A major port strike is looming. Costco says it's prepared.
Dominick Reuter/Business Insider
- Eastern US ports could largely halt operations if a maritime workers union goes on strike Tuesday.
- As the likelihood of a stoppage has increased, retailers like Costco have taken steps to plan ahead.
- "We've taken as many preemptive measures as we could to prepare," CEO Ron Vachris said last week.
US ports on the East Coast and Gulf Coast could largely come to a halt as soon as Tuesday when the largest union of maritime workers in North America is set to go on strike.
Retailers like Costco have taken steps to plan ahead as the likelihood of a stoppage has increased.
The International Longshoremen's Association, which says it represents 85,000 members, said Sunday that a strike at dozens of facilities at 14 US ports is set to begin on October 1 as contract negotiations with the United States Maritime Alliance stalled.
"The port strike is something we've been watching very closely for some time," Costco CEO Ron Vachris said last week during the company's fourth-quarter earnings call.
While the CEO acknowledged that the strike "could be disruptive," he said the company had been preparing.
Vachris noted that Costco's imports are primarily non-food items, which gives the company relatively more flexibility in adjusting its strategy to anticipate the October 1 deadline.
"We have done a little bit of everything," the Costco CEO said. "We've cleared the ports, we've pre-shipped, we've done several different things that we could to get holiday goods in ahead of this timeframe, and looked at alternate plans that we could execute with moving goods to different ports and coming across the country if needed."
A key question Vachris and other experts are weighing is less about whether a strike will occur, but how long it will last.
"I can't tell you until we know the length and what could happen out there, but 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."
Association for Supply Chain Management CEO Abe Eshkenazi told Business Insider that a prolonged stoppage could lead to months of backlogs in the flow of goods.
"The supply chain is inextricably linked, and as we enter the busiest shopping season of the year, businesses, retailers, and consumers alike will feel the impact of a stoppage," Eshkenazi said.
White House officials, including Transportation Secretary Pete Buttigieg, met with representatives of the United States Maritime Alliance on Friday in an effort to move the negotiations forward.
The dockworkers are seeking higher pay to address what they describe as a "half-century of wage subjugation," while the association representing employers says it has been unable to schedule an in-person bargaining meeting with the union.
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