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..
This 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′..
The 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 GRR – General Rate Restoration..