Get to know the vital terms of Logistics and Supply Chain Management.
Rate fluctuations form an integral part of understanding in the field of logistics and shipping, as it becomes a factor when managing global freight for any business. One of these pricing mechanisms is the General Rate Increase, or GRI in short, imposed by carriers, which affects the actual cost of shipment. The General Rate Increase is defined as the average rate increase applied to base tariff rates by shipping carriers for varying market conditions.
GRI is the adjustment put on base freight rates by shipping carriers. It usually comes in for containerized cargo and is one of the common practices in ocean freight shipping. GRIs help carriers offset their high operational costs, which can be a result of high prices of fuel or changes in supply and demand. This is not a fixed charge but rather periodically adjusted upon announcements from carriers themselves to sustain profitability and service levels.
To businesses whose operations are tied to the import and export of goods, GRI can have a severe impact on shipment costs. In other words, the increase in the GRI level means higher transport costs, which may have an impact on pricing policy, profit margins, and finally overall supply chain costs. Firms ought to be informed about forthcoming GRIs so that they can budget correctly and avoid an unplanned financial burden.
GRI is the standard rate that is accepted within the shipping industry to allow shipping lines or carriers to adjust freight rates due to market fluctuations. To the logistics manager, GRIs and their respective consequences would be beneficial to know for profitability and frictionless global trade operations.