Dealing with freight carrier GRIs (general rate increases) can be challenging. These increases, implemented by carriers to adjust their pricing and boost revenue, can significantly impact shippers' bottom lines. Therefore, it's crucial to understand the GRI process and how to minimize the hit.
In this blog post, we'll explore the ins and outs of general rate increases and offer practical tips to help mitigate them.
What is a General Rate Increase (GRI)?
A GRI is a freight carrier's announcement of a rate increase across a specific trade route or geographical area. The primary objective is to adjust rates to reflect changing market conditions, such as demand, capacity, fuel prices, and currency fluctuations.
Carriers typically announce these increases in advance and may vary in frequency, duration, and amount. It's not uncommon for them to introduce multiple GRIs in a year, with increases ranging from 5% to 20%.
How to Navigate GRIs
Now that we have a clear understanding of what a GRI is, let's look at some practical tips to help you navigate them successfully:
Stay Informed
One of the most crucial steps to navigating GRIs is staying informed. Carriers typically announce blanket increases at least two weeks in advance, giving shippers time to plan accordingly. Keep an eye out for GRI announcements by regularly checking their website, subscribing to their newsletters, or following them on social media.
Additionally, make sure you understand the terms and conditions of your shipping contracts. While many have clauses that allow carriers to increase rates, others may offer rate protection for a certain period.
Plan Ahead
Once you are aware of an upcoming GRI, it's time to start planning. The first step is to review your current shipping rates and assess the impact on your bottom line. This analysis will help you understand the cost implications of the increase and identify any areas where you can optimize your shipping process to mitigate the impact.
Next, consider adjusting your shipping schedules to take advantage of current rates or avoid the GRI. For example, if you know a GRI is coming, consider consolidating your shipments to maximize container space and reduce costs.
Negotiate with Your Carrier
This can be an effective way to mitigate the impact of a GRI. If you have a long-standing relationship with your transportation provider, you may be able to secure a better rate or get a discount to offset the increase. Carriers are often more willing to negotiate with high-volume shippers or those with long-term contracts.
Analyze your shipping patterns to identify areas where you can optimize your process. If you often ship to the same locations, you may be able to negotiate better rates by committing to higher volumes.
Keeping track of key performance metrics, such as on-time delivery and damage rates, is also helpful. If carriers are not meeting their performance targets, you’re in a better position to negotiate.
Consider Alternative Shipping Methods
Another way to mitigate the impact of a GRI is to explore alternative shipping methods. Depending on the nature of your cargo and the urgency of delivery, you might save money by utilizing intermodal transportation, LTL (less-than-truckload) shipping, or even air freight.
While these options may not always be feasible, it's worth exploring them to see if they can provide cost savings or flexibility in response to rate increases.
Work with a Freight Broker
Navigating GRIs can be frustrating, especially when dealing with multiple carriers or shipping routes. That's why working with a freight broker can be an excellent option.
Freight brokers have the expertise and resources to help you navigate GRIs successfully. They can help you stay informed about upcoming increases, negotiate with carriers on your behalf, and identify alternative shipping methods to mitigate the impact.
Road to Success
GRIs are inevitable, and carriers have the right to adjust their rates to reflect changing market conditions. While shippers may be unable to avoid every increase, they can take proactive steps to minimize the hit to their bottom line.
Whether you're a small business or a large corporation, Armstrong is committed to helping you optimize your shipping process and maximize cost savings. By working with us, you can access our extensive network of carriers and our industry expertise to achieve your shipping goals. Contact us today to learn more!