What is a General Rate Increase?

rate increaseIn October 2014, the Transpacific Stabilization Agreement, a coalition of shipping companies covering the Pacific trade routes, confirmed a general rate increase (GRI) – their 10th of the year, of $600 for every 40-foot container. For novice businesses that depend on international freight shipping, they might not understand what a general rate increase is and why this is happening to them. A general rate increase is a recurring surcharge that is found often in the world of shipping. The amount for general rate increase is usually the average amount of a rate increase from the carriers for their ocean freight shipping rates.

Years ago, the general rate increase applied for contract rates that were changed at the end of a year. Now the ocean freight industry sees numerous general rate increases annually, depending on the market and where you are shipping. It is not uncommon for some shippers to see a dozen general rate increases a year. That is an average of a new general rate increase every month. This can really slow things down for companies. And domestic shippers are not immune to this, as it seems many LTL trucking companies also implement general rate increases. Usually, a company announces the general rate increase about 30 days before implementation.

The good news is that a general rate increase might not last forever. However, it could conflict with a future shipment of your company. That is why it is wise to speak with your trusted freight forwarder by planning ahead. They might be able to find a deal for your company if there is a new sweeping general rate increase in the coming months. Working with them is a decision than can greatly help you.

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