Due to the rising global shipping crisis, Costco will rent its own container ships to import commodities in order to keep stores stocked and expenses to a minimum as the worldwide shipping issue threatens the holiday shopping season.
On a conference call with analysts last Thursday, Costco CFO Richard Galanti stated that the company hired three ships to transport merchandise from Asia to the United States and Canada. According to Galanti, the move will save them from paying six times the average cost for shipping containers through a third party.
Each ship would be able to hold between 8,000 and 1,000 containers at any given moment. He further mentioned that the corporation has rented “several thousand containers for usage on these ships.”
Costco intends to use these ships for approximately ten deliveries over the next year, accounting for approximately 20% of its Asian imports. The warehouse club chain is one of many international firms battling a supply chain crisis that is generating delays and shortages, including FedEx, Walmart, and Home Depot.
Cause of the Delays and Shortages
The big-box retailer is one of many businesses dealing with an ongoing supply-chain problem that is prompting delays and shortages. Backlogs, port traffic bottlenecks, and blocks have resulted from falling demand in the first half of 2020, followed by a surge at the latter part of the year. The scarcity of containers and dock employees has also exacerbated the situation.
Simultaneously, merchants are being impacted by truck and driver shortages, resulting in additional delays and increased expenses. Costco’s usual rollout period for new products in its shops now has doubled in certain cases, with furniture, toys, laptops, video games, and appliances suffering the worst delays.
Meanwhile, according to a marine traffic monitoring website, more than two dozen container ships appear to be stalled at sea miles off the south side of Long Island, waiting to enter New York harbor, and more than 60 boats wait to dock at two of the country’s main ports on the West Coast.
The crisis has rapidly deteriorated to the extent where supermarkets have been unable to replenish their shelves, and FedEx has had to reroute hundreds of thousands of items.
The global ship tracking site MarineTraffic shows cargo ships and oil tankers clustered just a few miles off the New York coast as they wait to unload their goods at the Port of New York and New Jersey, which appears to be experiencing the same congestion as the Ports of Los Angeles and Long Beach.