The average annual amount by which a carrier’s tariff rates increase. Due to the union history of the industry, these originated as standard price increases to mainly cover increased labor costs. In the mid-1990s, they were announced and went into effect at the beginning of each calendar year. Then, by the turn of the century, they were announced later in the year (to time rate increases with a higher demand season). But since the exit of CF and the subsequent pricing power realized by the carriers, the annual rate increase became more like an “every 11 month” rate increase and now we are back to January/February timing. The most recent move to early January timing was led by FedEx Freight to get all the companies (FedEx Express, FedEx Ground, and FedEx Freight) on the same annual price increase cycle. The supply/demand situation in the industry, though, dictates how much of the announced GRI is kept each year. Also, when the GRI goes into effect, it does not affect all shippers equally. It is only applied to typically half of an LTL carrier's account base, as the other half are on foreign rate bases [other carriers' tariffs] or contracts with reduced rates.

Contributed By:

Thomas Jackson
Director of Market Research & Analysis
Estes Express Lines, Inc.