Discussion Board Q's Chapter 14-20

Packaging for Export

lEARNING oBJECTIVES

At the end of this chapter, YOU SHOULD:

1 Understand the significance of good packaging practices in international trade.

2 Identify the distinctions among primary, secondary, and tertiary packaging.

3 Identify packaging objectives.

4 Identify characteristics of ocean, air, road, and rail cargo packaging.

5 Identify security issues in packaging.

6 Identify special transport needs of hazardous and refrigerated cargoes.

7 Identify domestic packaging issues.

Preview

Packaging may seem like a mundane, unglamorous aspect of international logistics; however, it is important to make sure cargo is probably secured to keep it from being damaged, stolen, or pilfered.

Chapter Outline

Introduction

I. One of the challenging practical areas of international logistics is the packaging of goods for international shipments

II. Packaging is responsibility of exporter

III. Three types of packaging:

a. Primary packaging: consumer packaging—what consumers sees upon purchase of the product.

i. Corrugated paperboard box

ii. Plastic wrap that is stretched or shrink-wrapped

b. Secondary packaging—grouping of several consumer goods into one unit, usually a thin cardboard box or shrinkwrap

i. This is what the retailer sees and handles before goods are placed on shelves

ii. In discount stores, consumers may also see the secondary packaging

c. Tertiary packaging (or transportation packaging)—includes all activities to ensure safe and efficient delivery of goods

14-1 Packaging Functions

I. Proper packaging has direct cost implications

II. Functions of packaging:

a. Protection of goods

b. Facilitation of handling of goods while they are in transit

c. Customer service—customer should not have to spend a lot of time unpacking goods and preparing them for service or sale

14-2 Packaging Objectives

I. Protecting goods from:

a. Breakage

b. Water damage

c. Theft and pilferage

II. Other problems:

a. Fire

b. Strandings

c. Sinkings

d. Collision

e. Overboard losses

f. Jettison

III. Customer service objectives of packaging:

a. Nail or screw plywood panels on crate instead of gluing and nailing to allow easier dismantling

b. Put packaging list in recipient’s language, clearly marking all packages in shipment by color-coding or letter-coding each pallet and its corresponding manifest

c. Use unitized packages matching size of those used by customer, so goods can be placed directly in customer’s warehouse

d. Customer service objectives may result in strategic advantage over competitor

IV. Packaging should reflect sensitivity to recycling and energy conservation in many European countries

14-3 Ocean Cargo

14-3-1 Full-Container-Load (FCL) Cargo

I. Choice of container. Exporter inspects containers:

a. For structural damage

b. For light leakage, which could indicate water infiltration risk

II. Palletization

a. Shipment should be unitized and placed on pallets

b. Pallets and shrink-wrap protects better from water infiltration and condensation

c. Facilities better handling and prevents from packaging from being crushed

d. Alternating boxes in a “brick” pattern

e. Europe standardized pallets has been 80 × 120 centimeters—31.5 × 47.25 inches

f. United States pallets are not standardized, although most are 36 × 48 inches—91.5 × 122 centimeters

III. Non-unitized cargo

a. If not unitized, cargo should be protected from crushing and moisture by being in higher grade of corrugated cardboard, double- or triple-walled

b. If stacked, layers of strong cardboard (except in high humidity areas) or sheets of plywood should be used in between layers to protect lower levels from collapsing

IV. Blocking materials

a. Since there are often spaces in container, it should be filled with blocking material, referred collectively as dunnage

b. First method is to have goods be secured to container itself, if possible

c. Second is to insert some sort of spacer in-between pallets or packages

d. Critical to have entire floor of container should be occupied to keep cargo from moving

V. Loading the container

a. Heaviest goods should be at bottom of container to keep center of gravity lower

b. Center of gravity should be in center of container

c. There are software programs to help in packing containers

14-3-2 Less-than-Container-Load (LCL) Cargo

I. Cargo too small for a single container is consolidated with other small cargo into a single container by a freight forwarder or a Non-Vessel-Operating Common Carrier (NVOCC)

II. Goods must be unitized or placed in a crate or box

III. Consolidator tends to be good at packing containers, but owners of other cargo in container may not have packed their goods well

