Giant US retail group Costco is cutting exposure to container ships as rates slump and capacity supply improves. The company had claimed last year to have chartered three small vessels for three years, and some box capacity, as congestion rose, and freight costs rocketed. Chief financial officer Richard Galanti has now told analysts on a conference call that Costco later added four more ships, as well as more boxes, in a bid to save money. But the CFO also said the group will take a $93m charge in its first quarter ending 20 November “mostly related to downsizing our charter shipping activities”.

“You will recall that the supply chain challenges related to shortages of the containers and shipping delays greatly intensified with container freight and shipping rates skyrocketing,” Galanti said. He explained that the group also wanted to improve shipping times. “This allowed us to better stay in stock and drive sales; and…to reduce some of the skyrocketing shipping and associated container costs. We achieved those objectives for a period,” the CFO added.

Over the course of 18 months Costco was able to control the shipping and delivery of nearly 50,000 containers, Galanti said. Many of these would have been greatly delayed. The group estimates it saved somewhere between $1,000 and $2,000 per container. “That, of course, fluctuated. Now, with a dramatic improvement in shipping times and much lower shipping and container costs, it made sense to downsize our commitment and lower prices for our members,” he concluded.

Other big chains like Walmart, Home Depot and Ikea were also reported to have chartered vessels, but brokers were skeptical. One source told TradeWinds last year there was no evidence of direct chartering, and the deals probably just represented the shippers taking extra space and trying to show the big lines they could operate independently.