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

Products Frequently Shipped by Air

Proper packaging is essential to contain and protect products while offering a means of conveniently handling them. Each package design has the goal of protecting the product from the assembly line to the user. There are many hazards even in domestic distribution, and international transport and distribution can increase the times products are handled and the probability of damage. Poor packaging leads to damage, decay, low prices (for damaged or incomplete shipments), or in extreme cases, rejection of the shipment by the buyer.

The method of packing or shipping will depend on your product and the infrastructure in 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 to avoid unnecessary loss during shipment. Research the refrigeration, loading, and storage facilities of the destination to ensure that they are 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 assumes 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, handling, and damage. It also allows for faster loading and unloading, more efficient distribution center/warehouse 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 based on 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.
   
5. Do not overload the containers, as the weight might exceed the limitations of the container.


6. 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 or freight forwarder 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

Cargo insurance protects the cargo owner's financial interests while the cargo is in transit. Air and ocean carriers provide very 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 responsible 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, 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 still a common 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 break bulk 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 used when the product is loaded into containers and moved from door to door without the contents being handled. This is the most common method used to transport high-value or value-added agricultural exports.

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Products Frequently Shipped by Air

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, which can be physically affected by a lengthy transit.

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