Transportation & Logistics

Costco’s depots (distribution centers) help reduce delivery costs by utilizing cross-dock systems for handling full pallets of merchandise from suppliers to warehouses (selling locations). Costco continually evaluates its processes and implements ways to improve shipping efficiencies. These measures include optimizing packaging design and pallet configuration – resulting in more products on a pallet, while striving to reduce packaging, protect merchandise and reduce delivery trucks on the road.

Another way Costco reduces costs is by analyzing state weight and length oversize permits, and by using specialized equipment where geographically possible to handle heavier loads. Costco also employs longer combination vehicles to maximize trailer utilization.

In 2021, we began an electric tractor pilot to determine its efficiency when evaluating maintenance, loadable weights, routes and the length of hauls between charging. We also started testing electric terminal tractors and are receiving good feedback from our drivers. Future rollout of both vehicles will be determined upon completion of the pilot and test programs.

Reverse Logistics

The transportation team always looks for ways to reduce empty miles involving trucks returning to the depots from the warehouses (known as “reverse logistics”) to improve efficiencies, save costs and take more trucks off the road, which reduces carbon emissions.

Examples include:

• Picking up truckloads of merchandise that are destined for a Costco depot for distribution to a regional group of warehouses
• Loading trailers with returned goods that are headed to salvagers or need to be returned to the supplier, and consolidating those shipments into truckloads
• Growing the World Vision program to donate many of these goods to communities in need worldwide. More information can be found in the Non-Food Donations section
• Loading the trailers with recyclable materials to be consolidated and resold, such as corrugated cardboard, LDPE stretch wrap, metal and plastics

In addition, these streamlined reverse logistics programs help us to reduce our merchandise handling costs and/or help free up sales floor space in the warehouses.

Fulfillment Centers

Some of Costco’s distribution centers in the U.S. and Canada also serve as fulfillment centers for our Ecommerce business. The strategic locations and procedures implemented provide us with business efficiencies that reduce expenses, our shipping footprint, carbon emissions and packaging. You can learn more about our sustainable packaging practices on our Packaging page.

BUSINESS DELIVERY FLEET

Costco's Business Delivery fleet continues to expand its internal initiative called “Truck of the Future,” which is aimed at maximizing efficiency in our growing delivery fleets. In 2018, Costco successfully field-tested a customized vehicle with Penske Truck Leasing that improves the payload capacity by reducing body weight. This lighter truck increased the miles per gallon, lowering our fuel costs and carbon footprint. In 2020, we continued the rollout that started in 2019 of these vehicles, and will continue as we add and renew fleet leases.

Additional efficiency features and pilot programs implemented in 2019 continue and include:

• Testing solar power to replace batteries
• Using half pallets that are lighter and more efficient for delivery to small businesses
• Implementing new coolers that reduce the amount of dry ice by replacing them with gel packs
• Continuing to test EV trucks and working with Penske to review available funding along with onsite charging options

Costco Business Delivery Centers also have implemented procedures to use electric plug-in shore power, tying into the grid to allow our refrigerated trucks to maintain temperature while being loaded and stored. This eliminates the previous practice of running the diesel reefer engine, thereby saving fuel and eliminating carbon emissions by over 70 percent for each truck that uses shore power.

Additionally, the Business Delivery fleet utilizes telematics – a standard option routing system now on all 2017 and newer Hino Trucks. This allows Costco to identify opportunities to enhance mileage consumption through efficient routing that also decreases idle time.

COSTCO LOGISTICS

In FY20, Costco acquired Innovel Solutions (since renamed Costco Logistics), a third-party, end-to-end logistics company that provides “final mile” delivery across the U.S. and Puerto Rico, complete installation, white glove capabilities for “big and bulky” products, and dedicated call centers. With over 1,500 new employees, and over 100 facilities, we are able to improve and grow our Ecommerce sales of “big and bulky” items at a faster rate, while also improving overall member service and speed of delivery for these items.

EMPLOYEE TRANSPORTATION

Costco continues to encourage its employees to utilize alternative forms of transportation with the goal of reducing energy consumption, emissions and commuter gridlock. The Commute Trip Reduction (CTR) program began more than 20 years ago at the corporate office with 18 vanpools, and by early 2020, had grown to 69 vans with 494 riders. The ongoing pandemic and remote working opportunities have significantly decreased employee need and/or interest in vanpools. At the end of fiscal year 2021, we had 37 active vans, with 29 currently operating on a weekly basis. Vans, fuel, maintenance and insurance are provided by five local transit agencies. Employees also receive a substantial financial subsidy from Costco, which in many cases covers their entire monthly commute expenses. Employees who regularly ride the bus are also eligible for this financial subsidy. Costco also has vanpools at its San Diego, Los Angeles and Mexico City regional offices, as well as many Costco warehouses.

In May 2019, Costco’s corporate offices began a pilot program with Waze Carpool for employees who want to commute more efficiently, yet lack the flexibility or consistency required to commit to a vanpool. This program allows us to track metrics monthly, including the number of carpools, average commuting distance, total miles carpooled and C02e avoided. Although this pilot ended and Costco did not roll out an official, company-sponsored Waze Carpool partnership, we are aware there are some employees that continue to utilize this program. Additionally we continue to have many employees who choose to informally carpool with coworkers. We also offer secure bicycle storage facilities and locker room use for employees who choose to ride to work. Finally, recharging stations are available at our corporate offices for employees who drive electric vehicles.

CHARGING STATIONS

Costco continues to increase available electric vehicle charging stations and now has 14 locations (including the corporate office), supporting 50 charging stations.