Network and Transportation Operations

Key Service Metrics

For the FY2014 measures of Single-Piece First-Class Mail, the Postal Service fell short of the target performance for Overnight, Two-Day and Three-to-Five Day delivery. For Presort First-Class Mail, the Postal Service met the target performance for Overnight, but fell short of the target for Two-Day and Three-to-Five Day delivery. Although targets were not reached for all categories of Single-Piece First-Class Mail delivery, overall performance scores have remained high and relatively stable. Weather variability also affects year-to-year comparisons, specifically in the first and second quarter of the fiscal year, during which the Postal Service was impacted by historically severe winter weather.

Network Realignment Stabilization

The Postal Service completed the initial phase of network changes during FY2013, including 143 consolidations. These changes to the processing network were accomplished while successfully maintaining a high level of service to our customers. During FY2014, the Postal Service focused on ensuring the efficient operation of the remaining facilities through an initiative such as Lean Mail Processing, rather than pursuing additional consolidation activity. A second phase of network changes, impacting 82 facilities, will begin in January 2015.

Lean Mail Processing

Lean Mail Processing (LMP) is being implemented in mail processing facilities nationwide. LMP is focused on improving operational efficiency and reducing cycle times between plant processes with the use of Lean Six Sigma tools and methodology. The foundation of LMP is to reduce waste and improve operational efficiency by creating an organized workspace with visual management signs to standardize the work unit. LMP is also aimed at standardizing mail flow to ensure first-in, first-out processing. Additional benefits include reducing mail transport equipment inventories to align with mail processing needs.

New Package Processing Technology – To facilitate the growing package business, the Postal Service is exploring new package processing solutions. This includes new equipment, such as Small Parcel Sortation Systems, as well as new technologies that will work with our existing equipment, such as new scanners, software and sortation programs development. This new equipment and technology will position the Postal Service to accept, process and deliver packages more efficiently in the coming years.

Total Factor Productivity

Total Factor Productivity (TFP) is an index that measures how efficiently the Postal Service uses resources (inputs) to handle all aspects of its workload. An increase in the TFP index indicates that the ratio of work being completed is increasing compared to the resources used and that the Postal Service is operating more efficiently. Workload consists of three primary components: delivery points, mail volume weighted by product type and miscellaneous output (e.g., passports). Resource usage is based on the constant dollar amounts (i.e., the costs adjusted for changes in prices) of the labor, capital and materials used by the Postal Service.

The chart below starts with the cumulative TFP improvement from 1972 to 2007, and then reflects the cumulative score each year since then. FY2014 marks the fifth consecutive year of positive TFP growth.

Total Factor Productivity

(Cumulative improvements compared to 1972 baseline)

Chart showing Total Factor Productivity (Cumulative improvements compared to 1972 baseline) [D]


Note: Prior year results are updated based on most current data.

Air Cargo Optimization – During FY2014, significant savings were realized in regard to the Air Cargo Network. The new Air Cargo Network with FedEx was implemented on October 1, 2013. This replaced the previous agreement with FedEx that had been in place since 2001.

Ground Transportation Optimization – Highway transportation expenses for FY2014 were $3.5 billion. This is an increase of 3.5 percent from FY2013. The primary driver behind the increase in highway transportation expense resulted from the movement of 281 originating-destinating pairs from air transportation to ground transportation. Secondary to this, the USPS provided an expanded ground reach through Peak Season FY2014. This increase in highway transportation costs has been off set by the closure of two ground network surface transfer centers in Clinton, TN, and Binghamton, NY, as well as additional mileage cutting measures to remove redundant transportation from the network. Postal Vehicle Service work hour usage for FY2014 was over 25 million. This is an increase over FY2013 and is predominantly a result of an increase in Vehicle Maintenance operations of 751,000 work hours.

International Operations Optimization – USPS continues to focus on reducing cost and improving customer service for International and Military Mail. In cooperation with the U.S. Department of Defense and U.S. Department of State, outbound military and diplomatic mail operations were consolidated into the Chicago International Service Center, reducing domestic transportation and handling costs and improving end-to-end service. USPS has also coordinated with several foreign postal administrations to sort U.S. inbound mail by ZIP Code range to more efficiently route volumes to airports geographically closer to the customer. This has resulted in a reduction in USPS handling and transportation costs while simultaneously reducing end-to-end transit times.

Facilities Management

The Postal Service remains focused on working to deliver, serve, adapt and improve. Our real estate portfolio of approximately 32,000 building facilities covering 275 million interior square feet remains one of our greatest tangible assets. It is vital that we manage and adapt our building portfolio to align with customer needs for service at a manageable cost. The purpose of the USPS Facilities team is to provide appropriate facilities for Postal Service needs, to ensure proper stewardship and management of the real estate inventory and related resources, such as portfolio energy management and real property investment, and to continually balance the real estate portfolio.

