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What is GRI in international shipping?

General Rate Increase (GRI) is adjustment of sea freight rates across all trade routes during a set time frame. Learn more about its process and purpose in this blog.

As global trade grows steadily, the logistics industry has also been adapting to new mechanisms and simplified compliance solutions for shipping. For hassle-free exports, it is important for businesses to understand various shipping terms that can help them make the right decisions.

What is General Rate Increase?

General Rate Increase (GRI) is used in shipping to refer to an across-the-board increase in freight rates for all cargo types and destinations. Shipping lines or freight forwarders usually implement this type of rate increase as a means to cover costs such as fuel prices, labor, or other expenses. The amount is calculated as a percentage of the current rates. GRI in logistics can impact shipping costs and logistics operations, as they can lead to an increase in the overall cost of moving goods by sea. Shipping lines will then use this increase to offset the cost of inflation, fuel price, and other operational costs¹.

Need for a General Rate Increase

GRI in shipping is usually announced to cover rising operational costs such as fuel prices, labor, and inflation. Shipping lines and freight forwarders use GRI in logistics to balance these costs and maintain profitability. Fuel prices, for example, can fluctuate greatly and significantly and impact the cost of shipping goods by sea. Inflation also plays a role in the need for GRIs, as the cost of goods and services increases over time.

Another factor that contributes to the need for GRIs is capacity constraints. When demand for shipping exceeds the available capacity, shipping lines may implement it to manage demand and ensure they can continue to operate at full capacity².

Who charges and regulates GRI?

Major ocean freight carriers charge GRI shipping to cover their rising operational costs. These charges are implemented as a percentage increase of the current rates. The Federal Maritime Commission (FMC) is an independent agency in the USA that is responsible for regulating inter-coastal and international commerce of ocean shipping via its ports. It has the authority to oversee activities of ocean common carriers, marine terminal operators, and Ocean Transportation Intermediaries (OTIs) such as ocean freight forwarders and Non-Vessel-Operating Common Carriers (NVOCCs)³.

When is GRI applied?

GRI in logistics is usually announced in advance, giving shippers and freight forwarders time to plan and budget for the increase and applies to all booked shipments on or after the implementation date. The new rates remain in effect until a new GRI is announced or the rates are adjusted for other reasons. These are usually implemented periodically, for example, monthly or quarterly, but the frequency may be across shipping lines.

General Rate Increase (GRI) vs. Peak Season Surcharge (PSS)

General Rate Increase (GRI) and Peak Season Surcharge (PSS) are both pricing mechanisms used by shipping lines and freight forwarders to adjust shipping rates in response to changing market conditions. Below are a few differences between the two pricing mechanisms:

Purpose

The main purpose of GRI in logistics is to cover rising operational costs such as fuel prices, labor costs, and inflation. PSS, on the other hand, is meant to cover high costs associated with shipping during peak holiday season, which is typically the period of high demand for shipping services.

Rate of increase

The amount of increase for GRI is a percentage of current rates. On the other hand, PSS is generally a fixed amount added to the current rates.

Timing

GRIs are usually implemented periodically, for example, monthly or quarterly. PSS is applied only during specific periods of the year, usually during a holiday season.

Cargo types

GRI applies to all cargo types and destinations, while PSS may only apply to certain cargo types or specific destinations.

Negotiability

GRIs are typically non-negotiable and apply to all shippers and freight forwarders. On the other hand, PSS may be negotiable and can be applied differently to various shippers and freight forwarders depending on the volume of cargo shipped during peak season.

GRI is a vital pricing mechanism in export logistics process that is used to cover rising operational costs. Understanding GRI is essential for shippers and freight forwarders as it can significantly impact the overall cost of moving goods by sea.

How does Amazon enable hassle-free shipping from India?

With Amazon global logistics, Indian exporters can send their shipments across the world via Fulfillment by Amazon (FBA). To assist global sellers and exporters deliver international orders in a hassle-free and seamless way, Amazon takes care of everything from packing, shipping to delivery and customer service through the FBA program. With FBA, sellers can focus on their business expansion in terms of product quality, launches, marketing and more, while Amazon handles international shipping for them.

To export from India, register with Amazon Global Selling in just 15 minutes by sharing a few KYC documents (identity proof, address proof and credit card). With over 300 million customers globally, you can leverage Amazon’s global scale across 18 global marketplaces in 200+ countries and territories.

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Frequently Asked Questions

Does the GRI affect all countries?

GRI is typically implemented by shipping lines and freight forwarders, which can affect shipping rates for all countries, depending on the company implementing the fee. Most shipping lines and freight forwarders operate globally, and their fees will apply to all the destinations that they serve.

Can shippers avoid or reduce shipping GRIs and surcharges?

Shippers may be able to avoid or reduce GRIs and surcharges by taking certain steps like:
· Negotiating with shipping lines and freight forwarders
· Finding cost-effective routes and modes of transportation
· Utilizing technology for supply chain visibility and optimization
· Building relationships with key partners in the industry

What are GRI fees, surcharges and how to calculate them?

GRI fees are additional charges that shipping lines and freight forwarders impose on shippers to cover their rising operational costs. These fees are typically implemented as a percentage increase of the current rates.

Published on January 30, 2023.

Sources:
1. https://www.icontainers.com/help/what-is-a-gri/
2. https://www2.fmc.gov/readingroom/docs/P2-20/P2-20_Order.pdf/
3. https://www.shippingandfreightresource.com/general-rate-increase-in-shipping/
4. https://www.flexport.com/help/21-gri-pss-freight-fees/
5. https://www.dripcapital.com/en-us/resources/blog/gri-in-shipping

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