Chapter 1 Compliance with Statutory Policies


The cost of international surface transportation by ocean remained constant at about $4 million. Ocean transportation suppliers are selected on the basis of a best value comparative analysis of proposals.


Under the acts of the Universal Postal Union (UPU), each postal administration that receives mail from another administration has the right to collect payment from the originating administration for costs incurred to handle and deliver that mail. These charges are called terminal dues for letter post. International Parcel Post and International Express Mail, as well as private courier services, also incur processing and delivery costs from foreign postal administrations (FPAs). Additionally, the UPU provides for transit charges for mail exchanged between administrations through a third country. Transit charges are paid by the originating country to the intermediary country for its forwarding of mail to the destination.

For the most part, settlements of terminal dues and transit charges are contingent upon both the Postal Service and a FPA accepting statistics with regard to the weights and number of mailpieces exchanged by the two countries. The actual settlement and payment of terminal dues or transit charges can occur a year or more after the service is performed. In order to record expenses associated with the current year, the Postal Service accrues an estimate of these expenses based on available weight and piece data by country. The Postal Service incurred $382 million in terminal dues, Express Mail, transit charges, and other international expense unrelated to the transportation of mail. The comparable expense for 2005 was $447 million.

4. Postal Service-Owned Transportation

The Postal Service-owned fleet is predominantly used to provide transportation for the “first and last miles” of its delivery network. Used primarily in urban and suburban locations, the fleet is augmented by highway contract routes and rural delivery where necessary and appropriate. In addition to providing delivery and mail processing support, the fleet includes vehicles used for law enforcement, plant and vehicle maintenance support, mobile Post Offices, and other support functions.

Table 1-6 Postal Vehicle Invetory
Vehicle Type
Delivery and Collection (1/2 -2 ton)
Mail Transport (Tractors and Trailers)
Administrative and Other
Service (Maintenance)
Inspection Service and Law Enforcement
Mail Transport (3-9 ton)

Table 1-7 Vehicle Operating Data
Operating Data
Miles Traveled1,237,567,446
Miles per Gallon10.2
Cost per Vehicle$5,130
Cost per Mile$0.91

5. Mail Transport Equipment

Mail transport equipment (MTE) consists of sacks, trays, lids, pallets, and wheeled containers that enclose and transport mail. The Mail Transport Equipment Service Center (MTESC) program is an outsourced, integrated network of 22 MTE facilities that collect, sort, repair, store, and distribute MTE to internal and external Postal Service customers. The Mail Transport Equipment Support System, a redesigned Postal Service software application, integrates and manages the network.

F. Postal Service Facilities, Equipment, and Supplies

1. Environmental Programs


With 216,000 vehicles; more than 34,000 facilities; and large transportation contracts, energy is vital to Postal Service operations. A new Energy Initiatives function was created this year to ensure the Postal Service has a comprehensive plan to optimize energy use. This function will develop and manage an integrated strategic energy effort focused on reducing costs and use, ensuring that legal requirements are met, and supporting continuity of operations.

The Postal Service paid nearly $2.4 billion in energy costs to process, transport, and deliver the mail. Postal energy costs increased 27%. Fuel accounted for 75% of total energy costs. Fuel costs increased nearly 32% and account for 84% of the 2006 increase. Utility costs increased 14%. The Postal Service’s energy strategies focus on both the supply and demand sides of energy management. Supply management focuses on reducing the cost paid for commodity fuels and utilities. The strategies that reduce demand concentrate on facilities and transportation.

Ten Shared Energy Savings contracts were awarded to contractors to conduct facility audits to identify improvements that make facilities more energy efficient. The contractors are responsible for capital and implementation costs and receive a share of the energy savings that result. Energy conservation contracts were awarded to six companies. The contracts will produce annual savings and provide environmental benefits. Other contracts with utilities in Northeastern states, Maryland, and Washington, D.C. will result in lower energy rates providing savings during the next 2 years.

In September 2006, the Association of Energy Engineers recognized the Postal Service’s achievements in this area with its Corporate Energy