performance for FCSP letter mail in fiscal year (FY) 2020 through March 31, 2021.
During the COVID-19 pandemic, the Postal Service delivered critical items such as medications, stimulus payments, Election Mail, and Social Security checks. While the Postal Service played an important role during the pandemic, its operations were not immune from the pandemic’s impact and concerns about on‑time delivery performance increased as the pandemic progressed.
The Postal Service uses an internal measurement system to evaluate its on‑time service performance and assigns root causes for failures that do not meet established delivery standards. Service standards are determined by the class of mail, where it originates, and its destination. In prior audits, we noted the Postal Service has struggled to meet mail service performance standards and had opportunities to improve operational efficiency and cost‑cutting efforts. Additionally, the Postal Regulatory Commission’s annual independent assessment of the Postal Service’s service performance for FY 2017 through FY 2020 found that the Postal Service failed to meet FCSP letter mail service performance due to issues in processing, transit, and last mile operations.
The OIG reviewed three related core functions vital to meeting the service performance target for FCSP letter mail nationally: mail processing, transportation, and delivery operations. Specifically, we conducted our review at 19 processing and distribution centers (plants) and 34 delivery units in the 17 districts outlined in the congressional request.
Nationwide service performance for FCSP letter mail dropped throughout 2020, after the onset of the COVID‑19 pandemic. Service performance scores began FY 2020 above 90 percent before significantly declining between July and December 2020 to a low of 67.43 percent at the end of December. Service performance scores started improving in January 2021 after the 2020 peak season, reaching 84.55 percent by the end of March 2021. Service performance at the 17 selected districts trended comparably with the national scores for FCSP letter mail but were lower, some far lower, than the national scores.
We found the service performance scores declined due to internal and external network impacts in mail processing, transportation, and delivery operations including employee availability challenges, increased package volumes, and a loss of transportation capacity. Specifically:
- Some processing facilities did not have sufficient operating capacity to receive, process and stage mail when package volumes were high, resulting in bottlenecks and delays in processing and transporting the mail.
- Some processing facilities were not able to adequately staff letter machines or dock operations or did not have a sufficient number of experienced employees, resulting in decreased efficiency.
- To alleviate bottlenecks within the network, some processing facilities worked mail offloaded to them from other facilities. Working this mail required additional resources to process and transport the offloaded mail.
- Implementation of the Surface Transfer Center (STC) redesign, a Postal Service initiative to reduce transportation costs and improve service through route optimization, also impacted the ability of some facilities to move the mail. The STCs contributed to dock congestion which resulted in late trips to plants.
- Late trips declined, critically late trips increased, and mail continued to arrive late to the 19 plants from other processing facilities. As a result, facility processing schedules were not aligned to match the transportation schedules.
- Constraints in mail processing and transportation, including the air network, prevented timely and consistent mail arrival to the delivery units. Delivery units used overtime to sort, case, and deliver mail.
Completed Mitigation Efforts
Despite these challenges, we found that Postal Service management modified normal operations in mail processing, transportation, and delivery operations to try to mitigate missed service commitments. In fact, many of the 19 plants reported they generally had no issues processing FCSP letter mail each day, but their service scores were impacted by FCSP letter mail coming from other facilities that had already missed its service commitment standard prior to arrival.
In their efforts to maintain operations in the plants and delivery units, management implemented various solutions to move the mail through the network. Some plants were more successful than others at maintaining operations and service scores. For example, some plants utilized overtime and/or management staff to complete mail processing and handling operations, while others shifted employees from letter sorting operations to work packages.
Network precision and synergy is critical to effective, timely mail processing operations across the country. Facilities that struggled with increased package volume, bottlenecks, and employee availability can impact service performance in downstream operations and at other facilities. In addition, if transportation is not available to move mail between facilities on schedule, large-scale service degradation can quickly occur.
In late March 2021, the Postal Service published its 10-Year Plan, Delivering for America, which outlined its commitment to make operational changes moving forward. The plan establishes 13 key goals to achieve financial stability and service excellence. Management also communicated this plan verbally to its stakeholders. The plan includes numerous initiatives that are aligned to achieve the financial, service, and other key outcome goals. Many of these initiatives are for service improvement for the 2021 peak season, including efforts to increase package processing capacities, address transportation challenges, and improve employee retention and availability.
To further improve service performance scores across the network, management should focus on quickly identifying and addressing issues at the locations that are the source of the service delays. Monitoring key performance indicators, by setting sufficient thresholds, throughout the network can identify underperforming facilities and bottlenecks and allow management to promptly take action to address these hotspots and mitigate service delays.
Employee availability impacted operations and the Postal Service’s ability to meet service commitments. As management proceeds with their hiring efforts, they should ensure mail processing peak season hiring plans address potential COVID‑19 pandemic impacts on the job market to hire a sufficient number of employees and fully train them in time for 2021 peak season.
While these initiatives and other Postal Service Headquarters Logistics & Processing Operations actions may address the challenges experienced last year, many of these initiatives require implementation within the coming months for a positive impact on the 2021 peak season. Implementing various initiatives concurrently is challenging, and combined with any continuing employee availability challenges, could have unintentional negative impacts on the quality and timeliness of mail delivery. Before implementing operational adjustments prior to 2021 peak season that will impact their network, the Postal Service should fully study and analyze the collective impact planned changes will have on mail service. These changes should also be clearly communicated, in writing, throughout the Postal Service’s management structure to ensure consistent implementation.
We recommended the Chief Logistics & Processing Operations Officer and Executive Vice President instruct management to:
- Develop a risk-based operational tool, with appropriate thresholds, to identify and remediate underperforming facilities or bottlenecks within the network, so they may be promptly addressed, and service delays mitigated.
- Ensure mail processing peak season hiring plans include potential impacts from the COVID‑19 pandemic on the job market.
- Conduct a service impact analysis for any peak season changes that incorporates ongoing effects of the COVID‑19 pandemic, expected peak season volumes, and strategies to mitigate potential operational issues.
- Develop and implement a strategy to communicate, in writing, clear guidance on any significant operational adjustments implemented prior to the 2021 peak season to ensure message clarity and consistent application throughout the agency.