Chapter 6 Packaging for export IBS3002 Logistics International Trade 9232020 1 IBS3002 Logistics International Trade Chapter 6 Packaging for export material handling 1 Contemporary logistics, Murphy (2015) International l.
9/23/2020 IBS3002 Logistics & International Trade Chapter Packaging for export & material handling Contemporary logistics, Murphy (2015) & International logistics, Pierre David (2011) Topic areas Introduction to Packaging Packaging for Each Mode of Transportation Security Hazardous Goods Refrigerated Goods Packaging as a Marketing Tool Material handling 9/23/2020 Product characteristics Various product characteristics can influence packaging and materials handling considerations Physical characteristics: + Substances forms – solid, liquid, gas + Ability to withstand exposure to elements (rain, freezing conditions) + Product density (weight per volume) + Respiration Chemical characteristics: + Incompatible products (products emitting ethylene) + Products requiring chemicals for its delivery Product characteristics The various properties of goods must also be made known to consumers to help them make the correct buying decision and care for the product properly 9/23/2020 Packaging fundamentals Packaging refers to materials used for the containment, protection, handling, delivery and presentation of goods Building-blocks concept: a very small unit is placed into a slightly larger unit, which then might be placed into a larger unit, and so on The building-blocks hierarchy is important to remember because each of the different building blocks is inside another, and their total effect should be to protect the product Three packaging fundamentals that organizations should be aware of: functional trade-offs, package testing and monitoring, labeling Packaging fundamentals – Functional trade-offs Packaging has three functions: • It protects the goods during transport • It allows the handling of goods without damage • It is part of the customer service strategy of the firm: good packaging reflects positively on the exporter’s firm Although the costs of packaging generally increase as the protection of the goods increases, it is important to remember that insurers will deny damage claims if they observe improper packaging Packaging is always the responsibility of the exporter, regardless of the Incoterms® rule used in the transaction 9/23/2020 Packaging fundamentals – Packaging testing & monitoring A package system requires types of information to design: - The severity of the distribution environment - The fragility of the product to be protected - The performance characteristics of various cushion materials The packages are subject to tests that attempt to duplicate all the expected various shipping hazards: vibration, dropping, horizontal impacts, compression, overexposure to extreme temperatures or moisture, and rough handling Packaging fundamentals – Labeling Packaging labeling occurs at the end of the assembly line This is a key point for control because it consists of: + Retroflective labels + Batch numbers + Weight + Specific content + Instructions for use + Information to allow passage through customs + Compliance labeling + One-or two- dimensional bar codes + Smart labels or RFID labels 9/23/2020 Packaging fundamentals – Labeling Packaging fundamentals – Labeling Hazardous materials: + Governmental regulations address labeling of hazardous materials + Requirements involve: - labeling - packaging and repackaging - placing warnings on shipping documents - notifying transportation carriers in advance + Globally Harmonized System of Classification and Labelling of Chemicals (GHS) is a global system to classify and label hazardous materials 10 9/23/2020 Packaging terminology • Primary packaging is what the final consumer sees • Secondary packaging is what the retailer/wholesaler handles • Tertiary packaging is what is used for transportation 11 Packaging terminology – Tertiary packaging There are three objectives of proper tertiary packaging: • Protect the goods in transit from mechanical damage: breakage, crushes, nicks, and dents (these perils represent roughly 43 percent of all claims made by shippers to their insurance companies) • Protect the goods from water damage: sea water, rain, floods, and container sweat (15 percent of claims made) • Protect the goods from theft and pilferage (21 percent of claims made) 12 9/23/2020 Ocean cargo packaging Shipments that are small in size and weight can either be full-container-load (FCL) or less-than-container-load (LCL): • An FCL shipment utilizes the entire capacity of a container, whether it is by weight or by volume • An LCL shipment utilizes less than the entire capacity, and is mixed with other goods, so that an entire container can be utilized The other goods are from other shippers, and the remainder of the container is filled by a consolidator or a NonVessel-Operating Common Carrier Shipments of packaged goods that are not placed in a container are called “breakbulk” shipments 13 Ocean cargo packaging FCL ocean cargo should be unitized, so the use of mechanical equipment is necessary to move the goods as 14 a unit Most often, this is done with a pallet 9/23/2020 Ocean cargo packaging Pallets that are well constructed allow the goods to be protected during handling Poorly-assembled pallets (mismatched cartons, no 15 stretch wrap, no corner protection) give a poor image of the exporter Ocean cargo packaging FCL palletized cargo should be prevented from moving in the