The ailing U.S. Postal Service could save roughly $100 million annually by shifting more mail shipments from the highways to the rails, according to a report by its inspector general.
Despite an early history of transporting mail via trains, the USPS spent only $40 million on freight rail contracts last year, compared to more than $3.3 billion in truck contracts. Its main competitors, FedEx and UPS, have become “major users of freight rail in the last decade,” and J.B. Hunt, a major USPS trucking contractor, gets 80 percent of its revenue from intermodal operations, according to a report released Tuesday.
“Intermodal rail service has improved to the point it can now provide service standards competitive with highway. Today, it is widely accepted as industry standard that rail is far more economical than highway for long-distance surface transportation,” according to the report by the USPS Office of Inspector General Risk Analysis Research Center.
USPS lost $3.2 billion in the fiscal second quarter and expects to lose $83.2 billion by 2016 if Congress does not allow the agency to make needed reforms. Costly health benefits and adjustments for worker’s compensation, along with declining mail volume, have squeezed USPS in recent years.