In light of recent port strikes, Costco (COST) Wholesale Inc. said it is addressing potential disruptions to its supply chain, particularly non-food imports, as the holiday season approaches.
Costco CEO Ron Vacris told investors during an earnings call on Sept. 26 that the company is working to secure holiday merchandise ahead of a strike that was formally called on Tuesday, Oct. 1. He said he has implemented several strategies.
“We’ve been doing a little bit of everything,” Vakris said. “We have a contingency plan. We’ve cleared the ports. We’ve pre-shipped them.”
In addition, Costco is “considering alternative plans” to help “transport merchandise to other ports across the country as needed.” Bakris said the company was closely monitoring the port strike and was aware of its timing.
Non-food items make up about 25% of Costco’s total business, but only some are imported, and some items are sourced domestically. The combination helps reduce the impact of port strikes, in part because it allows the company to rely on domestic products while ensuring inventory for the holiday season, Vakris said.
Like other companies, Costco relies on West Coast and Gulf Coast freight facilities for distribution. However, the situation surrounding the longshoremen’s strike worsened when the International Longshoremen’s Association (ILA) rejected a contract offer from the United States Maritime Union (USMX), citing inadequate pay and security.
Mr Vakris acknowledged that a port strike “could be destructive”, but the impact would depend on the length and potential development of the strike.
“That’s in our sights,” Vakris said. “Our buyers understand it all. They’re monitoring it closely and we’ve taken as many pre-emptive steps as possible to prepare for this.”
For the latest news, follow us on Facebook, Twitter And Instagram.
