Packaging and Transportation

Freight Bill

A freight bill is a transportation carrier's invoice for freight charges.The freight bill may have two forms of payment: Prepaid which is paid prior to transportation Collect is paid when the product is delivered As a contract manager, you may be responsible for paying freight bills or invoices.

Free on Board Origin

A key requirement to understand is the Free on Board (FOB) point in the contract. In Free on Board origin contracts, origin means at the contractor's facility. The buyer or contract manager has title to goods or services when acceptance is at origin. The buyer pays the transportation changes and can expedite shipment. The buyer is also responsible for damage or loss of freight.

Package

A package is a bundle or box that is usually a specific size and protects the product or part from physical damage.The package also serves as the basic unit for material handling. Material handling is the way the package is handled and transported from contractor to buyer.

Advertising

Advertising Very important for marketing the product and is usually a requirement for consumer or retail markets Include packaging characteristics that cause a consumer to buy your product in lieu of another

Transportation Considersations- Introduction

As a contract manager, you may be required to expedite and trace shipments, settle claims, and issue contract modifications.The professional contract manager must understand the terms used in the transportation industry to be able to resolve transportation claims, expedite and trace shipments, settle claims, and issue contract modifications.

Containerization

At the local airport, you may have noticed the use of containerization. Containerization is a standardized package or box used to facilitate transportation and material handling.The container is used by all major modes of transportation except pipeline. The containers can be removed from an aircraft and loaded onto a truck, railroad car, or ship. The use of the multiple transportation mode containers is called "Intermodal Operations."

Commerical or Air Freight

Commercial air transportation is the fastest mode but has a high cost. Some air freight providers include UPS, and Fed Ex.When considering air transportation, compare the criticality of the product being delivered quickly versus the cost of airfreight.Also, realize that air transportation has more stringent security requirements due to September 11, 2001.

Consumer Protection

Consumer protection is when the package is sealed to prevent tampering. Typically, tamper-resistant drug packaging is a prime example.

Containers

Containers used in transportation are classified as: Rigid• Example is a metal box • Fully protected Nonrigid• Metal frame with cloth or other fabrics for the walls • Not completely protected Containers provide the following benefits: Reduce chance of damage They're reusable Less loss due to pilferage Reduce material handling and transportation costs Reduce insurance costs

Expediting Shipment

Contract managers have many opportunities expediting shipment of goods and products. Expediting shipment is changing from one transportation mode to another. For instance, if your original contract provided for truck delivery, you could expedite to air transportation.

Contract Management Issues

Contract managers must be aware of contract management issues during your surveillance and enforcement of contract requirements such as: Contractor meeting your Preservation, Packaging, and Packing (PPP) requirements Identifying warranty and shelf-life items to your receiving department Advising your quality assurance inspector of the contract requirements and providing them with a copy of the contract

Electrostatic Discharge

Electrostatic Discharge (ESD) is a spark generated by static electricity. ESD requirements are usually specified for electronic components. There are two ESD protective packaging objectives: To eliminate the static generated by packaging materials To shield the item from exterior static sources outside the package. There are many commercially ESD prevention packing and packaging materials available for use. As a contract manager, you're responsible to verify the proper materials are used to prevent this type of damage to your parts and components.

Environment

Environment protection is protection from: Temperature Weather Humidity Corrosion Foreign substances like insects and rodents Prolonged exposure to air or light Exterior chemicals

Free on Board Destination

Free on Board destination is when the contractor is responsible for transportation to the buying activity. If the contract manager is required to expedite shipment, the contract manager will be required to pay an increase in contract price and write a contract modification.

Freight Damage

Freight damage is divided into two types of damage: 1. Apparent damage is easily visible by the outside of the box or container 2. Concealed damage is hidden and is not discovered until the box, container, or package is openedThe following are the contract manager steps to handle freight damage claims: Photograph the damaged package and product Annotate damage on the delivery receipt or the freight bill Contact the carrier agent immediately in writing or Email Write a Freight Damage Report to include: • Damage observed • Copy of the annotated delivery receipt or freight bill • Original Bill of Lading • Copy of invoice indicating the price of the item shipped Resolve the claim immediately

Identification

Identification Part number or catalog number Warranty marking Hazardous material codes and symbols Shelf-life requirement or when the product will expire Corrosion preservation packaging Manufacturer's identification code Ship to and mark for Stock or inventory control Bar coding or Universal Product Code (UPC) Radio Frequency Identification Code (RFID)

Department of Defense Items

In addition to the identification and materials handling markings, the Department of Defense has more requirements such as: National Stock Number (NSN) and part number Nomenclature or the name of the part Quantity and unit of issue inside the box Contract, Purchase Order, or Delivery Order number

Water Transportation or Water

In some cases, contract requirements may specify the use of water transportation. Water transportation offers the cheapest method of transportation and is best suited for high bulk, low value commodities. Bulk products can include iron ore, coal, oil, and farm products.

