- Project Title:
- Postal Service’s Positioning to Mitigate Increased Fuel Consumption and Prices
- Start Date:
- Monday, February 6, 2017
- Estimated Report Release Date:
- April 2017
The U.S. Postal Service has one of the largest transportation networks in the world and transports mail and equipment between plants, post offices, or other designated points that receive or dispatch mail. The surface transportation network consists of almost 16,000 supplier-operated highway contract routes (HCRs) and a network of over 7,600 Postal Service mail transport vehicles. As a result, the Postal Service is one of the largest consumers of fuel in the nation; it annually purchases over 200 million gallons of diesel fuel and drives over 1.5 billion miles.
When fuel prices decrease, the Postal Service saves fuel costs, such as with the drop of fuel prices from over $4.00 per gallon to $2.00 in the past 2 years. However, when fuel prices increase, the Postal Service must pay the additional cost; unlike its competitors who pass these additional fuel costs to their customers with surcharges. Consequently, fuel price increases may result in a significant increase in operational costs and are more significant because of the decline in mail volume by over 58 billion pieces since 2008 and increasing transportation costs since 2013.
Our objective is to determine whether the Postal Service is positioned to mitigate increased fuel consumption and prices.
- How can the Postal Service best plan for and fund fuel price increases given the challenge of not being able to use surcharges and increasing transportation costs?
- How can the Postal Service use alternative fuels, such as compressed natural gas, economically and viably?