What Is GRI?
A General Rate Increase may feel like a random blow, but it is dictated by the market of global trade. Supply and demand, which we’ve all heard about through the years, crystalizes and becomes tangible with a GRI. Shipping companies can adjust the rates they charge for a specific route, or for all routes, in order to recover costs or if the demand for that route has increased. Because it takes so long to build ships, a carrier might invest in new vessel for a well-traveled route but the actual ship won’t be able to ease demand for some time. Years ago, a GRI might happen once or twice a year. These days, carriers issue GRIs more frequently as the trade market has become more active, and they are better able to monitor that market.
How to read the GRI announcement?
Below is an example for a standard, 40′ container load shipped between Los Angeles and China. These are only sample figures, but will work as an “A + B = C” equation:
- On July 1: The standard rate for a shipment of non-hazardous goods between the two ports costs $1000 for a 40’ container load.
- August 1: Carriers pass a GRI of $200 per 40′ on the Los Angeles-China route, which will go into effect the next month.
- September 1: When the GRI goes into effect, the price increases to $1200 for the standard 40’ load: A ($1000) + B ($200) = C ($1200).
Below are the October 1st GRIs for Asia to US trade lanes:
Whether a GRI sticks is always debatable. But if prices go up by $1200 or $200, ocean freight will be more expensive come October 1st.
What can I do to avoid these major increases?
If you have an open quote request on Fleet, lock in that price by accepting your provider's quote.
If you have a shipment moving in October, lock in a lower price from our forwarders by opening a new quote request.
Using the Fleet marketplace will let you see how different forwarders are responding to these projected increases.