Background
As part of its Delivering for America 10-year strategic plan, dated March 2021, the U.S. Postal Service plans to capitalize on the strength of its surface network and lower costs by reducing its reliance on air transportation. However, the Postal Service spent about $3.5 billion on air transportation costs in fiscal year (FY) 2022, an increase of about $106 million (or 3 percent) compared to FY 2021. The Postal Service has opportunities to reduce costs by better planning air capacity. For example, the Postal Service must pay the aviation supplier for [redacted] percent of the planned weight capacity, even if the amount of mail tendered is less than this amount. Better planning could help the Postal Service reduce air transportation costs and further support its strategic plan.
What We Did
Our objective was to evaluate the U.S. Postal Service’s effectiveness in planning air capacity on specific lanes (pair of originating and destinating air stops). We analyzed Postal Service air weight data for the specific lanes planned to one aviation supplier for ten operating periods starting January 1, 2022, and ending May 26, 2023.
What We Found
The Postal Service did not accurately plan air weight capacity on the specific lanes for the aviation supplier we reviewed. Specifically, six of nine operating periods (about 67 percent) within our scope had actual mail weight that was less than the minimum [redacted] percent of planned air weight capacity for mail sent to the aviation supplier. As a result, the Postal Service paid the aviation supplier about $25.7 million annually for unused capacity because it did not meet the minimum weight requirement.
Additionally, the Postal Service did not reconcile minimum air weight commitments using its own calculation of actual weight tendered to the aviation supplier. Rather, it used the weight provided by the aviation supplier without verifying its accuracy. This occurred because procedures have not been updated and do not contain methods for validating data received from the aviation supplier, which could result in unnecessary transportation costs to the Postal Service.
Recommendations
We made four recommendations to management that included developing a process to confirm future transportation changes are incorporated into the forecast model, reissuing guidance for tendering mail, and updating the instructions and reassessing or redefining the responsibilities for the reconciliation process.