Background

The U.S. Postal Service launched a pilot program to transport mail by rail on July 14, 2020, under a contract with Contractor #1. On November 10, 2021, the Postal Service expanded rail service using a second contractor, Contractor #2. The intent of moving mail by rail is to reduce as many Highway Contract Route trips as possible and fully optimize the surface transportation network.

What We Did

Our objective was to evaluate how the Postal Service identifies opportunities for moving standard mail on intermodal transportation and monitors rail transportation network performance. To accomplish our objective, we conducted observations at the Los Angeles Network Distribution Center (NDC) and interviewed Postal Service management at the eight NDCs using rail service. Additionally, we reviewed contracts and performance data for the scope period of July 14, 2020, to June 30, 2022.

What We Found

The Postal Service identified opportunities for moving standard mail on intermodal transportation; however, it did not effectively oversee the rail program or review the contractor’s performance prior to awarding a second contract. We also found the Postal Service was not consistently monitoring the rail transportation network performance.

Overall, neither Contractor #1 nor Contractor #2 have consistently met performance goals since July 2020. Specifically, from July 14, 2020, through June 30, 2022, 35 percent of Contractor #1’s scheduled trips were late. In addition, from November 10, 2021, through June 30, 2022, 58.5 percent of scheduled trips with Contractor #2 arrived late. Furthermore, at seven of the eight NDCs, management did not follow policy for reporting late trips.

Due to a lack of contractor performance oversight, mail was not consistently moved timely. When mail moved via intermodal transportation is late, there is increased risk that it will not be delivered to the customer on time. Additionally, from July 14, 2020, to June 30, 2022, 60.7 percent of the trips from the Dallas NDC to the Los Angeles NDC ran with no mail, which is an annualized cost to the Postal Service of about $459,759.

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Source: USPS OIG