International Trade Practice

1

Chapter Four
Packing and Marking
? the importance of packing and marking in
international trade ? the functions of packing ?
the different types of packing and marking and
their uses ? how to make shipping marks ? how to
draft the packing clause of the contract
At the end of this chapter, you should be able to
understand
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The Contents of Chapter 4
4.1 Functions of Packing 4.2 Types of
Packing 4.3 Product Code 4.4 Neutral
Packing 4.5 Marking of Goods 4.6 Packing
Clause of the Sales Contract
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• 1. Why should commodities be packed?
• 2. How are cargoes classified?
• 3. What are the main types of packing?
• 4. What are the main types of marking?
• 5. What should be considered in packing the
  goods?

Questions
4
Overview

• Packing is one of the important ways to realize
  the value of commodities. It protects and
  prettifies commodities and forms an important
  process in the storage, transportation, and sales
  of commodities. In international trade, packing
  is also decisive in identifying commodities.
  Hence, packing is one of the key terms in
  business communication and
• negotiation.
• In addition, shipping marks, indicative and
  warning marks play an important role in
  identification and proper handling of commodities
  during transportation and
• process of loading and unloading.

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4.1 Functions of Packing

• ? primary functions
• secondary functions
• tertiary functions.

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Protective Function
Storage Function
1. Primary Functions
Loading and Transport Function
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Sales Function
Promotional Function
2. Secondary Functions
Service Function
Guarantee Function
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3 Tertiary Functions

• Additional FunctionParticularly relate to the
  extent to which the packaging materials or
  packaging containers may be reused once the
  package contents have been used. The most
  significant example is the recycling of paper,
  paperboard and cardboard packaging as waste
  paper.
• 2) Labeling Function
• Labels are often required by law and they
  perform several functions. A label can identify
  the product or the brand. It might grade the
  product, describe it, list its content, provide
  warnings, tell how to use it, such as with
  cleaners and pesticides, and promote the product
  using attractive and recognizable graphics.

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Factors Influencing the Nature of Packing
Factors Influencing the Nature of Packing

• 1. Value of the goods
• 2. Nature of the transit
• 3. Nature of the cargo
• 4. Compliance with customs or statutory
  requirements
• 5. Resale value of packing material
• 6. General fragility of cargo
• 7. Variation in temperature during the course of
  transit
• 8. Ease of handling and stowage
• 9. Insurance acceptance conditions
• 10. Cost of packing

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Considerations in packing goods

• 1) The nature of the goods, such as their
  fragility, value, hazardous nature, propensity
  to suffer from damp and so on.
• 2) The nature and duration of the transit and the
  various modes of transport to be used during that
  transit.
• 3) The cost of packaging in the budget.
• 4) Climatic conditions likely to be encountered
  en route.
• 5) Regulations of the importing country with
  regard to packing materials and marking.
• 6) The packaging should meet the needs of the
  consumers of the importing country in terms of
  culture.
• 7) Letter of credit or other contractual
  requirements of the buyer, carrier or insurer.
• 8) The increase in freight which arises from
  packing.
• 9) If the goods are containerized, an important
  consideration is whether the goods will go
  door-to-door in a single movement as a full
  container load (FCL) or whether they constitute
  less than a container load (LCL).

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Improvements needed to be more competitive

• The Standard of packing
• ? More favorable cargo insurance premium
• ? Good relations with importers
• The utilization of transport capacity--- keep
  broken stowage to
• minimum
• ? Reduce cost of distribution
• ? Reduce risk of damage
• Design of cargo packing--- facilitate the most
  economic method of handling
• The packing cost
• ? Cost minimized but packing adequate
• ? Each overseas sales contract considered
  individually---modes
• of transport, types of commodities and
  transit routing

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Recommendations

• Packed in strong containers, adequately sealed
  and filled
• Provide proper bracing, and make sure the weight
  is evenly distributed
• Packed in oceangoing containers or on pallets to
  ensure greater ease in handling
• Packages and packing filler made of
  moisture-resistant material
• To avoid pilferage, avoid mentioning contents or
  brand names on packages. Strapping, seals and
  shrink wrapping are effective means of deferring
  theft.

