Packaging and Unit Loads

Photo courtesy of Reliant Institute of LogisticsOpens in new window Almost all the products flowing through logistics networks are packaged, mainly to promote or protect the product. The former goal is achieved by one type of packaging referred to as interior or packaging. This packaging is brightly colored and contains marketing and promotional materials. Although the exterior or industrial packaging is the plain box or pallet that includes basic information about the item for organizations, it is designed to protect the product and make its handling easier.

Packaging is an essential aspect of logisticsOpens in new window and transportationOpens in new window. It fulfils a number of critical functions in the logistics supply and distribution process. In general, the main reasons for packaging goods can be summarized as follows:

Products may also be packed at different levels.

1. Primary or elementary packaging creates the smallest handling unit of any system, enclosing the product directly and keeping it unchanged throughout the logistics network.
2. Secondary or compounded packaging is created by bundling a number of primary packages together.
3. Finally, similar to secondary packaging, outer packaging takes place to make the handling of products easier. These packages disappear after the products are unpacked at destination points.

Customers may order the products at any of these levels, and the logistics and distribution systems must satisfy their demand cost-effectively. Therefore, the concept of load unitization—storing and handling goods in standard modules—has become a fundamental issue in today’s supply chain networksOpens in new window.

Moving standard unit loads is much easier than moving a variety of products with different sizes and shapes. Thus, smaller logistics units are collected and bundled together to form standard unit loads. Determining the optimal type and size of unit loads decreases both the products movement rates and their loading and unloading times. It also brings the chance of using standard handling and storage equipment to the company, so that it can be set up to work efficiently and be optimally utilized.

Different types of unit loads are designed for application in three basic areas of supply networks:

1. manufacturing,
2. storage, and
3. distribution.

Small containers (such as tote bins), intermediate bulk containers (IBCs), dollies, roll-cages, and box pallets are examples of the most frequently used storage-unit loads. However, the most commonly used storage-unit load is probably the wooden pallet.

Wooden pallets are intended to be made to standard sizes; however, the existence of different standards (e.g., in the United States, the United Kingdom, and continental Europe) caused international movements to encounter some problems.

Moreover, these pallets may also be made of metal or plastic, and they can be two- or four-way, open- or close-boarded, and single- or double-sided. Because these pallets are the most significant unit loads in warehousing, specific storage and handling systems are designed for them.

International Packaging Issues related to the Transportation of Goods

Packaging is of particular importance in international logistics. It is instrumental in getting the right merchandise to the right destination in a safe, maintainable, and presentable condition.

Packaging that is adequate for domestic shipping up rivers and streams or on domestic roads may be inadequate for the rigors of international sea transport and international flights. The motion of the vessel on which it is carried may damage the product (think of fancy computer equipment and delicate computerized parts).

Added stress in international shipping also arises from the transfer of goods from one mode of transportation to another at ports and various other places (the use of cranes, pulleys and other materials-handling equipment is important here).

The responsibility for appropriate packaging rests with the manufacturer and shipper of goods. The US Carriage of Goods by Sea ActOpens in new window of 1936 states:

The shipper must therefore ensure that goods are appropriately prepared for international shipping. This is important because it has been found that “the losses that occur as a result of breakage, pilferage, and theft exceed the losses caused by major maritime casualties, which include fires, sinking, and collision of vessels.’ Poorly packaged goods cost companies millions.

Packaging issues also need to be closely linked to overall strategic plansOpens in new window. The individual responsible for international packaging should utilize various modes of transportation as efficiently as possible.

The weight of packaging must also be considered, particularly when airfreight is used, since the cost of shipping is often based on weight. At the same time, packaging material must be sufficiently strong to permit stacking in international transport vessels.

Another consideration is that, in some countries, duties are levied according to the gross weight of shipments, which includes the weight of packaging.

Obviously, the heavier the packaging, the higher the duties. One needs to use strong lightweight materials rather than heavier materials. The shipper must pay sufficient attention to the customer’s packaging instructions.

Requests that the weight of any one package should not exceed a certain limit, or that the package should be of a specific size, are usually made for a reason. Often they reflect limitations in transportationOpens in new window or handling facilitiesOpens in new window at the point of destination. For example a certain crane might be able to move only a three-ton car and not a four-ton car.

The packaging of a product is often used as a form of display. International packaging thus has to fulfill a dual purpose of both protection and display.

The display aspect of the package is for future use at the point of destination, while the protective purpose is essential to transportation. Packaging should thus be strong inside (for transportation) and attractive outside (for the customers in the marketplace).

One solution to the packaging problem in international logistics has been the development of intermodal containers — large metal boxes that fit on trucks, ships, railroads cars, and airplanes and simplify the frequent transfer of goods in international shipments.

These intermodal containers save the product and make multiple movement from one container to another (an expensive logistical process) unnecessary. In addition, containers offer greater safety from pilferage and damage. (of course if merchandise from a containerized shipment is lost, it is frequently the case that the entire container has been removed or stolen.)

Developed in different forms for both sea and air transportation, containers also offer better utilization of carrier space because of standardization. (Adapted from Czinkota, 1998: 626)