Examining Changes in Postal Product Costs

The OIG worked with an expert in postal costing and economics to analyze product cost changes in four traditional USPS products: First-Class Mail, Standard Mail, Periodicals, and Package Services. The analysis compares costs from fiscal year (FY) 2006 to FY 2015. Four external factors drove product cost changes: inflation, change in product mix, individual volume change, and overall volume decline. The report attributes the remaining change in unit costs to other factors, some which are at least partially within the Postal Service’s control. When the main cost factors over which the Postal Service has no real control over are accounted for, unit costs were lower in FY 2015 than in FY 2006 for First-Class Mail, Standard Mail, and Package Services. Only Periodicals’ unit costs increased.