This is part 3 of the Xeneta 11-part FAQ series focusing on key questions related to freight rate benchmarking and procurement. The series provides answers to the most frequently asked questions revolving around the complex world of ocean freight rate benchmarking and procurement. It provides you some tips and tricks to make the process a little less painful.

1. Should I Agree to Prices
“Subject to GRI” or “Subject
to Peak Season Surcharge”?

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5. This is part 3 of the Xeneta 11-part
FAQ series focusing on key
questions related to freight rate
benchmarking and procurement.

6. The series provides answers
to the most frequently asked
questions revolving around
the complex world of ocean
freight rate benchmarking and
procurement. It provides you
some tips and tricks to make
the process a little less
painful.

7. In the case of agreeing to
prices “subject to GRI” or
“subject to peak season
surcharge”?, the first
question to ask is – “Do you
have a choice?”, especially if
you ship on the spot
market.

8. The reason is that GRI (General Rate Increase) or PSS (Peak
Season Surcharge) is something that the shipping lines
implement, whether you like it or not, whether you agree or
not. However, as with any rule, there are exceptions.

9. Depending on your committed
volume with the carrier, the
relationship that you have with
the carrier and the support that
you give the carrier, you may be
able to negotiate a waiver for
the GRI or PSS.

10. This could be done at
the time of you signing a
long-term contract or a
fixed term contract with
the lines as that is the
best period of bringing
up this eventuality. Large
volume shippers who
usually go for long term
contracts do not accept
GRI or PSS because if
there is scope of
increase in rate during a
contract period.

11. Other than that, there is
not much choice for you
as a BCO or NVOCC in
this matter as generally
once one carrier starts
implementing
surcharges, the others
follow suit. In this age of
carrier alliances and
partnerships, it is
doubtful that one
partner in the alliance
doesn’t implement the
GRI or PSS at the
prescribed time.

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13. Both GRI and PSS are often introduced unsuccessfully as more
often than not, the market does not accept it.
These charges get waived quite quickly especially bearing in mind
that these two are applied more on short term rates or spot rates
as the time frame where it can be applied is also short.

14. In some cases the
time frame can be so
short that some BCOs
or NVOCCs may even
stall their negotiations
or shipments in order
to avoid these
charges.

15. Having said that, if the choice has to
be made between a GRI and a PSS,
the better option would be a PSS
because the PSS is applied at the
“Peak Season” which is normally
around the period of August to
October in certain trade lanes and
around Chinese New year which is
when most carriers try to
implement PSS.