USPS inspector general questions Sunday delivery program

There are more United States Postal Service trucks on the streets on Sundays this holiday season, and many of them are delivering packages from Amazon, the online retailing giant.

A Dec. 5 report by the Postal Service’s inspector general raises questions about whether the agency is getting all the bang it should from these Amazon deliveries.

The USPS agreed to a special discount for Amazon under a 2013 negotiated service agreement with the Seattle-based company.

Auditors said they found “operational inefficiencies” in the Sunday parcel program in 40 of the 134 postal hubs in the Sunday delivery program.

The report, titled “Sunday Parcel Delivery Service,” blamed management, saying that supervisors “did not always enforce policies and procedures and supervision was inconsistent at some hubs.”

The auditors said the result was that the Postal Service could have saved $356,736 at the 134 hubs if the operations had been run by the book.

Management tended to agree with the IG’s findings, but questioned the auditors’ cost estimates.

With the USPS looking increasingly toward package mail to offset its well-known loss of first-class mail, reports like this one will become more important to the agency’s future.

The report comes as the USPS is expanding the program and as its package volume continues to soar. It also hired 5,000 more seasonal workers than it did during the 2013 holiday period. That’s 30,000 added workers compared with the 25,000 added last year.

2014 USPS finances

The final financial numbers for the Postal Service’s 2014 fiscal year are in, and postal analysts are beginning to say good things about the agency’s fiscal health.

The Alliance of Nonprofit Mailers reported in its Dec. 10 newsletter that “the liquidity crisis that drove postal legislative reform efforts in 2013 and 2014 seems to have abated for now.”

The ANM, headed by former USPS Stamp Services director Stephen Kearney, noted that the Postal Service’s cash on hand soared from $2.3 billion at the end of fiscal 2013 to $4.9 billion on Sept. 30, the end of fiscal 2014.

“This 111 percent increase in liquidity” drove the number of days of operating cash in the agency’s coffers to 19 days, from 9 days at the end of fiscal 2013.

While the USPS posted a $5.508 billion loss for the year, Kearney pointed out that the agency’s financial filing “translated this into an actual $1.374 billion operating profit” for fiscal 2014.

It did this by subtracting the $5.7 billion in retiree health care costs it was unable to pay and a $1.2 billion increase in workers compensation liability driven by nonoperating factors such as interest rates.

As for the current fiscal year, which began Oct. 1, the USPS is projecting a net loss of $6.1 billion, compared to the $5.5 billion loss in fiscal 2014.

But it is also projecting “a controllable operating profit” of $500 million compared to its $1.4 billion profit in 2014, the newsletter said.

First-class mail will continue to decline by 2.2 billion pieces, or 1.4 percent, to 153.2 billion.

That “continues the moderate leveling off we have seen recently,” the newsletter said.

Standard, or advertising, mail is expected to grow by 1 billion pieces in fiscal 2015, or 1.3 percent.

That will allow advertising mail to continue to outpace first-class mail volumes, with 53 percent of total volume.

“It is interesting to note within the plan how the USPS is handling its newfound prosperity,” the newsletter said.

Improvements to the agency’s infrastructure will jump sharply, up 144 percent. The spending for buildings, machinery and vehicles will grow by $1.3 billion, according to the newsletter.