Mixed results for package delivery are emerging from a major transportation overhaul at the U.S. Postal Service, with rural customers facing some of the biggest challenges, a report issued Sept. 8 by the USPS Office of Inspector General found.
The focus of the changes is a program called RTO, or Regional Transportation Optimization. The program is intended to combine package drop-off and pickup at post offices more than 50 miles from regional processing and distribution centers.
In impacted areas, the consolidation adds one more transit day for parcels entering the postal network for customers.
USPS has argued that reducing some transportation trips serving more remote post offices can reduce transportation costs and enhance service for some package volumes closer to large processing facilities.
The initiative has a broad long-term vision. The OIG report says RTO is expected to serve 72 percent of ZIP codes across the contiguous U.S. in the long term. Those zip codes account for about 48% of the population and 29% of the volume of outgoing packages.
As of May, the Postal Service had expanded the program to about 64% of the ZIP codes in its plans.
But the impact has not been evenly distributed.
The OIG found that changes in the network have disproportionately affected customers in rural areas, while customers closer to regional processing and distribution centers – generally located in or around metropolitan areas – have generally experienced the benefit of faster service.
That difference could have broader ramifications for the Postal Service, the watchdog warned.
“The disparity risks losing customers who view the service as inequitable, which could hurt the Postal Service’s brand and reputation, and impact revenue,” the report said.
Between October 2024 and April 2026, the on-time delivery performance for products that compete with FedEx and UPS, such as Priority Mail and Ground Advantage, was lower on average in ZIP codes affected by the consolidation program than in ZIP codes outside the RTO network.
The report did not specify the exact percentages because those numbers were redacted.
However, there was variation in performance after the USPS adjusted its service standards in 2025 to coordinate with the transportation initiative.
On-time delivery rates for packages originating in RTO ZIP codes for Ground Advantage were nearly the same — and in some cases, slightly better — than those posted in non-RTO ZIP codes.
Priority Mail was just the opposite. Packages from ZIP codes impacted by the initiative continued to lag packages from ZIP codes unaffected by the initiative, and the gap between packages from RTO ZIP codes and packages from ZIP codes unaffected by the initiative continued to grow.
The RTO effect would also be expected to differ quite widely across states.
The OIG said all ZIP codes in Louisiana, South Dakota, Vermont, West Virginia and Wyoming will be part of the initiative at some point, increasing the risk of longer transit times in those states.
Vermont provides a couple examples of how the changes can affect relatively short in-state routes. The report said First-Class Mail service standards in the state had been extended from two days to four days for mail going from one corner of Vermont to the other, despite the state measuring only 157 miles from north to south and 90 miles from east to west.
In its formal response included with the report, USPS management generally agreed with the OIG’s findings.
The agency also is examining the most affected locations in the larger network change to see if there are opportunities to enhance delivery performance.
RTO is part of a much broader effort to reduce operating costs across the Postal Service as part of the 10-year Delivering for America plan that began in 2021.
That broader strategy has involved major transportation changes and has also been tied to on-time delivery woes in implementation.
The OIG said USPS has saved approximately $755 million in transportation costs to date since the plan was implemented.
Despite those savings and the size of the operational changes, the watchdog said the Postal Service’s financial position has not improved.
“The Postal Service’s financial position has not improved and operational changes have been coincident with declines in service performance with the most noticeable impacts in rural communities,” the report continued.
David Steiner became Postmaster General and CEO last year, the top leadership role in the agency. He has said improving on-time delivery and strengthening the Postal Service’s financial outlook are two of his priorities.
The OIG’s findings highlight the challenge USPS faces in balancing network efficiency and cost reduction with reliable service in metropolitan and rural communities alike.
