Management Advisory - Strategies for Reducing Undeliverable as Addressed Mail
Background
The U.S. Postal Service processed more than 155 billion mailpieces in fiscal year (FY) 2014, 6.6 billion (4.3 percent) of which were undeliverable as addressed (UAA). UAA mail is costly, since it must be forwarded, returned, or treated as waste. The Postal Service spent nearly $1.5 billion handling UAA mail in FY 2014, and the mailing industry incurs about $20 billion in UAA costs annually.
According to a 2006 study conducted jointly by mailers and the Postal Service, about 40 percent of UAA mail is caused by the public, primarily because customers do not notify the Postal Service of address changes. Thirty-five percent is attributed to business mailers for reasons including, not updating address lists and having to mail to incorrect addresses to meet other legislative or regulatory requirements. The Postal Service itself is responsible for about 23 percent due to sorting errors or failed deliveries. The origin of the remaining 2 percent of UAA mail is unknown.
Various factors hinder efforts to accurately match addresses with recipients and ultimately reduce UAA mail. For example, companies in the financial and insurance industries are legally required to send mail to the last known address even if Postal Service systems indicate a change of address has been submitted.
As an incentive to reduce UAA mail, mailers must certify that they periodically compare and update address lists against customer-filed change of address orders to receive workshare discounts. Even then, address list accuracy is not guaranteed. The Postal Service has recently proposed eliminating the certification requirement, but mailers have concerns about how that change might impact them.
The Postal Service manually tests 3 percent of business mail for address accuracy prior to entry into the mailstream. A 30 percent per mailing error tolerance is permitted. This threshold is intended to exclude the portion of UAA mail that is beyond the mailer’s control. But this process is changing with the implementation of Seamless Acceptance, which electronically tests all business mail for address accuracy, quantifies UAA mail, and identifies the sender.
Our objective was to evaluate the Postal Service’s strategies for reducing UAA mail. This is the first of two reports. In our next report, we will evaluate the Postal Inspection Service’s enforcement efforts over the Revenue Investigations Program.
What The OIG Found
The Postal Service’s UAA mail reduction strategies have not been effective, as evidenced by a 2.1 percent increase in UAA mail from FY 2011 to FY 2014. This ineffectiveness is due to the Highlights UAA mail is costly, since it must be forwarded, returned, or treated as waste. The Postal Service spent nearly $1.5 billion handling UAA mail in FY 2014, and the mailing industry incurs about $20 billion in UAA costs annually. Strategies for Reducing Undeliverable as Addressed Mail Report Number MS-MA-15-006 1 complexity of the address verification process and conflicting laws and regulations. The Postal Service is working to reduce UAA mail volume that results from the public and the Postal Service. For example, it has made it easier for recipients to change their addresses by providing for online entry. It has also implemented processes to use address changes noted by letter carriers during deliveries.
But many of the Postal Service’s UAA reduction efforts address business mail entering the mailstream and implementation of Seamless Acceptance. Seamless Acceptance won’t eliminate all UAA mail but will offer greater visibility into data associated with each mailpiece. This newly available data will enable the Postal Service to associate UAA mail with the sender and provide opportunities to craft entirely new solutions to ensure address standards are met.
In addition, the combination of Seamless Acceptance and secure destruction brings opportunities for mailers and the Postal Service to share information electronically and eliminate the need to return mailpieces. The Postal Service and stakeholders could reduce costs if they focus on using this new data to develop solutions to the UAA mail problem.
What The OIG Recommended
We recommended the Postal Service work with mailers to leverage newtechnologies to promote compliance with address standards and more accurately attribute actual UAA mail costs.