Realignment of bulk mail centers into network distribution centers in response to declining mail volume is generally going well but so far the effort has saved only about $111 million, 40 percent of projected annual savings, the USPS inspector general has said.
It said management estimated transportation savings of $217.7 million from realignment but that as of October transportation savings were $77.4 million, or 36 percent of the original projection.
Management underestimated the volume of mail between processing facilities as a result of the NDC initiative and the increase in surface transportation needed to realign the network, the IG said.
It called on the vice president of network operations to ensure trailer capacity is being optimized to eliminate excess capacity in the transportation network, and review trips in the NDC network for additional consolidation opportunities.
Work-hour savings also have fallen short. Management estimated $65.1 million, or 23 percent of NDC savings would come from a reduction in work hours, but actual work hour savings were only $33.9 million, about 52 percent of the projected savings, according to the IG – although not all consolidations have taken place yet.
Postal management agreed to initiate several strategies to reduce under-utilized surface transportation capacity and it implemented a pilot program to evaluate the operational and business feasibility of truckload consolidation and deconsolidation by terminal handling suppliers, which will continue through the end of fiscal 2011, the IG said.
