Costco charters ships to mitigate supply chain disruptions

30 September 2021

Wholesale retailer Costco has followed in the steps of John Lewis and Walmart to charter ships in an attempt to mitigate global shipping disruptions.

Global ports have been rocked by the pandemic resulting in a shortage of empty containers, queues at ports to unload goods and containers ending up in the wrong places.

In an earnings call, chief financial officer at Costco Richard Galanti said the company had chartered three container ships and “several thousand” containers to move products from Asia to the US and Canada.

He said each ship will carry 800-1,000 containers at a time and make approximately 10 deliveries during the course of the next year. 

The ships will account for around 20% of the company’s imports from Asia.

Galanti said: “Containers, trucks and drivers all are impacting the timing of deliveries and higher freight costs. Despite all these issues, we continue to work to mitigate cost increases in a variety of different ways and hold down and/or mitigate our price increases passed on to the members.”

He said port delays, container shortages, labour cost increases and driver shortages were placing “pressures” on supply chains and leading to inflation.

He said various major brands had requested longer lead times due to “difficulties in finding drivers and trucks on short notice”. 

Founder of toy store The Entertainer Gary Grant warned in August a shortage of shipping containers had resulted in soaring costs throughout the pandemic. He said container costs increased 10-fold, with prices rising from $1,500 for a 40-ft container to $14,000-£18,000 per container.

John Lewis previously announced it was chartering ships in a bid to “save Christmas” and increasing wages for HGV drivers to mitigate seasonal disruptions. Walmart and Home Depot also announced they were chartering ships to overcome supply problems.

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