Chapter Four

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:

2. 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

3. 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.

5. 4.1 Functions of Packing  primary functions • secondary functions • tertiary functions.

6. Protective Function Storage Function 1. Primary Functions Loading and Transport Function

7. Sales Function Promotional Function 2.Secondary Functions Service Function Guarantee Function

8. 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.

9. 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

10. 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).

11. 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

12. 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.

13.  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 Cargoes Cargoes fall into three groups:

14. 4.2 Types of Packing • Transport packing (outer packing or big packing ) • Sales packing (inner packing, small packing or immediate packing

15. Transport Packing unit outer packing assemblage outer packing 单件包装 集合包装 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

16. Unit Outer Packing

17. Assemblage Outer Packing

18. 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?

19. 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.?

20. 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.?

21. Sales Packing  suspensible packing,  transparent packing,  portable packing,  gift packing, etc.

22. 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)

23. 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.

24. 4. 5 Marking of Goods Various types of Marks Shipping Mark（运输标志） Indicative Mark（指示性标志） Warning Mark（警告性标志） Identification Mark（识别标志）

25. 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

26. 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.

27. 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.

28. one of the important description on the Bill of Lading, Invoice and Packing list. Sample shipping mark WSG Name of consignee or buyer S/C NO.200801108 Contract number HAMBURG Port of destination NOS.1-200 Package number

29. 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.

30. 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

31. Warning marks Reminding the cargo handlers to take necessary safety measures.

32. Identification Mark (Subsidiary Mark) 07CL — H08 合同号 ART.NO. : 904A 货号 COLOUR : NAVY/GREY 色泽 SIZE : 尺寸搭配 N.W. : 11.3KG 净重 G.W. : 16.4KG 毛重 MEAS. :45.5×52×55.5cm 尺码 MADE IN CHINA 生产国别 36 37 38 39 40 41 1 1 2 3 3 2

33. 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

34. ABC S/C0753 BOMBAY 1/38 150KG Made in UK Sample

35. 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.

36. 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”.

37. 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

38. 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

39. 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?

40. 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

41. 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

42. 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 doesn’t 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. ( )

43. 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 “seller’s usual packing” are commonly used in the packing clause. They are favorable for the seller. ( )

44. 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.

45. 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?

46. Web Links http://www 1. http: // www. cnexp.net 中国出口精英网 2. http: // news.pack.net.cn 中国包装网 3. http://www.chinesewto.net/company/hs/hs.asp WTO中文网 4.http: // www.china-gb-bz.com中国标准标志网 5.http://www.tradehr.com外贸英才网 6. http://www.biaozhi.net中国标志网

47. THE END Thank You !