Navigating Shipping Costs: A Guide to General Rate Increases (GRI)
Definition of GRI
General Rate Increase (GRI) in shipping lines is a crucial concept to understand. GRI refers to the adjustment of container shipping rates applied to various shipping routes. This adjustment is typically implemented by shipping carriers on their base rates, which can result in a significant increase in shipping costs.
When is GRI Applied?
GRI generally depends on the dynamics of market demand and supply. It can be based on a stable market situation, but due to market volatility, it can be applied several times or even suddenly.
Why is GRI Necessary?
The international ocean freight industry is highly competitive, with shipping carriers competing for the best routes and prices. When one carrier lowers its rates, other carriers follow suit, causing rates to reach a minimum level. At this point, carriers need to recover their costs and raise rates, which is when GRI is applied.
Global Impact of GRI
The impact of GRI can be felt in any geographical area, but recent trends have shown a greater impact on imports from the Far East. Shipping lines announce GRI and must notify regulatory bodies, such as the U.S. Federal Maritime Commission, 30 days in advance.
Ways to Mitigate the Impact of GRI
- Determine Document Collection Date: Gather your documents before GRI is implemented so that the current rates apply to your shipment.
- Flexible Shipping Dates: Adjusting shipping dates can help avoid the impact of GRI.
- Collaboration with Suppliers: Maintain open communication with suppliers to avoid any delays that could result in additional charges.
- Compare Shipping Rates: Regularly compare shipping rates among different carriers to choose the most cost-effective option.
Understanding GRI and using the right strategies can help control shipping costs, enabling businesses to better navigate the complexities of international shipping.