Dive Brief:
- The Postal Service should develop a plan to communicate disruptions to customers two days in advance to prevent a repeat of the issues shippers and mailers faced in the 2020 peak season, the USPS Office of Inspector General recommended in an audit report Friday.
- Nine Postal Service processing facilities embargoed or redirected certain mail types up to 17 days during the 2020 peak season due to a surge in volume and limited capacity, according to the report. The actions helped improve the on-time percentage for first-class packages and priority mail, which had deteriorated.
- Embargoes and volume redirections to nearby facilities only occurred "after facility conditions became so congested that mail could not be processed efficiently." It added that the Postal Service didn't announce these actions in enough time for mailers to make other transportation arrangements.
Dive Insight:
The Postal Service has highlighted network investments made ahead of the 2021 peak season to better handle a surge in volume, including the addition of 112 new package sorting machines. Fellow parcel carriers FedEx and UPS have made investments of their own in anticipation of another peak in which daily volume is expected to outpace capacity.
"Lessons learned in FY 2021 will be incorporated into the FY 2022 plan," USPS management said in comments included in the report, adding that its "management team utilized all available options to minimize service delays."
But USPS customers remain concerned about how this year's peak will play out after a difficult 2020 holiday shipping season, said Michael Plunkett, president and CEO of the Association for Postal Commerce, in an email.
"The Postal Service will have to greatly improve on its communication relative to last year's peak or risk alienating customers even further," Plunkett said.
In response to the inspector general's recommendation, Postal Service management said that it would review and update its policies as appropriate. However, "some of the root causes are not predictable forty-eight hours in advance," it said.
Two days' advance notice is a short timeframe for shippers to adjust, given the capacity constraints expected for the upcoming peak season. Adding carriers isn't easy at this point, but shippers still have opportunities to adjust the share of volume their carriers handle, Clint Boaz, senior sales engineer at ProShip, said on a July company webinar. Additionally, FedEx and UPS have made it known they have more network capacity available on the weekends and are prioritizing small- and medium-business volume.
During the 2020 peak season, package volume at the nine USPS facilities that implemented embargoes or volume redirections increased by a range of 7% to 54%, according to the report. Management at the facilities said they didn't have enough capacity to receive, stage and process the surge in volume.
USPS embargoed and redirected processing facilities
| Facility | Action taken | Effective date | Number of days | Mail types affected |
|---|---|---|---|---|
| Cleveland P&DC | Redirect | Dec. 9-26, 2020 | 17 | Marketing Mail Letters |
| Springdale, Ohio, Annex | Redirect | Dec. 14-26, 2020 | 12 | Marketing Mail Flats |
| Northwest Rochester, N.Y., Annex | Redirect | Dec. 17-29, 2020 | 12 | Marketing Mail Flats and Periodicals |
| Philadelphia NDC | Embargo | Dec. 14-19, 2020 | 5 | Marketing Mail Flats, Letters and Parcels |
| Detroit NDC | Embargo | Dec. 14-19 | 5 | Marketing Mail Flats and Parcels |
| Baltimore P&DC | Redirect | Jan. 15-20, 2021 | 5 | Marketing Mail Flats and Letters |
| West Valley, Ariz., P&DC | Embargo | Dec. 14-18, 2020 | 4 | Marketing Mail Flats and Parcels |
| New Jersey City, N.J., NDC | Embargo | Dec. 14-17, 2020 | 3 | Marketing Mail Flats and Parcels |
| Birmingham, Ala., Annex | Embargo | Dec. 14-17, 2020 | 3 | Marketing Mail Flats and Parcels |
P&DC is a processing and distribution center. NDC is a network distribution center. Annex is a standalone facility. SOURCE: USPS Office of Inspector General audit report.
The agency's Birmingham, Alabama, Annex facility saw package volume increase "because management accepted mail from a new high volume package customer when a Postal Service competitor limited the amount of customer packages they would accept," according to the report. UPS and FedEx have been more selective about the volume they accept into their networks as demand has spiked during the COVID-19 pandemic.
As a result of the volume spike, the on-time percentage for first-class packages and priority mail declined at the nine facilities from October 2020 to December 2020, the report said. It's not clear to what extent on-time rates were affected, as the report redacted that information.
"Headquarters management stated when possible, they tried to ease congested conditions by moving packages to other facilities for processing, but trailers and drivers were not always available," it said. "So, they imposed embargoes or redirections on the commercial mail that had not yet reached the facilities."
The processing of marketing mail was delayed for several days at the embargoed facilities to focus on reducing the backlog in packages, per the report.
Following the embargoes, the affected facilities saw an increase in on-time percentages for first-class packages and priority mail they handled. But USPS took action after congestion was already occurring and "was inconsistent in communicating that embargoes or redirections had been imposed," according to the report.
"If the Postal Service does not address these concerns, it will be challenged with making appropriate business decisions to effectively adjust to major disruptions in the future and prepare for increased package volumes and upcoming peak mailing seasons," the report said.
