Costco is renting 3 container ships and 'several thousand containers' to shield itself from supply chain delays and rising costs

September 27, 2021

Costco is renting 3 container ships and 'several thousand containers' to shield itself from supply chain delays and rising costs

Costco shoppers outside one of its stores — Costco is looking to protect itself against rising freight costs.
Noam Galai/Getty Images

Costco is renting its own container ships to import products from Asia to the US and Canada.
It wants to sidestep the global shipping crisis and shield itself from shortages and rising costs.
It's also renting "several thousand" containers, Costco CFO Richard Galanti said.
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Costco has joined Home Depot in renting its own container ships to prevent delays and keep costs down as the global shipping crisis rages on.

In a call with analysts Thursday, Costco CFO Richard Galanti said the company had chartered three ships to import products from Asia to the US and Canada. This would help Costco avoid spending six times the normal price on shipping or containers through a third party, he said.

Each ship could carry between 800 to 1,000 containers at a time, he said. The company had also leased "several thousand containers for use on these ships," he said.

Costco expected to make about 10 deliveries over the next year using these ships, accounting for around 20% of its imports from Asia, he said.

The big-box chain is among a large group of retailers grappling with an ongoing supply chain crisis that's causing delays and shortages.

Falling demand in the first half of 2020, followed by a surge at the back end of the year, has led to delays, port traffic jams, and blockages. A lack of containers and dock workers has made the situation worse.

At the same time, retailers are being hit by truck and driver shortages, leading to further delays and higher costs.

"As I discussed on last quarter's call, inflationary factors abound," Galanti said. "Higher labor costs, higher freight costs, higher transportation demand, along with container shortages and port delays ... It's a lot of fun right now."

Costco's standard rollout time for new products in its stores had doubled in some cases, he said, adding that furniture, toys, computers, video games, and appliances had the biggest delays.

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