Efficiency
Manufacturers that are committed to global sourcing for their production materials understand the impact that this has on the overall costs and their competitive position in the marketplace. A buyer understands and must manage each cost component that impacts the total landed cost value (ExWorks versus Port, HS Codes, import duties, etc…) to deliver the best possible cost for the materials purchased in a global market place.
Most of the component costs are fixed and very little can be done about them. The area that the buyer can have the most influence on is the space utilization factor associated with packing the container. Space utilization in a shipping container can be 80 to 97% efficient based on hoe the products are packed. The lowest utilization level occurs when products are palletized. The pallets themselves require space on the bottom and on the second level as products are generally stacked two pallets high. In addition, when using pallets there is usually a space at the top of the pallet that is too small to fit additional products.
The most shipping cost efficient container packing is hand packing the master cartons. When containers are packed using this method the manufacturer generally optimizes the master carton sizes for the products to utilize most if not all of the container space. When accepting this packing method the buyer must take into account the cost locally for unpacking containers loading using this method. In Asia this is a low labour cost activity but when done within your manufacturing or warehouse facility, it could represent a significant cost and remove the savings related to the space that is taken up with pallets.