Chapter 14

PACKAGING FOR EXPORT

LEARNING OBJECTIVES
By the end of this chapter the student should be able to:

1 2 3 4 5 6 7

Understand the significance of good packaging practices in international trade. Identify the distinctions among primary, secondary, and tertiary packaging. Identify packaging objectives. Identify characteristics of ocean, air, road, and rail cargo packaging. Identify security issues in packaging. Identify special transport needs of hazardous and refrigerated cargoes. Identify domestic packaging issues.

REVIEW/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.

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CHAPTER OUTLINE

14-1 Introduction
I. II. III. IV. One of the challenging practical areas of international logistics is the packaging of goods for international shipments. Packaging is responsibility of exporter. There is rarely a strategy of packaging even though it is an area that has strategic implications. Functions of packaging: a. Protection of goods b. Facilitation of handling of goods while they are in transit c. Customer servicecustomer should not have to spend a lot of time unpacking goods and preparing them for service or sale d. Distinctions among primary, secondary, tertiary packaging i. Primary packaging: consumer packagingwhat consumers sees upon purchase of the product. ii. Secondary packaging: grouping of several consumer goods into one unit, usually a thin cardboard box or shrinkwrap. 1. This is what the retailer sees and handles before goods are placed on shelves. 2. In discount stores, consumers may also see the secondary packaging. iii. Tertiary packaging or transportation packaging includes all activities to ensure safe and efficient delivery of goods. For industrial goods tertiary packaging encompasses all packaging activities aimed at protecting goods in shipment.

14-2 Packaging Objectives

I. Protecting goods from: a. Breakage b. Water damage c. Theft and pilferage Other problems: a. Fire b. Strandings c. Sinkings d. Collision e. Overboard losses f. Jettison 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 recipients 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 customers warehouse

II.

III.

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IV.

d. Customer service objectives may result in strategic advantage over competitor Packaging should reflect sensitivity to energy and recycling issues in many European countries.

14-3 Ocean Cargo

14-3a Full-Container-Load [FCL] Cargo I. Choice of container. Inspect containers: a. For structural damage b. For light leakage, which could indicate water infiltration risk Packaging materials a. Shipment should be unitizedplaced on pallets. b. Europe standardized pallets has been 80 cm s 120 cm31.5 inches x 47.25 inches. c. United States pallets are not standardized, although most are 36 inches by 48 inches91.5 cm x 122 cm. d. Due to diseases there are some restrictions on wooden pallets. e. If not unitized, cargo should be protected from crushing and moisture by being in higher grade of corrugated cardboard, double- or triple-walled. f. 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. g. Heaviest goods should be at bottom of container to keep center of gravity lower. h. Center of gravity should be in center of container. i. There are software programs to help in packing containers. Blocking materials. a. Since there are often spaces in container, it should be filled with blocking material, referred collectively as Dunnage. b. First, goods need to be secured to container itself, if possible. c. Entire floor of container should be occupied to keep cargo from moving.

II.

III.

14-3b 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). Goods must be unitized or placed in a crate or box. Consolidator tends to be good at packing containers, but owners of other cargo in container may not have packed their goods well.

II. III.

14-3c Break-Bulk Cargo I. II. Not everything can be containerized, so a lot of cargo goes break-bulk. Is frequently handled so it must be packed well for rigors of journey and handling

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III. IV.

V.

VI.

Break-bulk cargo shipper must make sure all port facilities can handle cargo. Crates and boxes a. Cratescontainers built on wooden frame and are either open or enclosed with plywood. i. Well-built crates are stronger than boxes. ii. Appropriate for break-bulk 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. Boxescontainers made of wood where sides are integral part of structure of container. c. Boxes and crates should be lined with waterproof material. Bags a. Multi-wall shipping bag: i. Can be used for transporting break-bulk 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 one cubic metercan weigh up to one metric ton ii. Used for transporting granular cargo such as plastics, grains and some chemicals Drums a. Metallic (steel drums) i. Wet or dry cargo ii. Great resistance to water damage and pilferage iii. High cost and weight b. 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

14-3d Markings I. Two reasons to properly mark cargo: a. To protect from poor handling b. To protect from theft and pilferage Use International Organization for Standards (ISO) accompanied, if possible, by languages of ports through which cargo will go. Display weights in metric units and English units. a. Net weight of cargo alone b. Gross weight of cargo plus packaging To prevent use of inappropriate handling equipment display outside dimensions in metric units and English units. To protect break-bulk 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 consignees name and shipment number.

II. III.

IV. V.

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VI. VII. VIII.

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. For security reasons, avoid markings identifying shipper and/or cargo. Many companies use coded colors for identifying purposes, regularly changing colors.

14-4 Air Transport

14-4a Containers I. II. III. IV. Except for 20 foot containers, containers used in air transport cannot be used for other modes. Cargo is usually consolidated in containers at airport of departure. Cargo usually manipulated at airport of arrival and packed on trucks. Air containers are lightweight, made of wood, Plexiglas or aluminum, and are generally clean.