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Cargoes
Cargoes fall into three groups

• ? bulk cargoes or cargoes in bulk like wheat,
  mineral ore, coal, etc.
• Nude cargoes like plants, vehicles, bronze or
  steel plates or blocks.
• Packed cargoes all the other cargoes

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4.2 Types of Packing

• Transport packing
• (outer packing or big packing )
• Sales packing
• (inner packing, small packing
• or immediate packing

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Transport Packing
unit outer packing
assemblage outer packing
????
????
wooden case, crate, carton, corrugated carton,
iron drum , wooden cask gunny bag, cloth
bag , plastic bag, can, paper bag, bundle, bale
, carboy basket bottle, cylinder, demijohn
container, pallet, flexible container

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• Unit Outer Packing

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Assemblage Outer
Packing
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Checklist for the Planning of Transport Packing
for Export
Transportation requirements

• Are the climatic conditions throughout the
  transportation cycle known?
• Has the package been constructed to protect its
  contents against climatic hazards such as
  weather, humidity, changes of temperature, etc.?
• Are the handling methods, number of reloadings,
  equipment used etc., throughout the
  transportation cycle known?
• Has the package been constructed to withstand
  shocks during transport and strain during
  storage?
• Has the package used for the domestic market also
  been used for export?
• Can the same export package be used for all
  export destinations and ways of transportation?
• Have all different ways of transportation (sea,
  air, road, rail ) and their technical and
  economic effects on the construction of the
  transport packing been studied?
• Has the effect of palletization and
  containerization on the construction and economy
  of the transport packing been studied?
• Have the standards, laws and regulations
  affecting transport packing in the target markets
  been observed?

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2 Product requirements

• Is the product designed to be easily packed for
  transport?
• Are changes in product design possible to adapt
  it to the transport packing?
• Does the product need extra protection to keep
  its properties in the form of
• Anti-corrosive agents?
• Protection against contamination?
• Shock-absorbing materials?
• Protection against rodents, insects, mould,
  etc.?

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3 Distribution requirements

• What kind of transport packing do your
  competitors use and why?
• Is there any particular trend to be observed that
  will entail changes in the near future?
• Have the importers/wholesalers/retailers
  opinions been ascertained on
• Quality standards?
• Packaging sizes and weights?
• Closure methods etc.?

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Sales Packing

• ? suspensible packing,
• ? transparent packing,
• ? portable packing,
• ? gift packing, etc.

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4. 3 Product Code

• An encoded set of lines and spaces that can be
  scanned and interpreted into numbers to identify
  a product.
• Two main bar codes internationally
• UPC (Universal Product Code USA)
• EAN (European Article Number)

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4.4 Neutral Packing

• The packing that does not show the name and
  address of the manufacturer, the origin of
  country, the trade mark and brand.
• ? breaking through different limitations and
  political
• discriminations of importing countries and
  regions
• ? breaking through the tariff and non-tariff
  barriers of
• some importing countries or regions, to
  meet the special
• demand of the transaction (such as
  entrepot)
• ? helping the manufacturers in the exporting
  countries to
• increase the competitiveness of their
  products and
• expand the exports.

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4. 5 Marking of Goods

• Various types of Marks

• Shipping Mark(????)
• Indicative Mark(?????)
• Warning Mark(?????)
• Identification Mark(????)

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Shipping Mark
Not only stenciled on the transportation packing
of cargoes but also appear on the invoices,
insurance documents, B/L and other documents.
LP
Abbreviations of consignees or buyers Name
of the unloading port Package No.
SAN FRANCISCO NO.1/100
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General requirements for stenciling shipping
marks

• It is not advisable that shipping marks be
  designed to be complicated. They should be simple
  and clear and easy to be identified.
• The position should be proper, and the color
  should be durable.
• No advertising propaganda words and pictures are
  allowed to be inserted into the marks.

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The standardized shipping marks consist of the
following four parts.

• 1) Abbreviations of consignee or buyer. The
  abbreviation is used instead of the full name of
  the customer to reduce the risk of pilferage as
  potential criminals or receivers cannot easily
  relate the contents.
• 2) Reference number. It can be the number of
  sales confirmation, order, or letter of credit.
• 3) Port of destination
• 4) Package number. The shipper should list in the
  shipping mark the total number of the whole lot
  of consignment and the number of the individual
  packages consecutively, so as to convenience the
  verification of each individual package of the
  whole patch.

