From a much longer UPS news release on this year's Peak Season:

UPS expects to deliver more than 630 million packages between Black Friday and New Year’s Eve, an increase of more than 10 percent over holiday deliveries last year. This UPS peak holiday shipping period includes an additional shipping day before Christmas versus 2014.

The company plans to deliver about 36 million packages on Tuesday, Dec. 22, up from 35 million last year, and double the normal daily average of 18 million deliveries. Consumers’ preference for ecommerce, coupled with the industry’s most often selected delivery solutions have driven UPS’s peak volume to all-time highs. The company tallied about 17 million deliveries on its peak delivery day just 10 years ago.

Since Christmas falls on Friday this year UPS plans for high daily residential delivery volume throughout the week. The company expects to make a record number of deliveries to residential addresses during the holiday period, up to 60 percent of all package deliveries, versus an average of 45 percent on a full-year basis

In 2010 Forester predicted US online retail would exceed $250 billion by 2014.  Actual numbers came in at just over $304 billion. In mid-2014 Forrester offered the projections shown above.

Last-mile can often be "golden". For many products long-haul is a commodity business. In today's (and probably tomorrow's) tight market for trucking, fleet management is fundamental. But there is not much need or pay-off for mass customization. A case can even be made that such a strategy is non-scalable (so far).

But within twenty-or-so miles of a supply node, customization is almost constant. As more products are increasingly delivered direct to consumers, the needs and potential pay-offs of effective -- systematic -- customization will grow.

UPS and Fedex have clearly benefited from this trend. USPS as well. Uber is targeting the potential. Last week Baird Equity Research suggested that Amazon is beginning to probe (then adapt, then accelerate) operations as a direct-delivery provider.

According to Baird's analysis:

Our assessment of Amazon's broadening fulfillment ecosystem, internal domain expertise, and early initiatives with Prime Now to offer third-party delivery suggests there is evidence Amazon may ultimately pursue more comprehensive third-party services. Similar to the gradual rollout of AWS, we would expect Amazon to introduce competitive transportation and logistics services on an incremental basis, with a long-term focus. Ideal customers for ATL (Amazon Transportation & Logistics) would range from SMBs to enterprise businesses that lack financial resources, expertise, or technology horsepower to manage fulfillment/logistics internally, and with an offering that raises the competitive bar vs. incumbent service providers. Amazon currently operates >165 fulfillment centers worldwide, and is already testing “last mile”delivery of products not sold via Amazon’s websites.

Amazon's stock soared to a new high today on news of modest profits on strong earnings that far outpaced expectations.  Amazon's sales rose 30% over the same period in 2014.

Which was a bit like a poke in the eye for Walmart which one week ago projected profits falling by as much as twelve percent next year as it invests in ecommerce -- especially supply chain enhancement -- and improved customer service.

Thursday the New York Times published a nice comparison/contrast of Walmart and Amazon.  Nothing not already reported by this blog, but a helpful overview.  The shift to online retail is occurring even faster than many predicted.  Amazon's supply chain is optimized for online purchasing and home delivery.  Walmart's supply chain dominated the supercenter age.  Sears commanded telegraph and railways.

According to the Wall Street Journal:

The biggest landlords in the U.S. are being crushed under a mountain of packages, leading one large apartment operator to stop accepting deliveries and others to experiment with ways to minimize the clutter.

The moves are at the center of two colliding trends: an increase in apartment living and a surge in online shopping. The result is a rising tide of packages with no good place to go.

U.S. online retail sales are expected to swell to $334 billion in 2015, up from $263 billion in 2013, according to Forrester Research Inc., a research and advisory firm. Analysts at Forrester expect that number to increase to $480 billion in 2019.

Just wait until Christmas.

According to the MIT Sloan Management Review:

...access to transparent, accurate data is a prerequisite for effective supply chain collaboration and coordination. Lack of transparency is often born from a lack of trust or confidentiality issues. But we are already seeing progressive companies developing novel solutions to this dilemma — such as data “cleanrooms” and digital marketplaces. 

 What we call data “cleanrooms,” often managed by a third party, allow the sharing of sensitive data (for example, consumer demand, product cost breakdown, and asset utilization) in a legal and secure data environment that lets participants better identify and size opportunities for joint value creation.

For a few years now many of us have been talking about how there needs to be a kind of Federal Reserve System for supply chains.  It is sometimes forgotten that the Fed is a sophisticated private-public partnerships.  And especially at the regional level, the private sector is arguably predominant.

What the Fed has done to clarify and manage -- and crucially troubleshoot -- the money supply, another private-public partnership could do for other supplies.

Walmart practically destroyed Sears and transformed the grocery industry by deploying late 20th Century supply chain strategies. It is now competing for the 21st Century strategic high-ground.

