Just how bad is the current shipping crisis?
Well, it’s certainly bad enough for Costco Wholesale Corporation to rent out container ships and extra containers in order to combat it. And they aren’t the only company to do so.
Chief Financial Officer Richard Galanti said that Costco has chartered three ocean vessels and “several thousand containers” for a year in an effort to continue moving merchandise from Asia to North America.
These ships are expected to make about 10 deliveries across the next year and will account for approximately 20% of its Asia imports. While their capacity is much smaller than Costco’s usual volume of imports, the company can no longer rely on the overwhelmed shipping industry to meet their demand.
“We’re ordering as much as we can and getting it in earlier,” says Galanti.
With higher labour costs, soaring freight costs, increased demand, and the ever-continuing shipping crisis, Costco believes that the increase in costs is likely to be semi-permanent, and will not lessen anytime soon.
By taking control of their own vessels, Costco can shield their business from rising transportation costs, and work towards minimizing supply chain disruptions like port congestion, shipping delays and even halted production.