Background
The U.S. Postal Service began deploying a major change to operations in October 2023 with the implementation of the Local Transportation Optimization (LTO) initiative in the Richmond, VA, region followed by 14 additional regions across the nation through August 2024. The initiative is generally designed to reduce the number of transportation trips to and from select post offices and increase the amount of mail transported on each trip. With LTO, mail collected at offices will remain there until the next day, delaying its entry into sorting operations.
What We Did
Our objective was to determine the impacts to service performance, customer service, mail security, and expected cost savings from implementation of the LTO initiative. We reviewed 15 LTO regions implemented through August 2024 and analyzed service performance data from October 2022 through July 2024 for the first six LTO regions (Richmond, VA; Wisconsin; Phoenix, AZ; Atlanta, GA; Portland, OR; and Alabama) as of the end of March 2024. We also judgmentally selected and conducted site visits at 26 out of the 2,456 optimized offices. The Postal Service filed a request for an Advisory Opinion with the Postal Regulatory Commission October 4, 2024. Our fieldwork was completed prior to this filing; thus, we did not review it as part of this report.
What We Found
While safeguards were appropriately implemented to secure the mail held overnight at the LTO optimized offices, we found the LTO initiative negatively impacted service to customers. The service performance scores for First‑Class Mail declined after the implementation of LTO, more significantly impacting the rural population. Additionally, customer complaints about mail delivery delays increased after the LTO implementation. Further, management did not maintain an accurate list of optimized offices, negatively impacting its ability to calculate realized cost savings. Finally, overall transportation expenditures increased by $7.13 million for the 15 LTO implemented regions when compared to the same period last year.
Recommendations and Management’s Comments
We made two recommendations to address customer outreach and cost savings, and management agreed with both. The U.S. Postal Service Office of Inspector General (OIG) considers management’s comments responsive to the recommendations, as corrective actions should resolve the issues identified in the report. Postal Service management’s comments and our evaluation are at the end of each finding and recommendation.
