Costco, Walmart keep an eye on possible port strike

Tens of thousands of longshore workers are ready to strike early Tuesday morning, impacting grocery deliveries for retailers like Costco and Walmart. 

The International Longshoremen’s Association and the United States Maritime Alliance remain at a stalemate in contract negotiations, impacting cargo deliveries along the East Coast and the Gulf of Mexico. The ILA’s 85,000 members want a wage increase. Negotiations between the two sides are not scheduled to happen before a 12:01 a.m. Tuesday deadline.

“ILA longshore workers deserve to be compensated for the important work they do keeping American commerce moving and growing,” the ILA said in a press release. “Most of these foreign-owned shipping companies are engaged in a ‘make and take’ operation: They want to make their…profits at United States ports…and take those earnings out of this country and into the pockets of foreign conglomerates.”

The ILA accuses shippers of “gouging” customers resulting in increased costs to American consumers. Shippers are now charging $30,000 for a full container, an increase from $6,000 a container just a few weeks ago, according to the ILA.

“In just a short time they went from $6,000 to $18,000 to $24,000 and now $30,000,” the ILA said.

Costco addressed the possibility of a longshoreman strike during its earnings call on Sept. 26.

“The port strike is something we’ve been watching very closely for some time,” said Costco CEO Ron Vachris.

The warehouse retailer said a limited amount of food and sundries arrive via cargo shipments, and its imports are primarily non-food items. Costco said it has contingency plans in place in case of a strike and has ordered holiday items in advance. The retailer also could look at moving goods to different ports.

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

Costco said contracts have locked in freight rates for now, but if a disruption does take place those prices could go up.

Walmart was the top U.S. company using imports at East Coast and Gulf ports over the last year, according to Import Genius, which specializes in trade data.

“We prepare for unforeseen disruptions in our supply chain and maintain additional sources of supply to ensure we have key products available for our customers when and how they want them,” Walmart said in an emailed statement to Supermarket News.