14-3-3 BreakBulk Cargo

I. Not everything can be containerized, so a lot of cargo goes breakbulk

II. Is frequently handled so it must be packed well for rigors of journey and handling

III. Breakbulk cargo shipper must make sure all port facilities can handle cargo

IV. Crates and boxes

a. Crates—containers built on wooden frame and are either open or enclosed with plywood

i. Well-built crates are stronger than boxes

ii. Appropriate for breakbulk cargo or LCL cargo

iii. Should be made of dry wood, although for insect and disease control purposes there are some limitations on importation of some wood into some countries

b. Boxes—containers made of wood where sides are integral part of structure of container

c. Boxes and crates should be lined with waterproof material

V. Bags

a. Multi-wall shipping bag:

i. Can be used for transporting breakbulk merchandise like chemicals, plastics, and other powdered materials not affected by water

ii. Quite sensitive to rough handling

b. Large bag called flexible intermediate bulk container (FIBC)

i. Capacity of 1 cubic meter—can weigh up to 1 metric tonne

ii. Used for transporting granular cargo such as plastics, grains, and some chemicals

VI. Drums

a. Metallic (steel drums)

i. Wet or dry cargo

ii. Great resistance to water damage and pilferage

iii. High cost and weight

b. Polymer drums

i. Carry liquid and wet cargo

ii. Less resistant to rough handling

c. Fiber drums

i. More resistant to water damage than bags and more resistant to pilferage

ii. Often damaged by port personnel when they are rolled like steel drums

iii. Sensitive to mechanical damage such as that caused by careless forklift truck drivers or sharp corners

14-3-4 Wood Requirements

I. International Plant Protection Convention (IPPC) in force to prevent infestations from wood-born insects

II. All wood used in international trade must be heat-treated or fumigated with methyl bromide to prevent infestations. All treated wood must be identified with the IPPC symbol, the country of processing, and the method used (see Figure 14-15)

14-3-5 Markings

I. Two reasons to properly mark cargo:

a. To protect from poor handling

b. To protect from theft and pilferage

II. Use International Organization for Standards (ISO) accompanied, if possible, by languages of ports through which cargo will go

III. Display weights in metric units and English units

a. Net weight of cargo alone

b. Gross weight of cargo plus packaging

IV. To prevent use of inappropriate handling equipment display outside dimensions in metric units and English units

V. To protect breakbulk or LCL cargo from being lost or shipped to wrong consignee it should be clearly marked on several sides of load (so it is always visible) with consignee’s name and shipment number

VI. Units of same shipment should be marked like “1 of 4,” “2 of 4,” etc. or mark all units of same shipment with same color

VII. For security reasons, avoid markings identifying shipper and/or cargo

VIII. Many companies use coded colors for identifying purposes, regularly changing colors

14-4 Air Transport

14-4-1 Containers

I. Except for 20-foot containers, containers used in air transport cannot be used for other modes

II. Cargo is usually consolidated in containers at airport of departure

III. Cargo usually manipulated at airport of arrival and packed on trucks

IV. Air containers are lightweight, made of wood, Plexiglas, or aluminum, and are generally clean

14-4-2 Packaging Materials

I. Most air cargo tends to be shipped in secondary packaging, but this is generally not appropriate because:

a. It’s not sufficient to protect goods from manipulation before and after flight

b. Secondary packaging has brand markings that can tempt thieves

II. Appropriate shipping packaging should be tertiary in nature and include one additional layer of cardboard, preferably double-walled, and a shrink-wrap

III. For cargo sensitive to humidity put small packets of desiccant material in the box

IV. For cargo susceptible to leakage (glass, plastic bottles):

a. United States Federal Aviation Administration regulations (and United Nations rules) require that secondary or tertiary package must be able to contain accidental leakage

b. Most containers cannot sustain such leakage so adequate additional material must be packed with goods

