Costco Bows Out

 The big box US retailer Costco has bowed out of ship chartering and has paid a big price for the experience.

In late 2021, frustrated with unreliable delivery dates and sky high shipping charges, Costco decided to charter three ships for three year terms at a quoted $42,000 per day each. They did so through the US shipping company Pasha Hawaii, as Costo had no in house ship operating experience. In March 2022 it was reported that they had charted four more ships for a total of seven. The ships would operate from China to the US east coast and Halifax, using a large supply of new containers rented from Triton for Costco's exclusive use. 

Carpathia was the first of the charters to call in Halifax.

Carpathia sails on August 23, 2022 loaded with new containers dedicated to Costco.

AS Carlotta in the Narrows October 15, 2022.It appeared to have a few light coloured - non-reefer - boxes in the mix.

 It was not long however before regret began to set in as cargo rates and ship charter rates collapsed during 2022. Nevertheless Costco claimed to have saved betwen $1,000 and $2,000 on 50,000 containers they transported on their "own" ships (about 20% of the company's needed capacity). Rates for containers on the transpacific peaked at about $40,000 and are now around $1,000 ($2,000 to the east coast). There is also an estimated glut of 5 million TEUs of idle containers world wide. To add insult to injury, the scores of new container ships to be delivered over the next two years will depress vessel values substantiallly, and increase pressure on rates.

 

 

Protostar N was in Halifax Nov 27, 2022, but by passed Halifax on its call in Baltimore February 5, 2023 and headed directly for the Mediterranean.

 In December 2022 Costco opted to exit the charters and pay early cancellation penalties of $93 million. All the ships were still underway or committed with Costco cargo, so the cancellations came into effect at the last US port, which seems to have been Baltimore.

What is to become of all the "several thousand" rented containers is a good question.

 The last ship under the charter is believed to be the Queen Esther which is due in Saint John, NB for March 3, 2023. It was also likely the last Costco charter to call in Halifax when it was here in December.

Queen Esther at Fairview Cove December 9, 2022.

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