container by using dunnage or blocking Inflatable dunnage is always 16 of the right size 9/23/2020 Ocean cargo packaging If the cargo does not fill the container completely, the goods should be centered in the container and solidly braced against the walls 17 Ocean cargo packaging FCL Ocean cargo FCL cargo should be loaded according to the following rules: • The center of gravity should be at the center of the container, front-to-back, and side-to-side • The heavier items should be at the bottom • The goods should be braced with blocking or dunnage • The goods should be placed on pallets or dunnage to raise them above the floor of the container (to protect them from water damage) • A desiccant should be used to protect from ambient humidity 18 9/23/2020 Ocean cargo packaging LCL Ocean cargo LCL cargo should be even better protected than FCL cargo The goods are likely to be handled more frequently and be placed near goods that may not have been well packaged LCL cargo should be boxed or crated with strong corners (in case another cargo is placed on top of it), protected from humidity with shrink wrap or stretch wrap, and well marked with handling instructions 19 Ocean cargo packaging Crates and boxes used for LCL cargo 20 10 9/23/2020 Ocean cargo packaging Granite blocks in the port of Sète, France, and on their way from the port to a finishing plant 29 Ocean cargo packaging Breakbulk cargo markings The International Plant Protection Convention (IPPC) mandates that wood used for packing or dunnage be treated with chemicals to prevent insect infestations Marking international shipments with international handling pictorials help protect them from poor handling (they are not language specific), as well as from theft and pilferage 30 15 9/23/2020 Ocean cargo packaging The International Plant Protection Convention (IPPC) mandates that wood used for packing or dunnage be treated with chemicals to prevent insect infestations 31 Ocean cargo packaging Marking international shipments with international handling pictorials help protect them from poor handling, as well as from theft and pilferage 32 16 9/23/2020 Ocean cargo packaging Bulk cargo Bulk cargo (dry or wet bulk) is cargo that is placed directly in the holds of the ship, without packaging of any kind Containerized cargoes and breakbulk cargoes are loaded and unloaded using cranes, one unit at a time In contrast, bulk cargo is loaded and unloaded with continuous methods such as vacuum pumps, conveyor belts, pipes, augers, and so on 33 Ocean cargo packaging Dry bulk cargo (grain) is loaded 34 using a conveyor belt and a chute 17 9/23/2020 Ocean cargo packaging Dry bulk cargo (alumina) can be unloaded using a 35 vacuum pump Air transport Air transport is less hazardous to cargo than ocean transport: nevertheless, cargo should be well protected for air transport Secondary packaging is not appropriate for air shipment because it does not sufficiently protect goods during the flight and airport handling operations, and the commercial markings of the packaging make the goods a tempting target for thieves Air cargo containers are designed to facilitate the loading and unloading of aircraft, and not to act as intermodal containers used in other means of transportation 36 18 9/23/2020 Air transport Air cargo containers are different from ocean cargo containers and only facilitate handling.37 Road and Rail transport Goods will generally travel by road for a portion of their international voyage, but the main international carriage can be by ocean, air, or rail Packaging needs are dictated by the main mode of transportation Rail transportation requires the same level of packaging as ocean transportation; goods are subjected to sudden accelerations and decelerations, as well as exposure to bad weather and changing temperatures Rail companies provide packaging guidelines for shippers 38 19 9/23/2020 Road and Rail transport Container cargo traveling by rail should be as 39 carefully braced as it is for ocean transportation Security Packaging security issues center around pilferage and theft Good packaging security practices include: • Tamper-proof seals on all FCL shipments • Measures designed to hide the nature of the goods being shipped (making secondary packaging “anonymous”) • Measures designed to keep shipment information confidential 40 20 9/23/2020 Security Container seals: the top one is a bolt seal, the bottom one is a wire seal Bolt seals are required for shipments to the United States 41 Dangerous goods Hazardous cargo can be shipped by ocean and by air, but most dangerous goods (flammable, explosive, or toxic goods) are shipped by ocean If they are containerized, they are shipped “above deck” rather than “under deck.” The shipment of dangerous goods by sea is regulated by the International Maritime Organization The shipment of dangerous goods by air is regulated by the International Air Transport Association (IATA) 42 21 9/23/2020 Refrigerated goods Goods requiring refrigeration make up another category of cargo that demands particular care and specialized packaging services Refrigerated goods usually require very specific handling, and therefore, most refrigerated goods travel “alone,” and are not mixed with other refrigerated goods Goods requiring refrigeration are placed in refrigerated containers that are selfpowered, or powered through the ship’s electrical system They can also be placed in refrigerated holds in the ship 43 Security Reefers sometimes include shelves to facilitate