Costco’s CEO on how the big U.S. port strike could impact holiday shopping

In light of the recent port strike, Costco (COST) Wholesale Corp. said it’s been addressing potential disruptions to its supply chain, particularly for nonfood imports as the holiday season approaches.

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

“We have done a little bit of everything,” Vachris said. “We’ve got contingency plans. We’ve cleared the ports. We’ve pre-shipped.”

Moreover, Costco has “looked at alternate plans” that could help it “move goods to different ports across the country, if necessary.” Vachris said the company has been closely monitoring the port strike and was aware of the timing.

While nonfood items make up about 25% of Costco’s total business, only a portion are imported, with some products sourced domestically. This mix helps mitigate the impact of the port strike, partly because the company can rely on domestic goods while also securing its holiday inventory, Vachris said.

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

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

“It is in our sights,” Vachris said. “Our buyers are all over it. They’re watching it closely, and we’ve taken as many preemptive measures as we could to prepare for this.”

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