On October 14 the Dow Jones Industrials fell over 150 points (and Albertson's held back from its IPO) as Walmart's stock price fell 10 percent and led the retail sector in reporting disappointing results and prospects.  The world's largest retailer has loss 30 percent market value since January.

According to the Wall Street Journal:

For months Wal-Mart executives have subtly made their case that investors should view the company as a growing e-commerce player that happens to be a behemoth. It has asked them to be patient as the retailer, which has half a trillion in annual sales, spends heavily to turn the giant ship around to better compete with Amazon.com Inc. and other faster-growing retailers like Kroger Co. and Costco Wholesale Corp.

Wal-Mart’s “biggest competitor is online and doesn’t care about profits. It’s hard,” said Mr. Yarbrough, referring to Amazon...

Wal-Mart is pitching its stores and massive network of distribution centers as a key strength in its battle with Amazon. In a PowerPoint presentation Wednesday, Mr. McMillon, the CEO, showed investors a slide with pictures of online retailers that have opened brick-and-mortar locations, including Warby Parker and Rent the Runway.

“Here is a key question: Will it be easier for an e-commerce company to build out a massive store network and create a customer-service culture at scale, or are we better able to add digital and supply-chain capabilities and leverage our existing stores?,” he said.

Personal story: Tuesday Amazon did not get me a promised one-day delivery (I am not a Prime member and had paid $60 for the fast service). I complained. Within six minutes I had a seemingly (not really) personalized response and a full refund. I've since received my product. That's a capability that will be very tough to equal. Stand by for a furious fight.

Yossi Sheffi's new book on supply chain resilience should be read by anyone who has ever glanced at this blog. https://mitpress.mit.edu/books/power-resilience

On October 1 Walmart opened a new fulfillment center. According to the company, "The 1.2 million sq. ft. facility in Union City, just south of Atlanta, is the third large-scale e-commerce fulfillment center to open in the U.S. in as many months, and features state-of-the-art automation and warehousing systems."

 According to Reuters:

Competition with online rivals including Amazon.com, which recently surpassed it in market value, has heated up and Wal-Mart has committed as much as $1.5 billion this year to invest in e-commerce. Much of that is going into large-scale warehouses dedicated to fulfilling online orders. It now has five such facilities, from which it says it will be able deliver to 95 percent of country in two days. The facilities - some big enough to house two cruise liners - will enable it to receive, sort and ship packages faster and at a lower cost, Michael Bender, chief operating officer of global e-commerce, said in an interview.

Last week Amazon opened a similar-sized new fulfillment center outside Baltimore.  According to The Sun:

The 1 million-square-foot fulfillment center, which the state and city lured to Baltimore two years ago with an incentive package of more than $43 million, started operations March 30, while still under construction. Now tens of thousands of packages ship to customers each day from the building. The firm also opened a smaller sorting center nearby last October. The bigger building, where Amazon now employs more than 3,000 people, is open 24 hours a day, with staff working in staggered 10-hour, four-day-a-week shifts.

Construction companies for distribution and fulfillment centers say that since the turn of the century the average size of new facilities has tripled to just about 900,000 square feet. As Amazon and Walmart demonstrate, plenty are even larger.

The National Weather Service is forecasting a potentially very strong El Niño Effect for the upcoming Winter and early Spring: "All models surveyed predict El Niño to continue into the Northern Hemisphere spring 2016, and all multi-model averages predict a peak in late fall/early winter."

East Asia and Southern California may experience especially significant effects.  Typhoon Etau's mid-September hit on Japan is seen by many forecasters as a precursor of the potential for extreme outcomes.

A White Paper by one supply chain software firm notes, "The recent flooding from Severe Tropical Storm Etau in Japan is the first significant manifestation of El Niño. It may serve as a wakeup call for CPOs and organizations complacent about the potential El Niño threat to supply chain operations. It is also illustrative of the types of El Niño impacts that organizations can expect and the opportunities for proactive threat mitigation actions moving forward."

Roughly sixty percent of US imports arrive at the Ports of Los Angeles and Long Beach.

Amazon is recruiting 1099-contract drivers to deliver packages within one-hour in a Seattle test-drive. They call the test AmazonFlex. According to Wired:

Flex fits neatly into Amazon’s ultimate goal to own all retail. Over the years, Amazon has built up a massive logistics infrastructure to make convenient deliveries scalable. It’s poured money into building huge fulfillment centers near major metro areas, which has eaten hugely into the company’s bottom line. Now, owning a platform for on-demand workers on top of all that could help the company hammer out streamlined delivery routes using tracking software.

Motley Fool comments, "Amazon.com is constructing massive warehouses in the outskirts of America's biggest cities that could serve as a durable competitive advantage for generations to come."

According to Wired, Amazon aspires to be the dominant set-of-nodes in US (and beyond) retail.  Meanwhile, retail competition caused by Amazon is producing a proliferation of nodes and innovation.  Is the increased system resilience transient?