The aim of every exporter must be to ensure that the goods arrive safely in the hands of the consumer. The fact that the goods are fully insured is in excuse for not bothering to check whether damage or pilferage occurs during the transit. Whilst the payment of the insurance claim may satisfy the buyer financially, it will not satisfy him mentally. The buyer orders the goods because he can sell them, before the vessel arrives. If he receives only a part of what he has handed in a salable condition, he will probably lose the goodwill of his customers and, in consequences, will blame the exporter.
Distinction Between Packing and Packaging
There is distinction between the terms export packing and packaging. Packaging refers to the job of providing specialized containers for the packing of goods. Packing is used for the general operation of putting goods into containers for shipment and storage,i.e., transportation. Often, the only criterion used is that goods shall be packed so that they can leave the works in a satisfactory condition, without regard to their condition on arrival. Packing and packaging require serious consideration where goods are to be transported or stored in a warehouse either for transshipment or distribution. The aim should be to deliver the goods to the customers as cheaply as possible and when he wants them, in a good and usable condition. The type of packaging is dependent to some extent upon the type and mode of transport used.
Bad or insufficient packing affects both the exporter and the buyer and probably, in the long run, the exporter more than the buyer. A part form the loss of customers, the exporter will suffer because the marine insurance company will increase its premium for him, if there is an undue number of claims: Moreover, the exporter will have difficulty in getting clean bills of lading; and if his packaging are very bad, he may find it difficult to persuade the shipping company to accept his goods at all.
Objectives of Sound Export Packing
(i) To insure the safe arrival of goods at destination. The type of packing which will deliver the commodity in a good condition to the foreign customer will vary with:
- The product;
- The port of destination;
- The length of journey;
- The climate of the place of delivery;
- Heat and moisture to which the goods are subjected during the voyage.
Only experience and experimentation will prove or enable the exporter to develop the type of container or packing that is best suited to the particular conditions.
(ii) To economize on the shipping space. Ocean shipping space is expensive and unless care is taken to ec0nomize on this space, it can often be as costly to the exporter as the space actually occupied by the merchandise itself. Only ingenuity and engineering applied to that end will produce the most satisfactory results.
(iii) To save expense by use of economical packing materials. It sin not always necessary or even desirable to use heavy materials or to use first grade materials. As matter of fact, great advances have been made in the use of heavy paper cartons, and some exporters. Have found that certain products can be successfully shipped overseas in these cartons.
(iv) To prevent pilferage. General safeguard against pilferage is to pack the goods securely and to put on the case nothing that will announce the character of its contents to the intending pilferer.
(v) To insure the lowest possible customs duties. The basic rules to insure goods export packing are:
- He should ask from the customers for complete instructions: how to pack his order, what conditions it must withstand during the voyage, whether the packing will affect the duties to be levied on the shipment. He should then supplement this with advice form the shipping agents and from information gathered from official reports.
- He should institute test in the factory to determine the strength of the various styles of packing and should ask the customer to fill out a slip reporting the condition in which the goods are received by him. Such a system, with the results tabulated and kept on office record cards, will quickly and surely culminate and difficult that packing might present.
Factors to be Considered in Export Packing
- Strength. Container must be employed that will hold together during the entire journey.
- Climate. Climate as a factor influences packing, and is specially important in the case of articles which are readily affected by heat and moisture. Not only is it essential of for the exporter to know the climate of the country for which the shipment is destined, but he must be informed as to the route which the carrier of the shipment will take. One of the common methods of protecting merchandise from adverse climatic conditions is by lining the case, box, or other container with waterproof paper. Additional protection may be obtained by placing the articles themselves in a waterproof wrapper, thus providing two layers of waterproofed paper. Such goods as biscuits and crackers destined for a tropical market call for a special care to be exercised for protection form moisture. An extreme example is the careful packing of tea, which must be packed not only against the usual climatic perils but must also be tightly sealed so as prevent if from absorbing odors and smells from the surrounding cargo.
Transport and Export Packing
The exporter who wishes to keep transportation charges to the minimum must consider both the weight of his shipment and the space it occupies. Ocean freight rate are usually quoted for “weight or measurement, at the ship’s option”, and the basis which yields the higher revenue is applied. Since in any vessel only a fixed amount of space is available for cargo, many ocean shipment are is fact charged on the basis of the space occupied by them.
Shipments of large and irregularly shaped articles, such as machines of various types, may be reduced in bulk by dis-assembly. Articles of uniform shape may sometimes be nested, resulting in savings in the cost of crating materials as well as of shipping charges. Many types of merchandise may be compressed into bales.
Custom Duties and Packing
The manner in which merchandise is packed may materially affect the customs duties levied on it. Before preparing his goods for shipment, the exporter should inform himself of the customs regulations applicable in the country of destination. Generally speaking the weight of the unit is of major importance. If the “gross weight” is applied as the basis for import duties, excessive weight becomes unnecessarily costly. When “net weight” is the basis, heavy outside packing does not affect the import duty.
Marine Insurance and Export Packing
Marine insurance companies are naturally interested in export packing methods since it is to their advantage to reduce to the minimum the damage which goods may suffer in transit. These companies are usually glad to extend advice based on their long experience. One of the most fundamental factors taken into consideration by marine insurance companies when quoting rates for specific shipper is the latter’s record of loss and damage on his export shipments. If an export concern, in consequence of faculty packing or other causes, experiences a consistently high degree of breakage, pilferage, nondelivery because of improper marking and other losses resulting in marine insurance claims, there is little question that it will be obliged to pay higher premiums for its marine insurance. If damage is heavy and can be prevented but no steps taken to terminate the cause of loss, the insurance company may well refuse to extend further protection. On the other hand, if a company packs its export goods properly and thus creates a good record with its marine insurance company, the latter will quote the most favorable rates for it.