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Known as Tiger Cub economies, countries like Malaysia and Indonesia have been recognised as having the potential to become economies rivalling that of Japan and South Korea.
Malaysia’s status as the third most prosperous nation in Southeast Asia makes it an attractive market to ship to. It has a Gross National Income (GNI) per capita of USD 10,590 in 2018 compared to its 1981’s figure of USD 1,930,1 cementing its status as one of the tiger cub economies to look out for.
Both Malaysia and Indonesia have sizeable Muslim populations. For many Indonesian businesses, this makes Malaysia a great market to expand to for those selling products such as modest fashion and halal cosmetics, both upcoming market trends.
But for businesses in Indonesia, supply chain considerations are unique to each business and a choice between using sea freight and air freight to Malaysia ultimately needs to be made. Below, we break down when it makes sense to use air freight and also go through step-by-step how air freight works from Indonesia (Soekarno-Hatta International Airport) to Malaysia (KLIA and other Malaysian destinations).
If you need your goods delivered yesterday, go with air freight. With Indonesia and Malaysia being quite close by, the mid-mile air freight process (the actual flight) just takes a few hours.
Air freight’s speed is particularly important for products with expiry dates or speed is key to keeping a great eCommerce experience. Sea freight, on the other hand, takes a few days longer and is better suited to bulk shipments that aren’t time-sensitive.
Having this speed comes at a premium though. However, there are times when it’s actually cheaper to ship via air freight compared to sea freight depending on the weight of your shipment.
Rates for air freight are charged by the order’s volumetric weight (meaning how much space in the plane it takes up) or its actual weight depending on which is greater. For sea freight, less-than-container-load (LCL) shipments tend to be charged by volumetric weight, with minimum chargeable volume being 1 cubic metre (cbm).
Bulk LCL sea freight saves you money if your order is above 2 cbm. However, you don’t get those economies of scale for items that aren’t that big like small cartons that take up between 0.5 to 0.9 cbm since you’re paying for unused space. This is where air freight can be more economical than sea freight.
Fortunately, you don’t need to work all of this out yourself. Logistics service providers like Janio can help advise you on whether air freight or sea freight is better suited to your current leg of the supply chain and also offer you both shipping modes for your orders. To find out more, reach out to us below:
When choosing between air freight and sea freight, consider the following:
Air freight is fast, but can be limited in what you can ship. Bulky or oddly-sized items, or items too dangerous to meet air freight’s restrictions on what can be shipped generally should use sea freight instead.
For example, these products generally can’t be shipped via air freight: products containing gases, all things flammable, toxic or corrosive items like batteries, magnetic substances like speakers, perishable items and more.
B2C air freight shipments tend to face fewer hurdles as they are shipped to individuals compared to bulk shipping to businesses. Shipments that are below the customs’ de minimis rate of the destination country tend not to need a lot of customs documentation and are charged less import duties and taxes. The minimum documentation usually needed are commercial invoices and packing lists.
Bulk orders, on the other hand, face more regulation. The consignees of these orders are enterprises and businesses who need to be registered with local authorities. Your importing party also needs to have import licenses as well as other permits with relevant authorities at hand to clear destination customs clearance. These orders are subject to duties and taxes depending on their customs valuation and the type of goods shipped.
After getting cleared for export, your order is uplifted onto a plane and leaves Indonesia, bound for Malaysia. The mid-mile leg of the journey (the flight itself) will take around 2 or 3 hours at most.
While the logistics supply chain from Indonesia to Malaysia can vary depending on your requirements, shipping via air freight usually follows these steps:
This guide will cover how these steps apply to an air freight shipment being shipped from an address in Jakarta to Malaysia.
The first mile stage in international shipping is when the shipment leaves the origin address to your logistics service provider’s warehouse, be it a distribution centre or transportation hub. The origin address is where your inventory is initially stored, such as your office, warehouse, or your supplier’s address. In our example, the origin address will be in the Greater Jakarta area, otherwise known as Jabodetabek (Jakarta, Bogor, Depok, Tangerang and Bekasi).
Depending on your arrangement with your shipping partner, your shipment will be picked up by them or dropped off by you at your partner’s designated location.
Packaging and labelling are paramount before your order even leaves your doors. Packages may sometimes go through bumpy rides like turbulence. Having extra padding for fragile items, like bubble wrap and packing peanuts, is recommended to prevent your products from bouncing around or getting deformed during shipping. To learn more about the best practices in packaging your goods, we’ve covered this topic in our packaging guide.