Facilities performs strategic planning via ‘node studies’ analyzing the processing, delivery and retail use of existing facilities and the current and future local service needs. This identifies communities that can benefit from additional or modified capacity and locations where capacity exceeds the needs of the Postal Service, thus representing potential opportunities for savings and revenue generation. The 235 node studies approved in FY2014 represent $408 million of net present value in potential savings.

We executed over 5,200 leases in FY2014, ensuring continued occupancy for Postal Service operations at leased properties. Despite the increases in lease rates driven by the recovering economy, the lease rates for leases over $50,000 were negotiated 8.2 percent below market value.

Sales and outlease (rental) of excess real property assets generated over $200 million in gross receipts for the fourth consecutive year. This trend is slowing as economic conditions shift and opportunities decrease.

In FY2014, the Facilities team implemented portfolio modification projects ranging from emergency replacements to planned infrastructure changes supporting organizational and network initiatives. In FY2014, the USPS completed 70 new construction projects and dozens of other major renovations. These projects enabled the Postal Service to provide enhanced services, to maintain or restore operations after catastrophic events and to combine multiple facilities into fewer or smaller locations when appropriate. These moves allow us to take advantage of less costly space; sell off large, underutilized properties; or move to smaller, more efficient space.

Meeting the continual need for upkeep, we completed over 53,000 repair, alteration and replacement projects along with 1,844 upgrades for the Premier Post Office program in FY2014. We also finished 3,432 upgrades to maintain customer access in locations impacted by POStPlan. These measures ensure safety, security, serviceability and accessibility of Postal Service buildings as we maintain and right-size our network to provide a positive customer experience.

The current industry trend of consumer migration away from brick and mortar shopping to eCommerce, and its resultant growth in the package business, is impacting our facilities portfolio management plan as we continually improve and adapt that plan to address these marketplace developments.

Real Estate Inventory (Fiscal Years Ended Sept 30)


Real estate inventory




Owned properties




Owned interior square feet




Leased properties




Leased interior square feet




GSA/other government properties




GSA/other government interior square feet




Real Estate Inventory Actions


Inventory actions




Lease actions (alternate quarters, new leases and renewals)




Property disposals*




New construction (AQ, NCO, NCL and expansion)**




Repair and alteration projects (expense)




Repair and alteration expense totals




Repair and alteration projects (capital)




Repair and alteration capital totals




* Total partial and complete property sales (does not include non-property sales such as right-of-ways/easements, sale of rights, defaults, installment payments, etc.).

** Includes the build-out of pre-existing non-Postal spaces (Alternate Quarters [AQ]), the expansion of Postal-owned space (Expansion) and the new construction of leased (NCL) or owned (NCO) space.

Postal Vehicle Inventory


Vehicle type




Delivery and collection (1/2–2½ tons)




Mail transport (tractors and trailers)




Mail transport (3–9 tons)




Administrative and other




Service (maintenance)




Inspection Service and law enforcement








Delivery Points, by Type of Delivery (see Delivery Operations)


Delivery type












Post Office box




Highway contract route








Number of Routes, by Type of Delivery (see Dynamic Routing)














Highway contract route








Delivery Operations

Although the delivery infrastructure has been revamped and made more efficient through route reductions since 2008, it continues to be fuel and labor intensive. Mail volume continues to decline while the number of addresses we deliver to steadily increases. Our ongoing efforts in combining delivery unit locations, as part of the Delivery Unit Optimization (DUO) project, requires re-evaluating routes as workloads change and encouraging Postal Service customers to adapt to the most efficient mode of delivery (Mode Conversion). Our efforts have contributed to relieving some of the cost pressures on the expansive USPS delivery infrastructure. Using the latest in software technology, such as Dynamic Routing and Mobile Delivery Device (MDD) to provide near real-time tracking and the flexibility to delivering packages 24/7, has made the Postal Service more competitive within the package delivery industry.

Route Evaluations and Adjustments

Field management continues to inspect, evaluate and adjust delivery routes as necessary to reduce costs while improving service. During FY2014, the number of total routes was reduced by 787 from 225,152 to 224,365. This was accomplished while absorbing 944,183 additional delivery points that would have required adding 601 city routes and 1,135 rural routes. As part of DUO, we also relocated delivery operations from 139 smaller offices to centralized facilities to improve delivery efficiency.

Mode Conversions

Delivery efficiency is improved by increasing the number of deliveries per carrier stop. Converting deliveries to a more centralized mode reduces transportation costs, increases efficiency and lowers operational work hours. As a result of our communication and outreach efforts with our customers during FY2014, the USPS voluntarily converted a total of 225,009 deliveries to a more efficient delivery mode — 165,358 residential and 59,641 business deliveries. Additionally, deployment of modified Centralized Box Units with parcel lockers enhanced customer acceptance of centralization.