14-4-3 Markings

I. Markings in air transport are the much the same as in ocean shipments

II. Use of pictorials is appropriate

14-5 Road and Rail Transport

I. Cargo protection policy is similar to that of shipment by ocean container

II. Best to unitize cargo into pallets to facilitate handling at loading/unloading points

a. Pallets should be protected on all four corners, banded with nylon or steel straps and should be shrink-wrapped for protection against rain and ambient humidity

b. Cargo should be blocked and braced in truck trailer

III. Domestic shipments in the United States are almost all made by truck or by rail

IV. Cargo sensitive to theft should be packed in unmarked boxes

14-6 Security

I. Theft, pilferage of cargo is an increasing problem

II. Methods to help reduce theft:

a. Cargo should not bear name of shipper

b. Seal containers

i. Seals, however, can attract attention to valuable cargo

ii. Some containers have locks not visible because they are inside the container or truck doors and are unlocked by a coded transmitter

c. Personnel are a key issue

i. Most thefts involve insiders

ii. Number of people who know cargo contents should be limited

iii. Bill of lading and packaging lists should only be given to trusted people

iv. Non-employees should be restricted from the property

v. Managers should be present during loading, unloading

vi. Some companies keep docks under continual video surveillance

III. Some companies, such as Artex, specialize in moving precious cargoes like artwork, antiques and jewelry.

14-7 Hazardous Cargo

I. Can be shipped by ocean and air, but most flammable, explosive, toxic goods are shipped by sea

II. Sea shipments of dangerous goods regulated by the International Maritime Organizations (IMO)

III. Air shipments of dangerous goods regulated by International Air Transport Association (IATA) and by International Civil Aviation Organization (ICAO)

IV. Air shipments are also under jurisdiction of domestic regulatory agencies

V. Sometimes a specialized freight forwarder or a consultant is required

VI. Shipments of radioactive components can be complicated

14-8 Refrigerated Goods

I. Difficult to generalize about refrigerated goods, since different commodities require specific handling

II. Most refrigerated goods travel “alone” requiring their own specific temperature and humidity settings

III. Ocean refrigerated goods shipments usually travel in refrigerated containers, known as “reefers”

a. Sometimes there is confusion between Celsius and Fahrenheit temperature settings

b. Requires air circulation around cargo

c. Some goods required controlled atmospheres (mixtures of oxygen and nitrogen)

d. Fresh produce must be kept at humidity levels of 95 to 100 percent

IV. Air shipments use refrigerated aircraft holds instead of containers. Mixing of goods is prevented by packing them in solid wall cardboard boxes and, possibly by shrink-wrapping them

14-9 Domestic Retail Packaging Issues

I. With consumer products, several packaging issues are greatly influenced by primary packaging (final stage of packaging for the consumer) and secondary packaging (packaging designed to facilitate handling in the retail environment

a. These constraints tend to be domestic (specific to single country or group of countries.

b. Adapting strategy to specific market can be costly in terms of manufacturing, inventory, and logistical expenses

14-9-1 Size

I. Different countries may have demands for different sizes of consumer products

II. Retail store shelf layouts may affect packaging

III. Secondary packaging is influenced by primary packaging

14-9-2 Legal Issues

I. Some countries limit sizes to multiples of simple metric units

II. Many countries regulate maximum weight an employee may carry

III. United States allows sale of some medicines over-the-counter without prescriptions. France limits sale of all medicines, including those not requiring a prescription to stores called pharmacies

14-9-3 Storage and Transportation Environment

I. Humidity, dust, heat, cold issues

II. Lack of refrigeration solved by long-conservation milk

14-10 Packaging as a Marketing Tool

I. The most important way of looking at packaging is to prepare for the worst

II. A good packaging policy generates goodwill with the importer

III. Use nails or screws on boxes and crates (instead of glue) to allow easier dismantling

IV. Include a packaging list in recipient’s language

V. Mark all packages in shipment clearly, by color-coding or letter-coding each pallet and its corresponding manifest

VI. Use unitized packages matching size of those used by customer so goods can be placed directly in customer’s warehouse

VII. Be sensitive to the energy and recycling issues in many of the European countries

VIII. Consider that, in many countries, packaging will be re-used

Key terms

bag

A paper, plastic, or fabric container designed to unitize dry-bulk cargo and unitize it. A bag can generally be handled by a single stevedore.

box

A wooden container designed to unitize the goods and protect them. In a box, the walls are an integral part of its structural strength.

breakbulk cargo

Cargo that is unitized in a box or crate and that is placed directly into the hold of a ship. It is generally too large or too heavy to be placed in a container.

consolidated

A shipment that is made up of several small shipments from different shippers.

corrugated paper

Two flat sheets of brown paper, in between which a sinusoidally shaped sheet is glued.

