Costco Wholesale (COST) is taking a proactive approach to brace for potential strikes at U.S. ports that could begin next week. These strikes, scheduled for October 1st, could affect ports on the East Coast and the Gulf of Mexico, impacting a significant portion of U.S. ocean trade.
During their fourth-quarter earnings call on Thursday, Costco CEO Ron Vachris outlined the company’s contingency plans. These plans include pre-shipping holiday goods to avoid potential delays and preparing to utilize alternative ports if necessary. Vachris emphasized Costco’s proactive approach, stating, “We’ve done several different things that we could to get holiday goods in ahead of this time frame.”
The potential strike could disrupt the flow of essential goods, including bananas, meat, and prescription drugs, leading to delays and potentially higher costs for consumers. This could have a significant impact on the U.S. economy and global shipping networks.
The looming strike comes at a crucial time for retailers as they gear up for the holiday season. The potential disruption could have far-reaching effects on the supply chain and consumer prices. Earlier this month, retailers urged the White House to intervene in negotiations between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance. The ILA represents over 85,000 dockworkers, and their contract is set to expire on September 30th.
In August, transatlantic shipping volumes surged as retailers preemptively increased their inventories to mitigate potential supply chain disruptions. On September 17th, container trade expert Christian Roeloffs warned that a strike could severely disrupt nearly half of the nation’s ocean trade, noting that negotiations were showing signs of breaking down, increasing the likelihood of a strike.
While Costco’s fourth-quarter earnings report showed a revenue miss, it did beat earnings per share estimates. The company reported quarterly earnings of $5.29 per share, exceeding analyst expectations of $5.08 per share. However, revenue of $79.697 billion fell short of the consensus estimate of $79.973 billion.
Costco Wholesale Corporation’s stock closed at $901.44 on Thursday, down 0.77% for the day. In after-hours trading, the stock fell further by 1.43%. However, year to date, Costco’s stock has increased by 38.54%.
The potential impact of the port strikes remains uncertain, but Costco’s proactive measures highlight the seriousness of the situation and the potential for disruption across the retail industry.
