WHAT IS GRI? UNDERSTANDING GRI FEE

In the field of import and export, you may encounter the term GRI, especially when the economy is experiencing significant fluctuations. So, what is GRI and why do shipping lines apply this charge? Let’s explore with Smart Link Logistics through the following article!

What is GRI?

GRI, short for General Rate Increase, is a surcharge for increased freight rates. This charge is added to the shipping cost on certain or all shipping routes during peak seasons or specific periods. Shipping lines usually decide on this GRI charge based on the supply-demand relationship of each route and announce the adjustments directly on their website.

Why do shipping lines apply GRI?

GRI is applied based on market fluctuations and the supply-demand situation of goods. Like other businesses, shipping lines need to seize opportunities when the demand for freight increases sharply to maximize profits, especially during peak times like the end of the year. In the U.S., according to the Federal Code, applying GRI or GRD (General Rate Decrease) needs to be reported to the FMC (Federal Maritime Commission) 30 days in advance. After the announcement, shipping lines can adjust but not increase the GRI surcharge beyond the level reported to the FMC.

Impact of GRI Surcharge

GRI surcharge is an increase in freight charges, directly affecting buyers and sellers in the supply chain. Some specific impacts of GRI charges include:

Buyers and sellers will have to negotiate to optimize contract prices, compensating for the increased freight costs.
In some cases, if parties have booked space on the ship but the shipping line announces the application of GRI, even if the goods have not been loaded onto the ship, the booker still has to bear this additional charge. For example, a shipment booked on May 25 at a fixed rate and loaded on June 1 will still incur the GRI charge if it takes effect on May 31.
Such sudden charges are often referred to as VATOS (valid at time of shipping). Quotation departments of shipping lines or forwarders need to be aware when quoting customers and clearly state unexpected surcharges, such as GRI.

Ways to Reduce Negative Impact of GRI Charges

GRI brings significant profits to shipping lines but significantly impacts exporters and forwarders. To mitigate the negative impact of GRI surcharges, import-export parties and forwarders can consider:

Planning shipments before the GRI charge notice takes effect.
Coordinating closely with suppliers to ensure shipments are not delayed, reducing additional costs.
Comparing prices from various shipping lines and predicting potential price increases or GRI announcements to plan appropriate transportation.

Here is essential information about “what is GRI”. We hope this information is useful for individuals and businesses engaged in import-export trade. At Smart Link Logistics, we provide services and solutions to help your goods reach global markets with dedication and commitment, always by your side. We are proud to be a company with over 13 years of experience in the logistics field.

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If you require assistance with international import and export of goods, please contact our team at Smartlink Logistics. We are available to provide you with professional guidance on our services and the necessary customs procedures.

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