14-4b Packaging Materials I. Most air cargo tends to be shipped in secondary packaging, but this is generally not appropriate because: a. Its not sufficient to protect goods from manipulation before and after flight b. Secondary packaging has brand markings that can tempt thieves Appropriate shipping packaging should be tertiary in nature and include one additional layer of cardboard, preferably double-walled, and a shrink-wrap. For cargo sensitive to humidity put small packets of desiccant material in the box. 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

II. III. IV.

14-4c Markings I. II. Markings in air transport are the much the same as in ocean shipments. Use of pictorials is appropriate.

14-5 Road and Rail Transport

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

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III. IV.

Domestic shipments in the United States are almost all made by truck or by rail. Cargo sensitive to theft should be packed in unmarked boxes.

14-6 Security
I. II. Theft, pilferage of cargo is an increasing problem. 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. Some companies, such as Artex, specialize in moving precious cargoes like artwork, antiques and jewelry.

III.

14-7 Hazardous Cargo

I. II. III. IV. V. VI. Can be shipped by ocean and air, but most flammable, explosive, toxic goods are shipped by sea Sea shipments of dangerous goods regulated by the International Maritime Organizations (IMO). Air shipments of dangerous goods regulated by International Air Transport Association (IATA) and by International Civil Aviation Organization. Air shipments are also under jurisdiction of domestic regulatory agencies. Sometimes a specialized freight forwarder or a consultant is required. Shipments of radioactive components can be complicated.

14-8 Refrigerated Goods

I. II. III. Difficult to generalize about refrigerated goods, since different commodities require specific handling. Most refrigerated goods travel alone requiring their own specific temperature and humidity settings. 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%.

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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 shrinkwrapping them.

14-9 Domestic 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. Some factors that may affect primary and secondary packaging are: a. 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. b. 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. c. Storage and transportation environment i. Humidity, dust, heat, cold issues ii. Lack of refrigeration solved by long-conservation milk

II.

14-10 Packaging as a Marketing Tool

I. II. III. IV. V. VI. VII. VIII. The most important way of looking at packaging is to prepare for the worst. A good packaging policy generates goodwill with the importer. Use nails or screws on boxes and crates (instead of glue) to allow easier dismantling. Include a packaging list in recipients language. Mark all packages in shipment clearly, by color-coding or letter-coding each pallet and its corresponding manifest. Use unitized packages matching size of those used by customer so goods can be placed directly in customers warehouse. Be sensitive to the energy and recycling issues in many of the European countries. Consider that, in many countries, packaging will be re-used.

SUGGESTED HOMEWORK
1. Assign students to do a report on efforts to encourage recycling of primary packaging in Europe.

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2.

Assign students to do a report on types of secondary and tertiary packaging.

KEY TERMS
Improper Packaging The lack of appropriate packaging materials for an international shipment. The decision is oftentimes reached by an insurance company when it refuses to pay a damage claim that it considers would have been avoided, had proper packaging procedures been followed. Container A large metal box used in international shipments that can be loaded directly onto a truck, a railroad car or an ocean-going vessel. The most common dimensions of containers are 8 x 8 x 20 feet and 8 x 8 x 40 feet. Pallet An item made out of wood or plastic on which the goods are placed. The pallet allows the use of mechanical equipment to move the merchandise as a unit, and 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 water standing on the ground. Dunnage Packaging material designed to prevent the cargo from moving while in transit. Crate A wooden box made especially for a product to be shipped break-bulk because it does not fit into a container, or because the exporter deems that an additional level of protection is necessary. Break-bulk 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. Corrugated Cardboard Boxes 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 cardboard box; if there are two walls, it's a double wall box and three walls, it's a triple wall box. Crate A wooden box made especially for a product to be shipped break-bulk because it does not fit into a container, or because the exporter deems that an additional level of protection is necessary.

Flexible Intermediate Bulk Container (FIBC) A type of large-capacity woven bags (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 from 1,500 to 6,000 lbs (680 kg to 2,000 kg).

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Full-Container-Load (FCL) A shipment which 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. International Plant Protection Convention 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.. Less-Than-Containerload (LCL) A shipment which 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). Seals Locks 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.

POWERPOINT SLIDE LIST

Introduction to Packaging (5 slides) Ocean Cargo (21 slides) Air Cargo (2 slides) Road and Rail Cargo (2 slides) Cargo Security (3 slides) Hazardous and Refrigerated Cargo (2 slides) Domestic Retail Packaging Issues (1 slide) Packaging as a Marketing Tool (2 slides)

ADDITIONAL RESOURCES
Coyle, John J., Edward J. Bardi, and Robert A. Novack, Transportation, Thomson-SouthWestern, Mason, Ohio, 2006, Sixth Edition. 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.

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``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.