Highway Contract Route
Fuel Price Index Program
Tuesday, May 31, 2016
Estimated Report Release Date:
The U. S. Postal Service uses highway contract routes (HCRs) to transport mail and equipment between plants, post offices, or other points where mail is received or dispatched, such as business mailers’ facilities. HCRs also are used for box delivery, collection service, and other mail services. The Postal Service uses Fuel Price Index (FPI) program to manage fuel payment for HCR suppliers.
Under the FPI program, the Postal Service pays a set monthly fuel amount based on the annual authorized fuel gallons and a baseline fuel price per gallon. Additionally, the price per gallon is indexed to published regional prices and adjusted when fuel prices fluctuate up or down by $.05 or more in a single month. These fuel adjustments help the Postal Service manage fuel costs, especially in times of fuel price volatility like the past 2 years.
- Is the Postal Service’s FPI program effective in managing fuel costs? Why or why not?
- What would you change or do better? Please also share best practices to better manage the HCR fuel costs.
Source: USPS Office of Inspector General