Costco chartering ships to transport goods amid global supply-chain troubles
Each ship will carry about 800 to 1,000 containers at a time
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Costco is chartering its own container ships to transport goods between Asia and North America amid ongoing global supply chain issues.
In a recent call with analysts, Costco CFO Richard Galanti said the company has "chartered three ocean vessels for the next year" which will carry "several thousand containers."
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| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| COST | COSTCO WHOLESALE CORP. | 721.86 | -0.87 | -0.12% |
Each one will carry about 800 to 1,000 containers at one time, according to Galanti. The company plans to make approximately 10 deliveries throughout the year.
Currently, Costo, like most retailers, is dealing with a backlogged global supply chain.
Tens of thousands of containers are jammed up at two West Coast ports, in Los Angeles and Long Beach, California, which are responsible for moving more than a quarter of all U.S. imports, according to The Wall Street Journal.
COLCHESTER, VERMONT - AUGUST 4: Shoppers search for items at a Costco Wholesale store August 4, 2020 in Colchester, Vermont. The cost of groceries has been rising at the fastest pace in years since the coronavirus pandemic hit the U.S. economy. (Phot (Photo by Robert Nickelsberg/Getty Images / Getty Images)
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Galanti said Costco is dealing with "port delays, container shortages, COVID disruptions, shortages on various components, raw materials and ingredients, labor cost pressures" as well as "trucks and driver shortages."
The shortages of "containers, trucks and drivers all are impacting the timing of deliveries" and driving "higher freight costs," he said.
Despite this, Costo is working to mitigate cost increases to its members, according to Galanti.
The retailer said it's been seeing the biggest delays within its furniture, toys, computers, tablets, video games and major appliance categories.
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To combat this, it's been "ordering as much as we can and getting it in earlier" to make sure items are stocked especially ahead of the holiday season.
The company is also putting limits on key household items like toilet paper and water, which have seen an uptick in demand due to the pandemic.