What’s Driving Postal Transportation Costs?

While costs in general are expected to increase over time due to inflation, there were other factors that put downward pressure on the Postal Service’s transportation costs. Namely, the overall decline in mail volume and the reduction in First-Class Mail service standards. This led us to wonder how much costs should have been expected to change in response to two things: (1) the overall change in mail volume, including the decline in letters and flats and the increase in parcels; and (2) the overall change in transportation-related input costs, including fuel and driver wages. The OIG found that almost 40 percent of the increase in transportation costs over the last ten years cannot be explained by these two factors alone.