Tracing Shipments Information

Information that can be helpful when tracing a shipment includes: Product description Quantity Weight Date shipped Mode of shipment Route structure Shipper Place of origin or address Receiver or consignee

Packaging - Introduction

Manufacturing or product contracts have packaging requirements. The packaging requirements are stated in the contract and it's the contract manager's responsibility to ensure the packaging requirements are accomplished. The packaging selection is dependent on the type of protection that is required for the product. The objective of packaging is effective protection at a minimum cost.

Package Marking

Marking is another important characteristic of packaging. There are many types of marking that are used to identify the contents of the package, instructions for personnel performing material handling, and advertising requirements.The following items may be included in the contract for package marking:

Material Handling

Material Handling Special handling requirements are included on the outside of the package: Sling here Fragile - handle with care This way up Center of Gravity (CG) Use no hooks Keep away from heat

Freight Claims

Most contract managers will have an opportunity to settle a transportation claim. Transportation claims consist of loss or damage to products, unreasonable delay, and improper charges for transportation.The professional contract manager first reviews the contract, then reviews transportation documentation (bill of lading and freight bill terms and conditions) and finally expedites the claim resolution.

Motor Freight or Highway

Motor freight or highway is a mode that uses truck and vans. Many contractors have their own fleet of trucks, which is called private trucking. Other contractors use trucks that are available by contracting out the service. Contracted out services can include small-shipment carriers, short haul, and long-haul carriers.

Packaging

Packaging is the outside shipping container and is made from a variety of materials such as Corrugated cardboard Fiberboard Wood Styrofoam Plastic Fiberglass

Waste Management & Recycling

Packaging waste management and recycling are key elements to consider both in the pre-award and post award phases. Packaging materials cause difficult disposal problems. Some key elements to reduce this problem are: Use of bio-degradable packages Use of recycled packages Use of containerization

Packing

Packing is the cushion around the item to prevent it from fractures or destruction. Packing materials include: Bubble wrap or popcorn Styrofoam Pape r Specific shape mold materials. This material is formed in the shape of the product to provide excellent protection.

Physical Protection

Physical protection is for transportation and material handling. The common causes of physical damage are: Vibration Impact Puncture Compression

Pipeline or Pipe

Pipeline is used primarily for fluids, semi-fluids, and gases. A prime example would be the Alaska Pipeline.If you are a contract manager buying energy sources, you may have this as a major mode of transportation.

Preservation

Preservation protects the item from deteriorating, such as metal products corroding, and is required when parts are stored in a warehouse for a period of time.Preservation includes the following: Sealing in a plastic bag Desiccant in the containerA desiccant is a substance that changes colors when exposed to moisture. For example, if the desiccant is blue the product is protected. If pink or red, the product has been exposed to moisture. Most metal products that are not painted will corrode when exposed to moisture.

Preservation, Packaging and Packing (PPP)

Preservation, Packaging, and Packing (PPP) requirements are stated in the solicitation and contract. Products that are required to be shipped to a warehouse usually have more PPP requirements that those products that will be used immediately. The contract manager is responsible for enforcing the requirements during contract management.

Transportation Contracts

Some contract managers are responsible for administering transportation contracts. This type of contract is a service contract with a transportation company. The contractor provides the personnel and equipment required to meet the contract requirements. Additionally, for transportation of products, you could have moving contracts and contracts for personnel transportation.

Shipping

Sometimes in lieu of a package or in conjunction with a group of product packages, a master container is used. The shipping container provides an easy way to handle, store, and transport the contents through the distribution channels.

