ISSAQUAH, WA - At this point in time, the fresh produce and retail industries know all too well about the ongoing supply chain challenges being faced on a global scale. As buyers and suppliers watch as container ships have become congested in ports, slowing the distribution of products, Costco Wholesale has announced a unique new strategy to overcome these persisting hurdles. Recently, the retailer revealed that it will be chartering three ships and renting thousands of containers to help mitigate rising shipping costs.
“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 member,” said Richard Galanti, Chief Financial Officer in a call with analysts. “We've also chartered three ocean vessels for the next year to transport containers between Asia and the U.S. and Canada.”
Costco will be joining the ranks of Home Depot in making this play, as both companies attempt to prevent delays and keep costs at a minimum. According to an article from Business Insider, in renting these ships, the retailer will be able to avoid spending six times the amount that would be charged using a third party.
“…We've leased several thousand containers for use on these ships,” continued Galanti. “Every ship can carry 800 to 1,000 containers at a time, and we'll make approximately 10 deliveries during the course of the next year. Moving to inflation. Again, there have been many—there have been a variety of inflationary pressures that we and others are seeing, and more of it.”
As Galanti went on to describe in the call, Costco’s standard rollout time for new products in store has doubled in some cases, which was one of the major factors in this new strategy.
Costco is but one of many retailers and suppliers dealing with the ongoing supply chain crisis that is causing delays, shortages, and skyrocketing costs. Due to port traffic jams, blockages, and a lack of dock workers, the situation has only worsened, leading to key moves from authorities to solve these persisting problems.
To read a transcript of Galanti's call, click here.
How will the retailers recent shipping strategy position Costco to hurdle these supply chain challenges? Stick with AndNowUKnow for updates.
