Physical distribution, often referred to as logistics, is the means by which goods are moved from the manufacturer in one country to the customer
in another. This section discusses two vital aspects for which the importer/exporter should have an appreciation: shipping and packing.
Shipping
An import /export business can directly arrange its own land, ocean, and air shipping of international cargo. Inland transportation is handled in much the same way as a domestic transaction, except that certain export marks must be added to the standard information shown on a domestic bill of lading. Also the inland carrier must be instructed to notify the ocean or air carrier.
Water Transportation
There are three types of ocean service: conference lines, independent lines, and tramp vessels. An ocean conferenceis an association of ocean carriers joined together to establish common rates and shipping condi- tions. Conferences have two rates: the regular tariff and a lower con- tract rate. You can obtain the contract rate if you sign a contract to use conference vessels exclusively during the contract period. Independent linesaccept bookings from all shippers contingent on the availability of space. They are often less expensive than conference rates. An inde- pendent usually quotes rates at about 10 percent lower than a confer- ence carrier in situations where the two are in competition. Tramp vessels usually carry only bulk cargoes and do not follow an established sched- ule; rather, they operate on charters.
Regardless of the type of carrier you use, the carrier will issue a booking contract, which reserves space on a specific ship. Unless you cancel in advance, you may be required to pay even if your cargo doesn’t make the sailing. You must be insured with ocean marine insur- ance. An insurance broker or your freight forwarder can arrange this for you.
Marine insurance.Insurance that will compensate the owner of goods transported on the seas in the event of loss that would not be legally recovered from the carrier. Also covers air shipments.
Air Transportation
Air freight continues to grow as a popular and competitive method for international cargoes. The growth has been facilitated by innova- tion in the cargo industry. Air carriers have excellent capacity, use very efficient loading and unloading equipment, and handle standardized containers. The advantages are (1) the speed of delivery, which gets perishable cargoes to the place of destination in prime condition;
(2) the ability to respond to unpredictable product demands; and (3) the rapid movement of repair parts.
Air freight moves under a general cargo rate or a commodity rate.
A special unit load rate is available when approved air shipping containers are used.
Land Transportation
Transportation over land has become less regulated and, therefore, more competitive and efficient. The largest import /export market (NAFTA) can be served directly by road and rail. Importers and exporters look primarily to land transportation to move their goods to the nearest port of departure or as one leg of a sea, land, or air combination often referred to as intermodalism.
Intermodalism
The movement of international shipments via container using sequential transportation methods is the system of the future. The concept makes use of the most efficient and cost-effective methods to move goods.
Load Center This concept stimulated the sophistication of today’s intermodal world. As ships grew to hold more containers, they became more expensive to operate. One way to reduce costs was to hold down the number of port calls. In order to fill the ships at fewer ports, the cargo has to be funneled into these load centers. The simplification and organization of movements of cargo has become the fair-haired child of transportation specialists. An entirely new set of terms has developed around the concept.
Bridges A microbridgeis the routing of a container to or from any- where in the United States to or from any port. A minibridgemoves a container that originates or terminates in a U.S. port other than the
one where it enters or leaves the country. A land bridgeoff-loads a con- tainer at any U.S. port, ships it cross-country by rail, and then reloads aboard a vessel for final movement to a foreign destination. RO/RO refers to the roll-on/roll-off capability of containerized cargo, which is the foundation of intermodalism.
An example of intermodalism might be a container of goods origi- nating in Europe but destined for Japan. It could be rolled off a ship by truck and then onto a train in Newport News, Virginia (RO/RO), where it would be joined by another container trucked in from Florida, (minibridge) also destined for Japan. The containers would then be moved across the United States (land bridge) then rolled off the train and onto a ship in Long Beach, California, which would complete the movement to Tokyo. Figure 5.9 illustrates the intermodal concept.
H O T T I P
I
f the details of transpor tation and all the new-fangled ideas are not for you, then see your nearest freight forwarder (discussed in Chapter 7).Figure 5.9 Intermodal Concept
Load center port
To Japan
Land bridge
Inland city
Minibridge Load center port
Nonload center port
Microbridge From
Europe
Packaging and Marking for Overseas Shipment
Whether importing or exporting, your product(s) must travel thousands of miles undamaged. Your package must be protected from breakage, dampness, careless storage, rough handling, thieves, and weather. Insur- ance might cover the loss, but lost time and the ill will of your overseas trading partner are a high price to pay. It has been estimated that as much as 70 percent of all cargo loss could be prevented by proper pack- aging and marking.
An excellent source for all aspects of packing and packaging is the Modern Packaging Encyclopedia, published annually by McGraw-Hill, New York.
Breakage Ocean shipments are often roughly loaded by stevedores using forklifts, slings, nets, and conveyors. During the voyage, rough water and storms can cause loads to shift and sometimes crash into other containers. Even small packages sent through the mail can be squeezed, thrown, or crushed.
Assume the worst when packaging for overseas delivery. Use stronger and heavier materials than you would for domestic shipments. On the other hand, don’t over pack—you pay by weight and volume. For large ocean shipments consider standardized containers that can be trans- ferred from truck or rail car without being opened.
Pilferage ( Theft) Use strapping and seals and avoid trademarks or content descriptions.
Moisture and Weather The heat and humidity of the tropics as well as rainstorms and rough weather at sea can cause moisture to seep into the holds of a ship. From that moisture comes fungal growths, sweat, and rust. Waterproofing is essential for most ocean shipments.
Consider plastic shrink-wrap or waterproof inner liners, and coat any exposed metal parts with grease or other rust inhibitors.
Marking (Labeling) Foreign customers have their needs, shippers have theirs, and terminal operators have theirs. Each will specify cer- tain marks (port, customer identification code, package numbers, and number of packages) to appear on shipments. Other markings such as weight, dimensions, and regulations that facilitate clearing through customs can be specified. Figure 5.10 is a sample of markings.
Checklist for Shipping
• Write your customer’s name and address or shipping code on the package.
• Use black waterproof ink for the stencils.
• Include port of exit and port of entry on your label.
• Don’t forget to include package and case number.
• Include dimensions (inches and metric).
• Mark exports “Made in U.S.A.” and so on, so that the package will get through customs in most foreign countries.
• Express gross and net weight in pounds and/or kilograms.
Figure 5.10 Example of Markings
Shipper’s marks
Handling marks
Tokyo 7235
Receiver’s mark
Port of entry Destination
and order number Via Yokohama
Made in U.S.A.
Country of origin
Weight markings
Number of packages
and size of case Case no. 1
35× 25 × 15 in.
Gross 45 Lbs.
Net 40 Lbs.
• Don’t forget cautionary markings such as, “this side up” or “handle with care” in both the language of origin and the language of destination.
• Don’t use brand names or advertising slogans on packages.
• Any shipments that carry explosives or volatile liquids must conform to local law and international agreements.