Dive Brief:
- The U.S. Postal Service's initial efforts to consolidate some transportation operations have negatively impacted service to customers, the agency's Office of Inspector General said in a Dec. 18 report.
- The Postal Service’s goal is to move more volume in fewer trips, reducing transportation costs in the process, at the expense of some mail taking longer to reach processing facilities, per the report. Through the Local Transportation Optimization initiative, it is reducing the frequency of mail pickup and dropoff routes for some post offices.
- The Postal Service has implemented the LTO initiative in 15 regions, impacting post offices more than 50 miles away from a processing center. First-Class Mail service performance declined in regions the Office of Inspector General analyzed after the LTO's implementation, most heavily impacting single-piece volume in rural areas, according to the report.
Dive Insight:
The Postal Service is overhauling its network under Postmaster General Louis DeJoy's long-term plan to tackle the agency's financial woes, despite mounting lawmaker scrutiny over his approach. A key piece of that plan is expanding the agency's LTO pilot program nationwide under a new "Regional Transportation Optimization" initiative, which it unveiled in September.
The Office of Inspector General's findings offer a glimpse into how that pilot impacted customers. It analyzed service performance from October 2022 to July 2024 for the first six regions in which the initiative was implemented — Richmond, Virginia; Wisconsin; Phoenix, Arizona; Atlanta, Georgia; Portland, Oregon; and Alabama. First-Class Mail on-time reliability declined in all of these regions, per the report.
"In some cases, local Postal Service personnel at optimized offices redirected customers to a nearby non-optimized post office to ensure on-time delivery of their mail," the report said.
The Office of Inspector General found more than 60% of those served by affected post offices are in rural areas, adding to stakeholder concerns that the broader Regional Transportation Optimization initiative will disproportionately impact customers in less populated areas.
In the impacted regions, single-piece First-Class Mail for rural residents saw a more pronounced drop in on-time reliability compared to urban populations. As of July, service performance scores for single-piece First-Class Mail in rural areas was below 65% for the six analyzed regions, per the report.
Despite the cost-savings ambitions of the program, the report also noted that transportation expenditures increased by over $7.1 million for the regions in which the Postal Service implemented LTO.
However, the Postal Service would have seen an overall reduction in transportation spending within LTO regions if not for the $11 million increase in the Atlanta region. The agency said the region's regional processing and distribution center had to deploy emergency transportation contracts and hire more people due to implementation issues, per the report.