Labels must be visible and easily accessible by your shipping partner and customs officials. You can check out our guide on labelling your shipments which you can also find in our resources for B2C shipping to Southeast Asia.
If you’re shipping B2C parcels, they have to be consolidated on a pallet at your shipping partner’s warehouse together with other packages heading to the same destination country before it can be sent for terminal handling and customs clearance at Soekarno-Hatta International Airport. B2B shipments that are already palletized can be transported directly to the airport for customs clearance.
After collection, and consolidation if needed, your shipment will be sent to Soekarno-Hatta International Airport. There, your shipment will be sent to an air cargo agent’s warehouse for terminal handling.
Terminal handling includes weighing and inspection of the cargo, tallying up items with the commercial invoice and packing list and checking that the required customs documents are in order. If your items haven’t been palletized before arriving at the airport, they will be palletized at the air cargo agent’s warehouse before being sent for customs clearance.
Once this is done, your goods need to be cleared for export by officers from the Indonesian Directorate General of Customs and Excise. The kinds of documents that you’ll need to prepare for export customs clearance depends on the size of the shipments and also what is being shipped.
To get your goods cleared for export, your shipment usually needs the following documents ready:
If you’re exporting in bulk, such as entire pallets, then you may need the following additional documents:
If you’re unsure about the kinds of documents you need to prepare for either B2B or B2C export clearance for air freight, our experienced customs clearance teams can give you a hand.
After getting cleared for export, your order is uplifted onto a plane and leaves Indonesia, bound for Malaysia. The mid-mile leg of the journey (the flight itself) will take around 2 or 3 hours at most.
Once the shipment arrives at Malaysia, it will be unloaded at the destination airport for customs clearance. In West Malaysia the main airport where your goods will be unloaded is Kuala Lumpur International Airport (KUL).
To clear your goods for import into Malaysia, you’ll generally need the following documents:
If you’re shipping parcels directly to customers, you won’t need as many documents as listed above. The airway bill, packing list, commercial invoice and certificate of origin (if needed) are usually sufficient for clearance into Malaysia.
If your B2C order is shipped via air freight into Malaysia and has its customs valuation below Malaysia’s de minimis rate of MYR500, it won’t be charged additional duties and taxes.
The de minimis rate refers to a value threshold where fewer or no duties and taxes are charged if the shipment’s customs value is below that point. This only applies to goods that are delivered via air freight. In Malaysia, the customs valuation is calculated using the Cost, Insurance and Freight (CIF) method, which includes the cost of the goods themselves as well as freight and insurance costs.
On the other hand, if your goods exceed the de minimis threshold, higher import duties and taxes like income tax will be levied on your shipment. You would have to pay sales and service tax (SST) of between 5 - 10%, and the import duties and income tax depend on the product category as declared by the harmonised systems code (HS code) which could go up to around 25 per cent. You may find out the percentage of your import duties, and taxes you need to pay through Royal Malaysian Customs Official HS Code finder.2
If you are shipping in bulk, such as entire pallets, your importing party in Malaysia must first register with the Companies Commission of Malaysia for a license to import goods. Some items also need a license regardless, including batik sarong, electric domestic equipment, pharmaceutical products, and more. You may check out the list of items that require a license to export or import on Malaysia's Customs website.3
Once registered, a company must then apply for an import license from the Ministry of International Trade and Industry (MITI). Malaysia uses a privatized single digital window for all import and export regulations called Dagang Net.4
The customs import declaration is also part of the customs clearance process but will usually be applied for by your customs clearance agent, like Janio.
If you’re still unsure about the customs clearance process, check out our updated customs clearance guide for more information.
Once your shipment has cleared customs, it will enter the distribution stage of the shipping journey. If the consignee’s address is in West Malaysia, your B2B shipments can be delivered directly to its destination. B2C parcels on the other hand, need to be sorted at a transport hub before the last mile journey can begin.
If the address is in East Malaysia, an additional domestic flight will be needed before your shipments can be sorted or sent to last mile delivery.
The last mile delivery stage is where your parcel will be sent from the distribution center or airport straight to your consignee’s address. In Malaysia, this stage of the delivery is done via vans or trucks. During the last mile delivery stage, your logistics service provider will ensure that your shipment is received by your consignee. The number of attempts is based on the agreement you have with your shipping partner.
Air freight works best when speed is of the essence, and that the order is profitable enough to warrant the shipping rates. What’s better is when you have logistics service providers who can advise you on how to best utilise it in your supply chain.
Contact us below to find out more about how Janio can help you or if you’d like an air freight quotation to ship to and throughout Southeast Asia.
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