What is a General Rate Increase (GRI) in shipping and what is its implications..??

What is a General Rate Increase (GRI) in shipping and what is its implications..?? (Article based on a question from Henk about what GRI means..)

Further to my article regarding Common Shipping and Freight abbreviations, here’s one more abbreviation that may be added to the list..


GRI
is the abbreviation for General Rate Increase which is an adjustment of freight rates across all or specific trade routes during a specific time frame..

What is General Rate IncreaseThis is applied by shipping lines according to their requirement and the quantum of the rate increase is decided by them, generally based on the supply and demand on that route..

Example of a GRI announcement may be as below..

Dear XYZ Line customers

In a continued effort to provide you with best in class service and extensive port coverage in the region, XYZ Line is now announcing a General Rate Increase as follows:

Effective date: 1st September, 2013 Scope : Far East Asia countries to South Africa ( including hinterland countries serviced via South Africa).

General rate increase: USD 300 per 20’ container & USD 600 per 40’ container

Thus all cargo gated in from the 1st of September will have the GRI applicable.



This increase is necessary to continue providing a first class service in this trade, in an environment where the operating costs remain on the rise and current rates are below sustainable levels.

So what does this mean and what is its implication..??

This means that if for example on the Shanghai/Durban route your freight rate was USD.1000/20′ & USD.2000/40′, with effect from 1st of September, the rate will become USD.1300/20′ & USD.2600/40′..

Money in General Rate IncreaseThe implication to the buyer or seller would be that they might need to adjust the pricing of their products to accommodate this increase in freight cost.. Therefore such announcements are vital for sellers and buyers..

Generally GRI will be applicable for all customers except certain contract customers or customers who have negotiated special rates with the shipping line at the discretion of the shipping line..

Certain lines also term it as GRRGeneral Rate Restoration..

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6 comments on “What is a General Rate Increase (GRI) in shipping and what is its implications..??”

  1. By Sarika Reply

    Who and How decide GRI ? Shipping line ? Is it possible that some lines are come up with GRI but others are not imposing GRI ? Please advise.

    • By Hariesh Manaadiar

      Hi Sarika, it is of course possible.. GRI is not mandatory or an industry standard.. It is imposed by lines based on the trade lane and the commercial analysis..

  2. By sami Reply

    hi, hariesh . I know there is HBL (house bill of lading ) under L/C (Letter of Credit) but recently I came across an MBL issued by UASC where the cnee is a bank and notify is the importer. Is this MBL under L/c ?
    can you tell in detail ,please ?
    thankx

    • By Lakshmi

      YES, MBLs may also be consigned to the bank and submitted for negotiation under LC.

      Many a time, the LCs have a clause stating that Forwarder BLs are not acceptable. Whenever we came across this, we get it amended to acceptable because it is most likely that an HBL is involved.

  3. By Prashant Roy Reply

    Are GRI rates permanent or for a short term ? For eg. Due to excessive movement of cargo during Christmas season, the SLs may increase their rates.
    Are they normally practiced, as an when the increase is required by the Shipping lines or are they in force for short period of time?
    If on a short term basis, are these rates withdrawn, subsequently ?

    Regards,

    Prashant Roy

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