Bill of Lading

The Bill of Lading is the basic shipment document that is prepared by the person responsible for shipping. Specifies the terms and conditions of carrier liability. These are the clauses or terms and conditions that describe remedies for loss and damage. A contract for movement of a shipment May be used as a receipt and/or acceptance document by some contracting activities Government Bill of Lading (GBL) is used when government acceptance is accomplished at the manufacturer's plant and the government is responsible for transportation.

Standard Practice For Commercial Packaging

The Standard Practice for Commercial Packaging is ASTM D 3951. This standard is published by the American Society for Testing and Materials and describes minimum requirements for commercial packaging. Some of the requirements of ASTM D 3951 include: Quantity per Unit Pack (QUP) Number of parts that are in an identifiable pack. For example, the QUP can state 20 nails per sealed bag. Cleanliness Items must be free of dirt or contaminants that would cause deterioration. Preservation Items subject to deterioration or damage should have preservation packaging as discussed previously. Shipping Containers Must be capable of multiple shipments, handling, and inside storage up to one year. Must be acceptable to the carrier. There are many requirements in ASTM D 3951. The above items are only a sample of what the contract manager might find in the specification. You may order copies of this specification from: American Society for Testing and Materials 1916 Race Street Philadelphia PA 18103 Or visit the American Society for Testing and Materials (Links to an external site.) website

Mode Considerations

The buyer and contract manager make the decisions on the transportation modes for the contract.Contract managers should consider following: Customer's delivery requirements Product type and size Risk of loss from damage Quality of service Claims and their handling Cost Security

Intermodal Systems of Transportation

The term "Intermodal" is the use of the multiple transportation mode containers. Intermodal transportation is also called coordinated systems. It is the coordination of material handling, packaging, and transportation.There are numerous names in the field used for combining modes such as: Piggyback Truck-rail or highway trailer on rail flatcar Fishyback Truck-water or highway trailer on ship Trainship Bargeship Air-truck

Package Protection

There are also other materials that provide protection for the goods or items in a package.There are three basic types of package protection:

There are Five Transportation Modes

There are five modes of transportation that may be selected by the buyer in a contract for product delivery: 1. Railroads 2. Motor freight 3. Water transportation 4. Commercial air transport 5. Pipeline transportation The transportation mode selected can be determined by reviewing the speed, cost, and reliability.

Tracing Shipments

Tracing shipments is also a condition of the Free on Board point. Tracing of shipments determines the current location of the product or location where loss could have occurred.In FOB origin contracts, the buyer will trace the shipments because the buyer is responsible for the transportation.In FOB destination, the contractor will be requested to trace the shipment because the contractor is responsible for transportation.There are two points to make your job easier, they are as follows: 1. Have complete and accurate shipping information 2. Know what records are maintained by the transportation carrier

Transportation Changes

Transportation changes and changes in the shipping location instructions are also the responsibility of the contract manager.Changing transportation locations is called Amended Shipping Instructions (ASI) because it amends the contract shipping instructions and redirects shipment to another location. An ASI can also change the priority of shipment, which is expediting the shipment. An example of changing shipping priority is changing from truck to airplane mode of transportation.Some key points regarding ASI for the professional contract managers are : ASIs are initiated before contract delivery is accomplished If FOB destination, the contract manager is responsible for more money added on to the contract A contract modification or change order is required to change the contract Delivery follow-up at the new destination is required

Transportation Rates

Transportation rates are determined by the costs of service and the value of the service. Competition between transportation sources is a major factor since deregulation. In addition to just the cost of the transportation, the contract manager must be familiar with other rates. Some of the most common rates that may be identified as "Other Service and Terminal Charges" by a specific carrier are: Accessorial Service and Terminal ChargeConsist of the following charges: • Diversion is changes in the route structure or changing the shipping instructions • Reconsignment is a change in receiver of the goods or product • Protective or security service • Environmental protection • Ventilation • Refrigeration or heating • Terminal charges

Transportation - Introduction

Transportation requirements are specified in the solicitation and the contract. The contract manager must understand the clauses in the contract to make decisions pertaining to changing the mode of shipment, changing destinations, processing transportation claims, and identifying who pays for the transportation. Transportation requirements can be complex.

Railroad or Rail

When you are using railroad for delivering contract requirements you should consider the following: Relatively low cost Reasonable fast service Extensive geographical coverage Contract managers should remember that a boxcar could sit for days waiting to be connected to a train engine. This lead time must be considered when supporting your customer.