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Sample shipping mark
one of the important description on the Bill of
Lading, Invoice and Packing list.

• WSG Name of
  consignee or buyer
• S/C NO.200801108 Contract number
• HAMBURG Port of
  destination
• NOS.1-200 Package number

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Do you know

• Generally shipping marks are made by
  exporters. The parties need not discuss this
  matter while negotiating the contract. But the
  shipping mark must appear in shipping documents.
  Should the shipping mark be made by the importer,
  the seller should get it sometime before the
  shipping documents are made, and also, the marks
  must be identical with that designated by the
  buyer, especially under the payment of L/C.

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Indicative marks

• The symbols or words that indicate the nature
  of the contents of the package and give
  instructions to facilitate the smooth handling of
  the cargo that needs special care.

Fragile, Handle with care
Center of gravity
Protect from heat and radioactive sources
Keep dry
Stacking limitation
Use no hooks
Do not use forklift truck here
This way up
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Warning marks

• Reminding the cargo handlers to take
• necessary safety measures.

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Identification Mark

• (Subsidiary Mark)

07CL H08
??? ART.NO. 904A
?? COLOUR NAVY/GREY
?? SIZE
???? N.W. 11.3KG
?? G.W. 16.4KG
?? MEAS.
45.55255.5cm ?? MADE IN CHINA
????
36 37 38 39 40 41 1 1 2 3 3 2
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Marking of cargo---marking requirement

• Use recognized international cargo marking
  symbols
• ? Help identify the cargo
• ? Enhance the chances of acceptance by
  foreign authorities
• Make marks visible
• Make marks legible
• ? English
• ? The size
• ? In capitals
• Make marks indelible

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• ABC
• S/C0753
• BOMBAY
• 1/38

150KG Made in UK
Sample
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6. Packing Clause of the Contract

• 1. To be packed in new strong wooden cases /
  cartons suitable for long voyage and well
  protected against dampness, moisture, shock, rust
  and rough handling. The Seller shall be liable
  for any damage to the goods due to improper
  packing and for any damage attributable to
  inadequate or improper protective measures taken
  by the Seller. In such case all losses and/or
  expenses incurred shall be borne by the Seller.

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• 2. Packing must be suitable for ocean shipment
  and sufficiently strong to withstand rough
  handling. Bales must be press-packed and hooped
  with adequate inside waterproof protection and
  the outer wrapping must comprise good quality
  canvas. Cases or other outside containers must be
  externally of the smallest cubic dimension
  consistent with adequate protection of the goods.
  Packages must bear full marks and shipping
  numbers stenciled in good quality stencil ink in
  large plain characters on two sides and one end
  of each package. All bales must be marked use no
  hooks.

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• 3.Each set packed in one export carton, each 810
  cartons transported in one 40ft container

4. To be packed in double polythene bags of 20
kgs net, overpacked with a carton
5. Each package shall be stenciled with gross and
net weights, package number, measurement, port of
destination, country of origin and the following
shipping mark
99ZHPC-0802 SHANGHAI
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Considerations in drafting clause of packing

• The specifications should be clear and avoid
  ambiguous phrases
• Consider statutory requirements
• Specify the party who is to bear the packing
  charges
• The quantity or weight for each package
• Specify shipping marks

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Follow-up Practice

• 1. Review and Discussion Questions
• 1) What is the significance of packing in
  international sales of goods?
• 2) How is packing of goods classified in
  international trade? What are some of the major
  functions of each type of packing?
• 3) For some commodities, why are indicative and
  warning marks necessary in international trade?
• 4) Why are shipping marks important in
  international cargo transportation? Please
  describe the standardized form of shipping mark
  suggested by ISO?
• 5) What is neutral packing? What is it used in
  international trade?
• 6) What is a product code? Can you describe
  briefly about UPC and EAN?
• 7) Why do the exporter and importer need to
  explicitly stipulate the packing clause in the
  sales contract?

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2. Choose the right answer from each of the
following.

