Background
Flat-shaped mail, or “Flats”, refers to large envelopes, magazines, and other flexible, rectangular mail that meet certain criteria. The Postal Service processes Flats using automated mail processing equipment and manually, as necessary.
Each class of U.S. mail is legally required to cover its costs. The Postal Service has been challenged with processing Flats in a cost‑effective manner despite it developing and implementing several initiatives related to Flats. The Postal Regulatory Commission (PRC) has identified several causes of inefficiencies in the Postal Service’s Flats operations over the years in its Annual Compliance Determination Reports and most recently in its Flats Operations Study Report as required by the Postal Service Reform Act of 2022. In fiscal year (FY) 2022, four of eight Flats products did not cover their costs and Flats collectively had a cumulative negative contribution of approximately $630 million.
Starting in FY 2010, the PRC required the Postal Service to describe operational changes intended to lower Flats cost in its Annual Compliance Reports (ACR). In FY 2019, the PRC required additional information be provided in the ACRs on Flats cost and Postal Service initiatives related to Flats. The Postal Service also established a joint task force responsible for collaborating with the mailing industry on Flats cost saving measures.
What We Did
Our objective was to assess Postal Service initiatives to increase cost coverage of Flats products.
What We Found
We found most Postal Service initiatives are not designed with specific, measurable objectives to directly reduce Flats cost and do not address the causes of inefficiencies in Flats operations identified by the PRC. In addition, we identified opportunities for the Postal Service to further collaborate with its stakeholders on current and new initiatives related to Flats.
Recommendations
We recommended management further collaborate with stakeholders from the mailing industry to develop and implement initiatives with specific, measurable objectives to directly reduce Flats costs and address the causes of inefficiencies in Flats operations identified by the PRC.