Risks in freight
In the world of goods export, there’s more to risk minimisation than bubble wrap. Here’s how to view your packaging inside and out.
As far as freight mistakes go, Ross Gluer, general manager for the International division at TNT, says he’s seen some disasters stem due to exporters failing to follow simple precautions. One of the most common mistakes concerns boxes stacked crookedly on a pallet. “If they’re not stacked straight, the sides start to collapse, and if they’re too high it breaks its own back,” he says.
Unfortunately, many exporters think the plastic shrinkwrap that covers the pallet will prevent their cargo from suffering this fate, but in fact misaligned boxes will cause the wrap to tear, which leads to the boxes becoming exposed to the elements and at risk of collapse. And if a box does become separated from its peers, you’d better make sure it has been labelled. “If the customer doesn’t have a label on each box in a pallet and they separate, they take those cartons to an unrecognisable, unsendable, unprocessable area and they can just sit there,” explains Gluer.
While the experience of losing a couple of boxes in transit doesn’t sound too bad, Gluer adds that product shrinkage can be catastrophic. “A lot of receivers will only accept goods if they’re all present, they will not accept part delivery. If the other bit can’t be found then the question is, what happens to stuff you still have? Do you send it back, do you hold it? Do customs hold it? Will it incur storage charges? And if a pallet does collapse it’s not only going to be damaged, it’s going to be late,” he says.
It’s the exporter’s inability to deliver the products as promised that has the most significant effect on business, he believes. “People have insurance against damage and you can recover costs one way or another but, as a rule, you can’t recover your reputation.”
Gluer recommends exporters use standard pallets certified for export use, and keep the cargo to a manageable height; a 1.2 x 1.2-metre pallet should only be stacked to 1.2 metres to form a cube. “Keeping a fairly even height to width ratio means it is most likely not to get damaged, and it’s likely to stay dry because the shrinkwrap won’t be pulled around or torn,” Gluer explains.
And invest in decent packaging, don’t have it as an afterthought. “Don’t get skimpy,” says Gluer. “Build it in on day one. Don’t think, ‘I’ve done all my costings, gosh, I need another two to three percent for packaging’. Get it right from day one in the commercial considerations.”
Part and parcel
Another risk in packaging involves legal compliance and suitable marketing, which is especially important for people who sell to consumers in the international market. Exporters should firstly ensure that the physical packaging meets the requirements of the destination country; for example, food packaging needs to meet food grade standards of the market, which may be different from Australia’s.
Additionally, labels need to meet market requirements, says Ian Harrison, CEO of the Australian Made, Australian Grown (AMAG) Campaign: “You just need to be aware of the labelling claim requirements in the country where the product is being sold.”
Having the packaging and labelling right before entering a market is a key part of becoming export-ready, he advises. “All these things—packaging, compliance matters, costings, distribution arrangements, logistical arrangements—really do need to be considered and done properly before a business simply starts to spend money or export product.”
Exporters thus need to be aware of any difference in terminology between Australian indicators and other markets. Harrison gives the example of the USA, where ‘Product of’ and ‘Made in’ do not correspond to their Australian counterparts: “‘Made in America’ is a very high level of compliance similar to that of ‘Product of Australia’, whereas ‘Product of America’ is a lower category much the same as when we use ‘Made in Australia’, where there can be something like 50 percent of imported product,” he says. “The most important thing for an exporter to have in mind is that when they’re selling product in another country it’s the laws in that other country that apply.”
The chamber of commerce network handles the paperwork for country of origin certification for the customs system, which will ensure that the correct tariffs apply. “Those documents are important, particularly where we have free-trade agreements with other countries,” adds Harrison.
However, country of origin labelling can have a marketing aspect to it as well, which is where AMAG comes in. As a certification trademark registered with IP Australia, ‘Australian Made’ or ‘Australian Grown’ must be used according to a set of rules under the Australian Competition & Consumer Commission, which administers the Trade Practices Act. But exporters shouldn’t simply apply for the logo and slap it on, it needs to form part of a marketing strategy, says Harrison.
“An important question that all exporters need to ask themselves in the market they’re trying to sell to is, is there an advantage in the product being recognised as Australian? If there is, they should be aggressive about packaging their goods in a way that consumers can recognise or associate the product with being Australian,” Harrison advises. “If it doesn’t help the sale, then it’s in the exporter’s interest to downplay the fact. The use of AMAG can also be a marketing tool.”
The physical, legal and marketing risks in packaging can seem small, but all have the potential to ruin your exports if you fail to plan properly or heed the requirements, so make sure you check the boxes before you export.
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