Postal Service flats have a problem. As a group, they don’t cover their costs.Last year, they collectively lost the Postal Service about $630 million.
First, what are flats? They are not European apartments or a type of shoe. In the postal context, “flats” are large mailpieces between the size of a typical letter and a thicker parcel. Full-size envelopes, magazines, and catalogs are all considered flats. It’s a very popular format.
Some flats products have been underwater — meaning their attributable costs exceed revenue — for many years. Starting in fiscal year (FY) 2010, the Postal Regulatory Commission (PRC) required the Postal Service to provide information on the operational changes it was making to lower flats costs when it filed its Annual Compliance Report every December. This requirement was expanded to include additional information in FY 2019. The PRC has also developed a list of what it considers to be some of the causes of inefficient flat operations.
Last December, the Postal Service described its top initiatives to reduce flats costs. We examined them in our recent audit, Flats Cost Coverage, and found that most of the initiatives did not have specific, measurable objectives that would directly reduce these costs. The initiatives also did not fully address the causes the PRC had identified.