corrugated paperboard box

A type of box made of paper fibers in which two flat sheets are glued to both sides of a “wall” made of a sinusoidally shaped sheet. If there is only one wall, it is called a “single wall” corrugated paperboard box; if there are two walls, it is a “double wall” box; and three walls, a “triple wall” box.

crate

A wooden box made especially for a product to be shipped breakbulk because it does not fit into a container, or because the exporter deems that an additional level of protection is necessary.

drum

A cylindrical metal, plastic or fiber container designed to unitize dry-bulk or liquid-bulk cargo.

dunnage

Packaging material designed to prevent the cargo from moving while in transit.

flexible intermediate bulk container (FIBC)

A type of large-capacity woven bag (of polyethylene or polypropylene fibers) designed to unitize goods that would otherwise be carried as dry bulk, such as fertilizers, plastic pellets, or grain. Depending on their size and construction, FIBCs have a carrying capacity of 1,500–6,000 pounds (680–2,000 kilograms).

full-container-load (FCL)

A shipment whose volume and weight are close to the volume and weight limits of a container or for which the shipper requests that it be the only cargo in a container.

improper packaging

The lack of appropriate packaging materials for an international shipment. The determination is oftentimes made by an insurance company when it refuses to pay a damage claim that it considers avoidable had proper packaging procedures been followed.

International Plant Protection Convention (IPPC)

An international convention, which 144 countries have ratified, that mandates that wood used for packing or dunnage be heat-treated or treated with chemicals to prevent insect infestations. All wood materials used in international commerce must show the IPPC mark.

lashing

The process of attaching cargo to the means of transport. On a ship, containers are lashed onto the deck, in a container, goods are lashed to the container walls and floor.

less-than-container-load (LCL)

A shipment whose volume and weight are below the capacity of a container and for which the shipper does not request that it be the only cargo in a container. LCL shipments are generally “consolidated” with other shipments to form a full-container-load (FCL).

markings

Symbols printed on boxes or crates that help stevedores and terminals determine the proper way to handle, stow, or store a breakbulk shipment.

non-vessel-operating common carrier (NVOCC)

A shipment consolidator or freight forwarder that does not own means of transportation, but issues its own bills of lading, and therefore acts as a carrier.

pallet

A platform made out of wood or plastic on which goods for shipment or transport are placed. The pallet allows the use of mechanical equipment to move the merchandise as a unit. Goods shipped on pallets are also called unitized packages. The pallet prevents some of the problems presented by manual handling of the goods. Pallets also offer an additional level of protection by insulating the goods from standing water.

refrigerated container (reefer)

A container designed to hold cargo that must be maintained at a constant temperature. It generally needs an outside power supply.

seal

Lock especially designed to be applied on containers and truck trailers and that the importer must break in order to get entry into the container or trailer. Locks have an identification number that is recorded on the bill of lading, and that number must be checked by the importer as well, to ensure that the seal was not “replaced” during the voyage. Seals can be a simple loop of braided steel or a reinforced steel pin. Some seals are electronic and record attempted entries.

shrink/stretch wrap

A polymer film that is stretched over palletized cargo to protect it from water damage.

unit load device (ULD)

The term used to describe the containers used in airfreight transport.

unitized

Cargo in which smaller packaging units are assembled into a single larger unit, to facilitate handling.

PowerPoint SLIDES – STUDY THEM – PRINT THEM OUT !

· Introduction to Packaging (3 slides)

· Ocean Cargo (24 slides, 19 photographs)

· Air Cargo (2 slides, 1 photograph)

· Road and Rail Cargo (2 slides, 1 photograph)

· Cargo Security (2 slides, 1 photograph)

· Hazardous and Refrigerated Cargo (4 slides, 2 photographs)

· Domestic Retail Packaging Issues (3 slides)

· Packaging as a Marketing Tool (1 slide)

Additional Resources

Ports of the World, Fifteenth Edition, Cigna Insurance Corporation, available from Publisher, Ports of the World, Cigna Companies, P.O. Box 7716, Philadelphia, Pennsylvania 19192, USA.

“Container matters” and “Any fool can stuff a container,”' videos published by the Thomas Miller P&I Ltd, International House, 26 Creechurch Lane, London, EC3A 5BA, United Kingdom (can be obtained by contacting author at [email protected]).