Some mail distributed in New Jersey could be moved by rail, inspector general report says

There are opportunities to economically and effectively use rail to transport some standard mail and packages handled by the New Jersey network distribution center (NDC) and consolidation/deconsolidation facility (CDF), according to the Office of Inspector General (OIG) of the U.S. Postal Service (USPS).

Last year, the USPS spent more than $3.4 billion on highway contract routes (HCRs) and only about $43 million on rail, an OIG report states. The trucking industry is facing challenges in attracting qualified drivers due to driver age, pay and work demands, while rail could provide such benefits as improved service, lower costs and a smaller carbon footprint, according to the report.

"We estimate the Postal Service could save about $10.8 million annually by using some rail for transportation associated with the New Jersey NDC and CDF," OIG officials said in the report. "Rail could accommodate some volume and still meet service standards, but would require expanded transit times. It would also require moving some periodicals through the existing Surface Transfer Center network, which may add costs."

The OIG recommends that New Jersey management conduct a cost/benefit analysis of transportation associated with the NDC and CDF to determine if rail is more cost-effective than HCR in certain cases and test whether some HCR transportation can be converted to rail. In addition, management should consider moving periodicals through the established Surface Transfer Center network and changing operating plans to accommodate rail if it's economical and meets service standards, OIG officials said.

According to the OIG, USPS predominantly uses HCRs to distribute most mail because:
• management has experienced significant service issues with rail in the past and prefers the control and flexibility in mail departure and arrival provided by HCRs;
• the routes have the shortest transit times and provide added assurance that all mail will meet service standards;
• rail has not been fully assessed as an alternative transportation mode based on economic value; and
• management does not believe rail is a viable option to meet service standards or fit within the package services mail operational flow.