Dynamic Routing

Dynamic Routing uses a combination of specialized commercial and internal software that can create multiple routes within a large geographic region or HUBs crisscrossing ZIP Code boundaries. The number of routes created, the number of deliveries per route and travel patterns vary each day depending upon the quantity of parcels and delivery addresses. USPS began testing Sunday package delivery using Dynamic Routing at the close of FY2014. At that time, USPS was generating approximately 5,000 dynamic routes to deliver nearly half a million packages each Sunday in all seven areas, within 43 districts and in nearly 4,000 ZIP Codes. USPS will continue to expand the use of dynamic route generation on Sunday and explore additional uses during the peak holiday season and on weekdays throughout the year.

Mobile Delivery Devices

The MDD is the latest generation handheld device used by delivery carriers to record near real-time delivery tracking of packages. A purchase contract for 75,000 MDDs was awarded this past March and deployment of 5,300 devices was made for the Rural Route Study in June. Since September, approximately 5,500 devices have been deployed per week under the purchase contract.

The plan for FY2015 is to continue with the phased rollout of MDDs and replace what remains of the aging Intelligent Mail Device (IMD) and related clamshell cell phones currently in use. The plan includes the purchase of 188,000 additional MDDs with deployment to all delivery units starting in February 2015 with completion by September 2015.

Delivery Scanning Systems

More than 12,500 new Delivery Scanning Systems (DSS) were deployed this year to improve package scanning. DSS allows offices and other delivery units to efficiently capture arrival at unit scans on packages, and it tells the operator which route the package belongs on. This equipment improves our ability to provide efficient and timely delivery for packages that have just arrived in unit from large eRetailers.

Passive Adaptive Scanning System (PASS)

PASS is being deployed to larger postal facilities and serves a similar purpose as DSS. When packages arrive at facilities with PASS, multiple employees can use the unit to scan the packages; customers who are tracking the package at see the message “Arrival at Unit.” Once the package leaves the facility, customers see “Out for Delivery.” More than 2,700 PASS units were deployed this year expanding our network to over 3,800 systems.

Tracking and Visibility

The Postal Service continues to use technology to enhance visibility for our mail and package products in order to provide customers with the end-to-end tracking they expect. Additionally, enhanced product visibility allows the Postal Service to build and leverage operational intelligence to increase efficiencies and improve performance.

Container, tray and piece visibility improvements continued in FY2014. We expanded our focus to include bundles. A Bundle Visibility pilot is underway to provision out-for-delivery events for Standard and Periodical Flats. The pilot leverages nesting information provided by mailers and scanning to determine which mailpieces are out for delivery. National rollout of the bundle visibility program is targeted for FY2015.

We deployed the Volume Arrival Profile (VAP) tool in FY2014 for employees to gain insight on mail volume profiles, transportation, labor and scan equipment utilization. VAP provides a daily view of all carriers and intra-facility movement of the mail, showing arrival and departure times. This helps resolve issues related to mail movement and impacts of not meeting required timeframes. Additionally, VAP allows for better management of mail pick up based upon customer volumes. VAP allows management to identify opportunities to get carriers back to the delivery unit earlier in the day, which gets mail inducted into processing earlier, ultimately increasing efficiencies throughout the network.

To fully leverage current and future product visibility, the Informed Visibility (IV) enterprise system will be designed to provide real-time actionable information. This system will be a single source of all mail and mail aggregate information. IV will provide real-time event-driven service performance measurement and diagnostics, mail inventory and predictive workloads and end-to-end tracking and reporting for mail. Development is planned to begin in FY2015.

Product Visibility

The Postal Service remains focused on using technology to provide world-class visibility for our mail and package products. By improving our scanning performance scores, we have been able to provide better information for our customers about the location of their mail and packages. Customers will know in near-real time where their mail or packages are in the Postal Service network and when they can expect delivery.

We continue to emphasize the importance of scanning in messages to field offices and through recognition of the top performing Postal Service areas and districts.

Enhanced product visibility and scanning have allowed the Postal Service to provide customers with the end-to-end tracking information they expect. Customers benefit because USPS Tracking is included automatically at no additional cost on Standard Post and Priority Mail with full USPS retail acceptance.

Delivering a New Holiday

The Postal Service provided stellar performance and was lauded as the “star of the holiday season” by a Bloomberg Businessweek article1. It was reported that “meticulous planning” allowed the Postal Service to plow ahead with “no widespread complaints about tardy deliveries.”

The report said 2013 holiday package volume jumped 19 percent compared to 2012. The online publication also noted USPS was “swamped with parcels” but detected the uptick in volume in early December and “made adjustments to avoid delays.” One of its adjustments was delivering packages on the three Sundays before Christmas in its busiest markets and “USPS also delivered 75,000 packages on Christmas Day,” according to the report.

At the same time, the Postal Service continued regular deliveries of other mail including Sunday package deliveries for online retailers.

“The Postal Service may not be celebrated for speed, but when it comes to getting stuff to people on time during the holidays, the 238-year-old agency is tough to beat.”