Background
As part of its Delivering for America plan, the U.S. Postal Service announced several initiatives to improve transportation efficiency and decrease air transportation. The Postal Service estimated annual savings from these initiatives of about $1.1 billion from surface transportation, and $701 million from air transportation. In October 2021, the Postal Service extended First-Class Mail delivery standards to allow more volume to travel by surface and adjusted its primary air cargo contract in September 2024, to align with these initiatives. However, despite these changes, the Postal Service has increasingly relied on the air network to transport First-Class Mail and Marketing Mail.
What We Did
Our objective was to evaluate the effectiveness of First-Class Mail and Marketing Mail transported by the air network. We analyzed air-assigned volume, service performance, and transportation costs. Additionally, we judgmentally selected four air stop locations and 12 associated mail processing facilities to conduct observations and interviews.
What We Found
While the Postal Service has reduced overall transportation expenses, its new air cargo contract is not aligned with volume trends and network changes. The Postal Service did not properly forecast declining package volumes or impacts of subsequent network changes when establishing the volume requirements of its new air cargo contract. As a result, the Postal Service made the decision to transport First-Class Mail and Marketing Mail by air to avoid paying premiums. While the new contract offers benefits for the Postal Service, the volume requirement leaves the Postal Service with little choice but to fly First-Class Mail — even though this contradicts previous decisions to extend delivery standards to allow for surface transport — simply to meet contractual minimums and avoid even higher expenses. With the contract’s long duration and the continued difficulty of meeting minimum volumes without relying on First-Class Mail, the Postal Service may want to assess its options moving forward, including whether the current agreement remains the most effective approach.
Recommendations and Management’s Comments
We made two recommendations to address issues with planning and forecasting and to align the air cargo contract with network changes. Postal Service management agreed with one recommendation and disagreed with the other. Management’s comments and our evaluation are at the end of the finding and recommendations. The U.S. Postal Service Office of Inspector General (OIG) considers management’s comments responsive to recommendation 1 as corrective actions should resolve the issues. We will pursue recommendation 2 through the audit resolution process.
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