• 1)________ , usually made of jute, are suitable
  for transporting such cargoes as
• cement, fertilizer, flour, oil cakes, animal
  feeding products, chemicals, etc.
• A. Bales B. Sacks
  
• C. Cartons D. Cases
• ________ are a kind of portable platforms
  intended for handling, storing, or moving
• materials and packages
• A. Flexible containers B. Large
  metal containers
• C. Corrugated boxes D. Pallets
• 3) ______ acts as a silent salesman.
• A. Shipping packing B. Shipping
  mark
• C. Sales packing D. Neutral
  packing
• 4) Neutral packing is chiefly used for
  _______different limitations and political
• discriminations of importing countries and
  regions.
• A. opening B. setting
  up
• C. setting aside D. breaking
  through
• 5) _______ is composed of a specific geometric
  figure, abbreviations of consignee, the port of
• destination and the package number.
• A. Shipping mark B. Indicative
  mark
• C. Warning mark D. No mark

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• 6) _______ , also called dangerous cargo marks,
  are used to remind the cargo
• handlers to take necessary safety measures.
• A. Indicative marks B. Warning
  marks
• C. Shipping marks D. Sales
  packing
• _______ is also called linear code which refers
  to the electronic identification code attached on
  the commodities.
• A. Tested Code B. UCP C.
  UPC D. ICC
• 8) _______ should clearly stipulate the packing
  material, manner of packing, packing
  specification, packing expenses to be borne,
  shipping marks and so on.
• A. Quality clause B.
  Quantity clause
• C. Shipment clause D. Packing
  clause
• 9) According to international trade practice,
  shipping marks are usually designated by
  _________ and it is not necessary to specify them
  in the contract.
• A. the importer B. the
  exporter
• C. the carrier D. the
  forwarder
• 10) ________ are mainly used for transport
  packing of fragile and perishable goods.
• A. Warning marks B. Shipping
  marks
• C. Indicative marks D.
  Subsidiary marks

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3. Decide whether the following statements are
true or false.

• 1) The primary functions of packing primarily
  concern the technical nature of the packing. (
  )
• 2) Transport packing is not only adopted as a
  form of protection to reduce the risks of goods
  being damaged in transit and prevent pilferage,
  but also used for the propose of promoting sales.
  ( )
• 3) UPC and EAN are the two main bar codes used
  internationally. ( )
• 4) Neutral packing is a kind of packing which
  only shows the origin of country and doesnt show
  the name and address of the manufacturer. ( )
• 5) Shipping marks are not only stenciled on the
  transport packing of cargoes but also appear on
  the commercial documents such as invoices,
  insurance policy or certificate, bills of lading,
  etc. ( )

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• 6) Marks are generally classified into shipping
  mark, indicative mark and warning mark. ( )
• 7) ISO has suggested a standardized form of
  shipping mark, which is composed of a specific
  geometric figure, abbreviations or initials of a
  consignee, the port of destination and the
  package number. ( )
• 8) Requirements for shipping marks for road,
  railway and air transport are the same as those
  for ocean transport. ( )
• 9) Generally speaking, the packing expenses are
  included in the price, and shall be borne by the
  exporter. ( )
• 10)In international sales of goods, seaworthy
  packing, customary packing and sellers usual
  packing are commonly used in the packing clause.
  They are favorable for the seller. ( )

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Case Study
A Chinese importer purchased some flammable
liquid chemical raw material from a French
exporter. When the shipment arrived at the
destination, it was found that there was a slight
leakage caused by the defect in a few packages.
However, the Chinese importer failed to take any
measures to save the loss and prevent the damage
from expanding. As a result, the leakage worsened
after the warehousing of the goods and led to a
self-ignited fire. Afterwards, the Chinese
importer lodged a claim against the French
exporter for full compensation of the total loss,
but was refused.

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Case Study

• A Chinese company concluded a sales contract
  with a European buyer. The packing clause stated
  packed in cartons of 15kgs each, 15 boxes of
  1kgs each in a carton, When delivering the
  goods, the company had to employ different
  packages, because there was a shortage of goods
  with this small packing. The goods packed in
  cartons of 15kgs each, 30 boxes of 0.5kgs each in
  a carton were delivered. When the goods arrived,
  the buyer refused to take the delivery on the
  ground of discrepant packing. But the Chinese
  company held that the buyer should make the
  payment because the quantity was consistent with
  that in the contract. Who do you think should be
  responsible for it? How should it be settled?

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http//www
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www.china-gb-bz.com??????? 5.http//www.tradehr.co
m????? 6. http//www.biaozhi.net?????

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THE END
Thank You !