A GRI, or General Rate Increase, is an increase in base ocean freight rates for a specific route during a set period. These rate increases are controlled by supply and demand shifts and are generally introduced by one or more major carrier.
Hapag-Lloyd recently announced a GRI starting on June 15th for services from Asia to the United States and Canada. Despite the unprecedently high rates currently in place, this GRI will increase the cost of 40 ft containers to $3,000 each.
Why are Rates Continuing to Rise?
Shippers, retailers, and logistics companies alike are questioning recent rate increases at a time when prices are already so high. Jon Monroe of Jon Monroe Consulting explains it as well as anyone by observing that, “today’s environment is a free-for-all, and it seems carriers are looking to get what they can while they can.”
While today’s Freightos Baltic Index (FBX) is $5,543 for the route from China and East Asia to the West Coast of North America, the reality is that shippers are having to pay at least twice that for space, as well as to guarantee shipments. It currently costs shippers anywhere from around $10,000 up to $15,000 or more per 40 feet to secure early June shipments, which is a staggering number compared to rates of $1,686 pre-pandemic.
These rates, which appear poised to be only increasing based on Hapag-Lloyd’s upcoming GRI, mean reduced margins for retailers, higher prices for consumers, and elevated concerns about inflation.
While this might seem ominous, there are some indicators that reduced prices could be on the horizon. Several delayed vessels are arriving back in Asia in the next few weeks, which will lead to more space, potentially bringing prices down starting in early July.
While the market continues to be challenging for businesses relying on shipments from Trans-Pacific markets, having a reliable logistics partner, like ClearFreight, can make all the difference. We can help you navigate these turbulent times and work to ensure you are getting viable rates in this volatile market. Contact one of our supply chain specialists today to hear more about our logistics solutions and how we can make shipping easier for you.