GRI charges in shipping refer to the increase in shipping rates by ocean carriers for maritime shipping. The increase adjusts to the increasing fuel, labour and resource charges caused by inflation or market fluctuations. Ocean carriers pass the shipping surcharge onto the shippers to keep up with the quality of their services and ensure their cost recovery. General rate increases (GRIs) impact shipping rates and can significantly affect various stakeholders in the shipping process. It’s essential for businesses involved in international trade and logistics to closely monitor announcements of GRIs and stay informed about changes in shipping rates. Let us learn more about the GRI charges in shipping. 

What does GRI mean in shipping? 

GRI is an acronym for a general rate increase in shipping, which applies to all trade routes and is an integral part of maritime shipping rates. The demand and supply of goods shipped in international waters vary with time. Based on this, more significant ocean carriers adjust the sea freight rate. In cases of high shipping needs, ocean carriers increase the GRI charges in shipping along certain lines by adding a certain sum to the base rate.  

These tariff rates apply to all shippers using the specified trade routes irrespective of the class of service used. Also referred to as annual percentage increase, GRI in shipping accounts for changes in the supply chain. Carriers always announce such charges in advance, allowing shippers and other shipping parties to plan and adjust their budgets accordingly. Shippers need to predict the market conditions to steer clear of the impact of GRI in shipping. But before that, let us learn more about the need for GRI in shipping. 

Need of GRI in shipping 

GRI charges in shipping are levied for various reasons. Let us learn more about the purpose of GRI in shipping- 

1. Inflation – Geopolitical events in shipping, such as inflation, are one of the causes of GRI in shipping. With swooning market prices, it becomes difficult for carriers to offer high-quality services and maritime resources at standard rates. Therefore, renowned shipping carriers set a percentage increase in shipping rates to cover transport expenses.  
2. Rising fuel prices – One of the significant reasons for GRI in shipping is the constantly fluctuating fuel prices. Vessel operating carrier companies (VOCC) use tremendous amounts of fuel to power ships, and the slightest increase in fuel prices can lead to GRI. Fuel price hikes can also be caused due to inflation. 
3. Labour costs – The shortage of skilled labour is a challenge in the maritime industry that readily impacts shipping rates. Although digitalisation in shipping has led to the development of smart ports, many ports still use manual processes. The shortage of trained labourers leads to higher labour costs, which increase the shipping rate. 
4. Capacity constraints– The port’s capacity to accept shipping orders varies. When the demand for shipping exceeds the port capacity, shipping lines are forced to implement GRI in shipping rates to control the influx of demand and operate at full capacity. 

How does GRI in shipping work? 

GRI charges in shipping differ for international, national, and last-mile delivery. Shippers must be aware of the GRI that concerns their transportation requirements. Let’s learn more about implementing the GRI rate in shipping. 

1. International shipping– For shippers opting for international transportation of goods, the carrier determines the general rate increase after evaluating their expenses based on fuel, labour and adherence to regulatory compliances. The calculated GRI and the date from when it will be effective are conveyed to the shippers. 
2. National shipping-For domestic transportation within the country, there are two types of GRI. The basic rate increase in shipping is a percentage increase, usually between 1-5%, applied to the basic freight charges. The accessorial charge in shipping is applied by shipping lines to the shipper for using any additional services such as equipment, labour, or fuel. 
3. Last-mile delivery-GRI in last-mile delivery significantly impacts the shipping rate. The two types of last-mile delivery services include home delivery and business delivery. While both have high surcharges, the GRI applied to home delivery is lower than that of business delivery.  

GRI vs PSS in shipping   

General rate increase and peak season surcharge (PSS) in shipping are mechanisms used by ocean carriers to adjust shipping rates due to changes in trade market conditions. Let us learn more about the difference between GRI and PSS in shipping. 

1. Definition- GRI charges in shipping are adjustment rates applied throughout the maritime industry, trading on specific sea routes to address the rising costs of fuel, labour, etc. On the other hand, PSS charges in shipping are charges applied to maritime transportation during peak seasons when demand surges. 
2. Use- GRI is used in shipping to adapt to changing market conditions and balance demand and supply. During peak season, port congestion is quite common. A peak season surcharge is applied to control operational costs and manage port traffic. 
3. Time of surcharge- GRI charges are announced in advance to make it feasible for shippers to plan their shipments. They last for an indefinite period until a new price adjustment is announced. PSS is applied for a definite period, only during peak seasons, and ends once the season is off.  
4. Applicability– GRI is a global shipping surcharge that applies to diverse trade lanes and shipping routes depending on market conditions and the carrier’s needs. PSS is limited to specific trade lanes and shipping routes widely used during peak seasons. 

Impact of GRI charges on shipping rates 

1. For shipping companies– The shipping companies that transport significant goods on every trip invest more money in shipping operations, including maintaining a skilled workforce, specialised equipment and upgrading the services. Inflation or price hikes lead to challenges in providing quality service at standard shipping rates. General increase rates in shipping allow ocean carriers to compensate for surcharges in the trade market to avoid financial loss. The higher charges for shipping help level the budget of shipping lines during high demand and market fluctuations. 
2. For shippers– Exporters and importers in the trade market must pay the GRI and shipping rates to adjust to fluctuating market conditions. This leads to increased shipping charges, and shippers may suffer financial losses if they do not know about it.  

Minimising the impact of GRI in shipping 

GRI can lead to a significant increase in shipping expenses, impacting the profitability margin of shippers. While shippers can sometimes avoid transportation with a particular shipping line or through specific trade routes, it’s not always feasible. To minimize the impact of GRI charges in shipping, shippers must follow these tips-  

1. The GRI is set in advance and offers a buffer time before coming into effect. If you are making a shipment, ensure the estimated delivery date is before the GRI date. 
2. If you cannot avoid shipping during GRI, you can compare various shipping carriers to get competitive rates. 
3. It is also essential to stay informed about market conditions to avoid price fluctuations due to GRI. 
4. Digitization in freight forwarding is an intelligent option that allows shippers to compare and negotiate shipping rates. 
5. Establish long shipping contracts with ocean carriers, and your shipping rates will be unaffected by market volatility or price fluctuations. 

The GRI charges in shipping benefit the ocean carriers and help compensate for price hikes, while shippers are bound to suffer if they are not prepared for them. 

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