A worker wearing a protective mask removes rotisserie chicken from skewers inside a Costco store in San Francisco, California, on Wednesday, March 3, 2021.
David Paul Morris | Bloomberg | Getty Images
Shipping bottlenecks that have led to rising freight costs are cooking up a holiday headache for U.S. retailers.
Costco this week joined the long list of retailers sounding the alarm about escalating shipping prices and the accompanying supply chain issues. The warehouse retailer, which had a similar cautionary tone in May, was joined by athletic wear giant Nike and economic bellwethers FedEx and General Mills in warning of similar concerns.
The cost to ship containers overseas has soared in recent months. Getting a 40-foot container from Shanghai to New York cost about $2,000 a year and a half ago, just before the Covid pandemic. Now, it runs some $16,000, according to Bank of America.
In a conference call Thursday with analysts, Costco Chief Financial Officer Richard Galanti called freight costs “permanent inflationary items” and said those increases are combining with things that are “somewhat permanent” to drive up pressure. They include not only freight but also higher labor costs, rising demand for transportation and products, plus shortages in computer chips, oils and chemicals and higher commodity prices.
“We can’t hold on to all those,” Galanti said. “Some of that has to be passed on, and it is being passed on. We’re pragmatic about it.”
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