U.S. Postal Service:
Mail Delivery Efficiency Has Improved, but Additional Actions Needed to Achieve Further Gains
GAO-09-696: Published: Jul 15, 2009. Publicly Released: Jul 30, 2009.
The U.S. Postal Service (USPS) is facing significant financial problems as mail volume is declining, 4.5 percent in fiscal year 2008 and 11 percent projected for fiscal year 2009. USPS lost $2.8 billion in fiscal year 2008 and projects a $6.4 billion loss in fiscal year 2009 (possibly more if it cannot cut an ambitious $5.9 billion in costs). As one way to cut costs, USPS is trying to improve the efficiency of mail delivery, which generates close to one-third of USPS's $78 billion in expenses. Recognizing the sizeable impact of delivery on USPS's finances and operations, you requested a GAO review. This report addresses (1) how USPS monitors delivery efficiency; (2) characteristics of delivery units that affect their efficiency; and (3) the status and results of USPS's actions to improve delivery efficiency, in particular USPS's Flats Sequencing System (FSS). To address these objectives, GAO interviewed stakeholders and USPS officials, reviewed delivery documentation, conducted fieldwork, and analyzed delivery data.
USPS delivery managers have written guidance and information systems to help them monitor delivery efficiency--determining whether units and carriers are using the best work practices. These tools help set carrier and unit expectations and evaluate performance. Specifically, written guidance provides a monitoring framework and information systems track different metrics, such as deliveries and overtime, used for evaluation. However, there is no single measure of delivery efficiency, and managers use various metrics (e.g., carrier office and street efficiency indicators) to measure effectiveness.
Through visits, interviews, and analysis of city delivery operations, GAO found efficiency varies by delivery unit, and certain factors affect a unit's efficiency. These factors can include the experience, training, and local knowledge of a delivery manager; timing of mail received from the processing plant; availability of qualified carriers; unit size or location; and how recently routes were adjusted. In the less efficient delivery units (as determined by USPS's rankings), USPS was taking actions to alleviate some issues, including replacing managers, allocating additional resources, and providing training.
Although USPS has taken actions to improve delivery efficiency, the agency has limited information to measure the results. These actions include:
- Flat Sequencing System--this cornerstone effort is a $1.5 billion investment in equipment for sorting flat mail (e.g., large envelopes, catalogs, circulars, and magazines) into the correct sequence for delivery;
- Adjusting City Carrier Routes--aligning carrier routes to match changing workload, including using technology to set an optimal route structure;
- City Delivery Pivoting Opportunity Model--a scheduling tool that helps delivery managers deal with daily unstaffed routes by aligning available staff and resources with delivery needs; and
- Others--such as managing its delivery vehicle fleet and utilizing a tool to manage growth in the number of addresses in a cost-effective way.
These actions, combined with recent mail volume declines, have helped USPS eliminate nearly 10 million delivery workhours while absorbing 2.7 million additional deliveries between fiscal years 2006 and 2008. USPS expects to eliminate 37 million delivery workhours in fiscal year 2009 (saving approximately $1.4 billion) compared to the previous year. The future savings, however, may be limited by USPS's lack of specific cost-saving targets and results for most of these actions (USPS officials report it is too difficult to isolate the results of actions). Without such information, USPS is unable to assess the contribution and performance of each action and focus on those with the greatest savings potential. Also, while we are encouraged by USPS's efforts to coordinate with employees, their unions, and mailers to promote more efficient delivery, continued focus will be needed to help address ongoing challenges related to declining volumes, technical issues (e.g., FSS failed a key engineering test), and financial and operational issues (e.g., the impact of these actions on postal stakeholders and future USPS investment decisions, particularly if delivery frequency is reduced to 5 days a week).
Recommendation for Executive Action
Status: Closed - Implemented
Comments: In 2009, we reported that although USPS had taken actions to improve delivery efficiency, the agency had limited information to measure the results. These actions, combined with recent mail volume declines, had helped USPS eliminate nearly 10 million delivery workhours while absorbing 2.7 million additional deliveries between fiscal years 2006 and 2008. USPS expected to eliminate 37 million delivery workhours in fiscal year 2009 (saving approximately $1.4 billion) compared to the previous year. The future savings, however, may be limited by USPS's lack of specific cost-saving targets and results for most of these actions (USPS officials report it is too difficult to isolate the results of actions). Without such information, USPS was unable to assess the contribution and performance of each action and focus on those with the greatest savings potential. Therefore, we recommended that the Postmaster General establish cost-saving targets and track results for each of the major USPS initiatives to improve delivery efficiency. In 2013, we confirmed that USPS made Optimize Delivery Operations a major initiative. Within this initiative, USPS established cost-savings targets for Delivery Operations City and Rural Route inspections and reductions for FY-2012. For rural and city routes, the targets were to save $52 million and eliminate 675 routes respectively. USPS tracked the results and identified that the agency saved $52 million on rural routes and eliminated 782 city routes. In FY-2013, USPS established the following targets within its major deliver initiative: Delivery Unit Optimization is targeted to save $18.4 million; Directed Mode of New Delivery is targeted to save $3.7 million; and Business Mode Conversion is targeted to save $8.4 million. With these targets in place against which to measure performance, USPS has a way to assess and report on the progress of its major delivery initiatives, determine whether changes should be made, and hold managers accountable for achieving targets. As a result, USPS has a key management tool for tracking the savings associated with each initiative.
Recommendation: The Postmaster General should establish cost-saving targets and track results for each of the major USPS initiatives to improve delivery efficiency.
Agency Affected: United States Postal Service