air circulation and prevent temperature differences in the unit 44 22 9/23/2020 Security Refrigerated cargo can travel by refrigerated ship; 45 a ship designed to transport fruit juice Retail packaging issues Consumer packages (primary packaging) may need to be different from country to country to accommodate consumer preferences • Packaging Size Consumer preferences dictate packaging sizes: products are smaller in countries in which retail shopping is done frequently, and larger in those in which consumers shop at greater intervals • Packaging Design The customary design of the package for a type of product may be different The color preferences may be different The shape or materials of the package may be different 46 23 9/23/2020 Retail packaging issues Consumer packages (primary packaging) may need to be different from country to country to accommodate legal and environmental requirements • Legal requirements Legal requirements influence the sizes of packages; some countries require multiples of simple metric units (one kg or one liter) • Storage and Transportation Environment There are a number of environmental factors, such as high humidity, heat, or cold, that influence the design and materials used in primary packaging 47 Retail packaging issues Secondary packaging may need to be different from country to country to accommodate trade requirements • Legal requirements Laws may restrict the size of secondary packaging For example weight must be kept below a threshold, so that it can be handled by hand • Storage and Transportation Requirements There may be a standard pallet size that dictates how large a secondary packaging unit must be 48 24 9/23/2020 Packaging as a marketing tool A benefit of a good packaging policy is the goodwill that it generates with the importer, and the marketing benefits that can be derived from it Importers welcomes shipments that arrive packaged carefully enough that they not have to worry about having to challenge invoices or ask for the replacement for damaged goods Good packing enhances the relationship between exporter and importer, and builds trust 49 Unit loads in materials handling A unit load (unitization) refers to consolidation of several units (cartons or cases) into larger units to improve efficiency in handling and to reduce shipping costs Handling efficiency can be facilitated by mechanical devices (pallet jack or forklift) as well as by using a pallet or skid 50 25 9/23/2020 Unit loads in materials handling Advantages • Additional protection • Pilferage is discouraged • More fragile items can be stacked inside the load • Mechanical devices can be substituted for hand Disadvantages • Provides large quantity that sometimes is of limited value to resellers dealing in smaller quantities • Must use mechanical or automated device to move 51 Unit loads in materials handling Basic unit is a pallet or skid - Can be constructed from wood, wood composites, plastic, paper, and metal - Each pallet materials has advantages and disadvantages - Should be less than 50 pounds Pallet or skid alternatives - Slip sheet - a flat sheet of either fiberboard material or plastic, which is placed under the unit load - Shrink wrap - plastic wrapping that when heated shrinks in size to form a cover over the product 52 26 9/23/2020 Unit loads in materials handling Beyond the unit load - Use of load-planning software - Bracing - Inflatable dunnage bags - Load is subjected various forces including: + Vibration + Roll + Pitch - Weighing out 53 Unit loads in materials handling 54 27 9/23/2020 Materials handling Materials handling refers to the “short-distance movement that usually takes place within the confines of a building such as a plant or DC and between a build and a transportation service provider” How the products are handled depends on whether they are packaged or in bulk Handling may change the characteristics of the product 55 Materials handling principles Materials handling principles: - Planning - Space utilization - Standardization - System - Work - Automation - Ergonomic - Environmental - Unit load - Life cycle cost 56 28 9/23/2020 Materials handling equipment Two categories of handling equipment - Storage equipment - Handling equipment + Shelves + Conveyor systems + Racks + Lift trucks + Bins + Carts, cranes The choice of handling equipment can influence the type of storage equipment The choice of storage equipment can influence the type of handling equipment 57 Materials handling equipment Material handling equipment can also be categorized as: - Labor intensive - Mechanized - Automated Sufficient volume is needed to justify high cost of automated equipment An organization’s order picking and assembly system can also influence the type of handling equipment - Picker-to-part systems - an order picker goes to where a product is located - Part-to-picker systems - the pick location is brought to the picker 58 29 ... including: + Vibration + Roll + Pitch - Weighing out 53 Unit loads in materials handling 54 27 9/23/2020 Materials handling Materials handling refers to the “short-distance movement that usually takes... of handling equipment can influence the type of storage equipment The choice of storage equipment can influence the type of handling equipment 57 Materials handling equipment Material handling. .. hazardous materials 10 9/23/2020 Packaging terminology • Primary packaging is what the final consumer sees • Secondary packaging is what the retailer/wholesaler handles • Tertiary packaging is