Costco CEO braces for ILA strike at port

In the light recent strike at the portCostco (COST) Wholesale Corp. said it is addressing potential disruptions to its supply chain, particularly for non-food imports, as the holiday season approaches.

Costco CEO Ron Vachris told investors during the company’s Sept. 26 earnings call that the company has implemented several strategies to secure holiday goods ahead of the strike, which was officially called for Tuesday, Oct. 1.

“I did a little bit of everything,” Vachris said. “We have contingency plans. I cleaned the ports. I pre-shipped.”

Furthermore, Costco was “examining alternative plans” that could help it “move merchandise to various ports around the country, if necessary.” Vachris said the company has been closely monitoring the port strike and is aware of the timing.

While non-food items make up about 25 percent of Costco’s total business, only a portion is imported and some products are domestically sourced. That combination helps soften the impact of the port strike, in part because the company can rely on domestic goods while securing holiday stock, Vachris said.

Like other companies, Costco depends on West Coast and Gulf Coast freight facilities for distribution. However, the situation surrounding the port strike escalated after the International Shipowners Association (ILA) rejected a contract offer from the United States Maritime Alliance (USMX), citing inadequate wages and protections.

Vachris acknowledged that the strike at the port “could be disruptive” but its impact will depend on the duration of the strike and potential developments.

“It’s in our sights,” Vachris said. “Our buyers are everywhere. They’re watching it closely and we’ve taken as many precautions as possible to prepare for it.”