Basics of Exporting - Export Packing, Marking and Containerization

According to the U.S. Department of Commerce, American companies lose more business in the movement of products overseas than in any other phase of the export process. Overseas shipping involves modes of transportation, packaging requirements and documentation, all of which are very different from the requirements for domestic shipping.

The Need for Packing

How to Reduce Your Losses

Cargo Insurance

Shipping Systems
   Barge on Board System
   Roll-On/Roll-Off Service

Products Frequently Shipped by Air

Typical Commodities Transported by Air

Proper packaging is essential to contain, protect, and offer a means of handling the product. Each package design has the goal of protecting the product from the assembly line to the user. There are many hazards of domestic distribution, but increasing the amount of handling increases the probability of damage. Poor quality packaging leads to damage, decay, establishment of low prices, or in extreme cases and the outright rejection by the buyer.

The method of packing or shipping will depend on your product and the infrastructure of the country of destination. Before agreeing to a letter of credit, ensure that the necessary infrastructure is in place in your destination. Pack your goods accordingly to avoid unnecessary losses during the shipment. Be sure to research the capability of the country because refrigeration, loading, and storage facilities may not be adequate for your product.

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How to Reduce Your Losses

The type of materials used for shipping will vary according to the product, the type of transportation (ocean or air), and the ultimate destination. However, the basic principle of packaging is known as the "unit load' concept or "unitization." Unitization is based upon the theory that all shippers should pack their cargo so it may be moved and handled entirely by mechanical equipment, such as lifts and cranes, throughout the distribution network. This practice reduces the need for labor, the handling of boxes, and the amount of damage. Also, it allows for faster loading and unloading by transportation equipment, more efficient distribution center operations and a reduced level of pilferage. The reduced costs of the distributor in terms of labor and time often result in cost discounts for the exporter.

In practice, the unit load concept means that small, highly expensive items, such as calculators, should first be totally enclosed in wood boxes, or double, even triple wall containers to avoid pilferage and damage. Second, the boxes or containers should be secured to pallets with shrink-wrap or steel strapping. Large items can be secured directly to pallets, assuring that they are adequately protected from damage.
Packaging materials should be selected on the basis of product and environmental considerations such as temperature, humidity, desired atmosphere around the product, packaging strength, cost availability, buyer specifications, graphics, labeling, freight rates and government regulations. Packing procedures should adhere to the following recommendations:

1. Your product should be properly cushioned or blocked within the container to prevent movement or rubbing against other products.
2. Select the most advantageous pallet size and style. A four-way entry pallet permits handling from all four sides with a fork or pallet truck. Additionally, the standard size pallet size of 40 inches by 48 inches (1000mm x1200mm) maximizes the volume, which can be loaded into shipping containers.
3. Prepare ferrous surfaces with a rust inhibitor to enable your product to arrive at its destination free from rust or corrosion.
4. Drain holes should be made in the skid or floor area of large containers, boxes or crates. This will allow seawater or condensation to flow out of the container.
   Do not overload the containers, as the weight might exceed the limitations of the container.
5. Keep markings to a minimum. Do not add trademarks or product descriptions to the box. Marks should be applied with waterproof ink to three surfaces of the container. Cautionary markings should be in English, the language of the country of destination and the international graphic-handling symbol.

An export packer (listed in the Yellow Pages under "Packing and Crating Services") is an excellent source for packaging materials and advice. In addition, contact your shipping company for more specific information regarding pallet size, weight, and design. Freight forwarders offer packing services and information about packing requirements for different countries. Most likely, it will be easier to use a freight forwarder who can assist with the entire shipping process rather than separate shipping and packing companies.

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Cargo Insurance

The purpose of cargo insurance is to protect the cargo owner's financial interests while their cargo is exposed to the risk of transit. Air and ocean carriers provide limited coverage while a shipment is in their possession. Cargo insurance requires a bill of lading, which states the liability assumed by the carrier. When an exporter files a claim against a carrier, it has to prove that the carrier is directly responsibility for the loss. Outlets for obtaining cargo insurance are a freight forwarder or a company specializing in ocean and air cargo insurance.

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Shipping Systems

Goods can be moved to the foreign markets by sea, air or land transportation. When selecting a mode of shipping, consider product characteristics such as size and value, destination, perishability, the required speed of delivery and cost. Compatibility with the other elements of your distribution system such as packaging, warehousing, inventory control and handling should influence the decision as well.

Ocean shipping is the most commonly utilized method of shipping with three primary types of transport. First, bulk shipping is used to transport large amount of goods such as grains, logs and fertilizers. In bulk shipping, the entire hull or shipload is filled with the product. Second, the breakbulk type of ocean shipping is used when the product is loaded on and off by individual piece or bundle of cargo such as palletized cargo. These ships normally can handle dry or refrigerated cargo. Third, the containerized type is when the product is loaded into containers and moved from door-to-door without the contents being handled. It is the most common method used to transport high-value or value-added agricultural exports.

There are many shipping systems that employ these various types of ocean shipping:

Barge on Board System
This system is designed primarily for bulk or high volume shippers. It is ideal for shippers in cities on inland river ports to load their cargo and have it delivered via barge to the ocean port.

Two such barge-on-board services are LASH and SEABEE. The barges themselves and the ocean going vessel or "mothership" make up the system. The barges are floated out to the mothership, where either an integral gantry or elevator system will lift them out of the water and place them in their proper stowage position.

Roll-On/Roll-Off Service
The Roll-on/Roll-off vessel (RO-RO) has practically all of its cargo mounted on wheels making it ideal for inland shippers. The cargo, contained in trailers, truck, automobiles, buses, etc. is driven on board via an integral ramp in the stern of the ship. This method of loading and unloading is very rapid and efficient. With today's congestion at the world's ports, this system enables a rapid turnover of freight.

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Products Frequently Shipped by Air

Increasingly, air transport is becoming the mode of choice, especially by manufacturers of valuable high technology products, exporters of perishable foods and equipment manufacturers replacing broken machinery or parts. The air cargo industry has been spurred by innovations within the air cargo industry, which have resulted in a more efficient loading and handling of goods.

With the exception of products with a relatively long storage life and a relatively low value per pound or cubic foot, any agricultural product with one or more of the following characteristics can be profitably moved by air:

• Products with a relatively wide spread between local market price and the market in a foreign market.
• Products with seasonal peaks, particularly if the peaks do not coincide with production peaks from other supply sources for the same market.
• Products in potential markets that do not have local or substantially close suppliers.
  Products with some degree of perishability, both in the sense of physical deterioration and susceptibility to the risk of sudden and wide market price fluctuations.
• Products for which the air cost does not comprise a substantial percentage of the selling price and selling demand is so high that the effect of the added air cost to the total selling price does not have a substantial effect on demand.
• Products with a "fad," "snob" or "prestige" appeal.
• Live animals because any animal due to the availability for breeding and the impact which lengthy transit status have on physical condition and behavior.

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Typical Commodities Transported by Air

Asparagus
Avocados
Cherry Tomatoes
Citrus Products
Floral Stock (bulbs, tubers, cuttings etc)
Furs
Lettuce
Live Animals
Specialized and Processed Meats
Strawberries
Tree Fruits
Truck Farm Vegetable Products
Seafood

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