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Costco chief financial officer Richard Galanti said on Thursday the company will work to ensure it has essential items, which can lead to shopping limits in stores. Costco is trying to keep inventory despite shipping delays and truck driver shortages that make it difficult to hold some items.
That work will include putting limits on some key items, including toilet paper, paper towels, bottled water and some in-demand cleaning products, Galanti said on a call for results. The amount that each customer will be able to buy was not specified during the call.
Different challenges prompted these limits from previous ones during the pandemic, when stores saw unusually high demand for paper products and antibacterial wipes.
“A year ago there was a shortage of goods,†Galanti said. “Now they have a lot of cargo, but there are two or three week delays in delivery because there is a limit to the short term changes in the trucking and supplier delivery needs, so it really is. all over.”
The pandemic has tested Costco’s supply chain and increased its costs, as have other retailers.
Port congestion and labor shortages caused by the pandemic have forced retail chains, including Costco, to spend more on transportation and labor, digging into its margins, according to the Saint-Louis Post Expedition. Costco said it was paying six times for containers and shipping because of the increase in prices for items shipped overseas.
Costco is also placing orders earlier to get what it needs, as domestic supply chain issues have resulted in longer lead times. Galanti added that the company has chartered three ocean-going vessels for the next year to transport containers between Asia and the United States and Canada.
As early as August, there had been social media posts about product limitations for some of its private label products, according to CNBC. This week, the retailer warned some customers they could experience delays when placing an online order for toilet paper – a household item that has become synonymous with storage.
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