The Chicago Entrepreneur

Costco has chartered 7 ships for the next 3 years to increase supply chain flexibility

Over the next three years, Costco Wholesale Corp. will charter seven ships, up from three previously, in order to increase its supply chain flexibility. The company has also leased containers for use on these ships, which will transport goods between Asia, the U.S. and Canada. “With these additions, about a quarter of our annual trans-Pacific container and shipment needs are being accommodated this way, which gives us additional supply chain flexibility,” said Chief Executive Richard Galanti on the company’s most recent earnings call. “Despite all the supply chain issues, we’re staying in stock and continue to work to mitigate cost and price increases as best we can.” Costco reported fiscal second-quarter results after hours last Thursday. Costco was one of the retail giants that chartered ships last year to bypass the bottlenecks during the holiday shopping season. “[W]e are constructive on Costco chartering four additional vessels,” wrote Cowen analysts in a March 4 note. Cowen rates Costco stock outperform with a $650 price target. Costco stock edged up 0.6% in Monday trading, and has soared 66.7% over the last year. The S&P 500 index has gained 9.9% over the last 12 months.

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