In an effort to navigate the current global shipping crisis — which has resulted in product shortages and rising costs — Costco is renting its own container ships and containers to import products from Asia to the U.S. and Canada.
In a recent call with analysts, Costco CFO Richard Galanti said the company had chartered three ships and thousands of containers, which will help the warehouse club get products to their stores and will help them avoid paying increased shipping prices.
Galanti said Costco expects to make about 10 deliveries over the next year using the ships, each of which can carry 800 to 1,000 containers.
The shipping problems have been caused by a number of issues, from the rapid shifts in demand for goods in 2020 to a shortage of trucks, drivers and shipping containers.
“Inflationary factors abound: higher labor costs, higher freight costs, higher transportation demand, along with container shortages and port delays, increased demand in certain product categories, various shortages of everything from computer chips to oils and chemicals [and] higher commodities prices,” Galanti said. “It’s a lot of fun right now.”
Galanti said on the call that because of the shipping delays, Costco’s rollout time for new products in its stores had doubled in some cases, going from eight to 12 weeks and sometimes up to 16 or 18 weeks. Furniture, toys, computers, video games and appliances have the biggest delays, though some of these delays are caused by chip shortages.
Costco is not the only one experiencing issues, as Home Depot also contracted its own container ship back in June. Home Depot president and chief operating officer Ted Decker told CNBC the home improvement store now has a ship that is solely theirs, dedicated 100% to just their merchandise.
However, hiring out container ships might only solve part of the supply chain problem. Right now, cargo ships are backed up at California ports, which aren’t running at full capacity due to labor shortages and a lack of warehouse space for the goods the ships are bringing to port, the Wall Street Journal reports.
Have you noticed any missing products on store shelves or shipping delays recently?