Indonesia’s a rapidly growing market, making it a prime target country to expand into from Malaysia. Indonesia’s government has made great progress in increasing the standard of living and reducing poverty to below 10 per cent.1 It also has a healthy GDP growth rate, hovering slightly above 5 per cent since 2016 outside of COVID-19’s effects.2
As icing on the cake, Malaysia and Indonesia share a lot of things in common. Both countries have a Muslim majority, which means that products that appeal to this demographic in Malaysia will also appeal to those in Indonesia too.
On the logistics front, there’s plenty of action too since Malaysia and Indonesia are geographically close to each other. Sea freight within Southeast Asia is a viable option as many countries share ocean borders, which means that items arrive faster compared to other major trade routes like USA-China.
To tap into Indonesia’s potential, it helps to know how sea freight works so that you can plan your Malaysia-Indonesia supply chain.
How does Sea Freight from Malaysia to Indonesia Work?
The sea freight process generally follows these steps:
- Collection – Your hired shipping company collects the goods from the origin address. This could be your supplier’s address or your own warehouse in Malaysia.
- Origin Customs – Your goods are transported to an international port in Malaysia and cleared for export by Malaysian Customs.
- Loading – If your goods are Less-than-Container-Load (LCL), your shipment will be consolidated in a container with other businesses’ shipments. If they’re Full-Container-Load (FCL) your shipment has the whole container for itself. Malaysia’s busiest port is Port Klang (MYPKG).
- Mid-mile – The ship leaves for Indonesia.
- Destination Customs – Once the ship reaches Indonesia, they will be processed by Indonesia’s Directorate General of Customs and Excise. While there are 7 major international ports in Indonesia, the busiest port is Tanjung Priok (IDTPP), which processes more than 50% of Indonesia’s shipments.
- Unpacking (LCL) – LCL goods will be unpacked from the shared container then loaded onto vans or trucks to prepare for the last mile delivery.
- Domestic flight (when necessary) – As Indonesia is an archipelago, an additional flight may be needed to deliver your shipment to an airport closer to your destination address before last-mile delivery.
- Last-mile delivery – After unpacking, or if your goods are FCL, the shipments will be transported to your destination.
Collection in Malaysia
Your shipping partner will collect your order from your specified address, be it your warehouse or your supplier. Depending on whether you’re shipping by Full-container-load (FCL) or Less-than-container-load (LCL), the way your sea freight order will be handled, charged, and containerised will differ.
To determine which of the two is a better arrangement for your order, you can keep these factors in mind, or discuss with your trusted freight forwarder to figure out which works best for your shipments.
Should I ship by LCL or FCL?
FCL shipments mean you pay a flat rate for the whole container that will transport your goods across the sea. While expensive upfront, it may be a cheaper option than shipping a particularly large LCL order in terms of cost per cubic metre (cbm).
LCL orders are generally charged by volume. Below a certain volume, LCL can be cheaper than FCL on a per shipment basis if you don’t need a full container for each delivery.
As a rule of thumb, when your shipment has filled about half of a container, it’s more economical to buy a whole container (FCL). This is around 10 cbm for a twenty-foot-equivalent (TEU) container. A TEU’s volume is usually between 23 to 25 cbm.
Flexibility and Speed:
LCL shipments require more work from your freight forwarder since they need to be consolidated with multiple shippers’ shipments. This need for consolidation could also slow down loading times and make their sailing dates less flexible than FCL.
FCL is cheaper in terms of price per cbm and usually faster because you are in control of the whole container. On the other hand, FCL requires you to have the order volume to justify using a whole container.
FCL shipments can be packed and sealed into a container at the origin address and it’ll only be opened after it arrives at the destination.
LCL shipments, on the other hand, go through more handling compared to FCL shipments. It needs to first be consolidated into a container, get unpacked at the seaport to be assigned to a last-mile truck before finally arriving at the destination address. All this handling could increase the chances of items getting damaged or misplaced, but you can check with your shipping partner how they cover potential losses during transit.
Your sea freight shipping partner, like Janio, will advise you on which of the two is best for your shipping needs. Once the order is collected, your shipping partner will transport it to one of Malaysia’s seaports.
Whether you need LCL or FCL for your upcoming shipment, Janio Asia’s got the right sea freight solution tailored to your freight forwarding needs. Chat with our supply chain consultants via the link below!
Origin Customs Clearance
After your shipments have been collected, they need to be cleared for export by Malaysia’s Customs at the international port closest to your origin address, such as Port Klang for those shipping out of Klang Valley.
To get your goods cleared for export, your shipment usually needs to have the following documents ready:
- Commercial invoice
- Bill of lading
- Packing list
- Export permit (if necessary)
You or your shipping provider must first register with the Companies Commission of Malaysia to export goods which require a license. Some of these items include certain plants, wood, minerals, and more. You may check out the list of items that require a license to export on Malaysia’s Customs website.3
Your goods also need to be classified and declared to Malaysian Customs prior to export. Like most Customs Offices, Malaysia uses the Harmonised Systems Tariff Code to classify your goods. You can look up the classification of your goods using the HSS Explorer.4
While knowing all of this is helpful to getting your exports ready, you can check with our customs clearance experts if you’re unsure of which documents to apply for and how to declare your goods.
After checking these documents and clearing your shipments for export, your shipments can be loaded onto a vessel.
Loading and Mid-mile
After your shipment is cleared for export from Malaysia, it will be loaded onto an Indonesia-bound vessel.
As an archipelago of over 17,000 islands, Indonesia has extensive connectivity through sea freight, with multiple international ports that your goods can sail to. While the Port of Tanjung Priok is the busiest port in Indonesia, other noteworthy ports include the Port of Tanjung Perak (IDTPE), Port of Kuala Tanjung (IDKTJ), Port of Makassar or Soekarno-Hatta (IDMAK), Port of Bitung (IDBIT), and Port of Sorong (IDSOQ). Additionally, the Indonesian government is working to develop a maritime highway across 24 strategic ports in Indonesia.5
Sea freight between Southeast Asian (SEA) countries can be a better alternative to air freight in certain cases. Major sea ports in SEA are clustered in a relatively small geographical area. Thus, sea freight shipments between these countries aren’t that slow. For the Malaysia-Indonesia lane, sea freight delivery timing ranges between 5 to 8 days, compared to air freight’s 1 to 2 days for a fraction of air freight’s cost.
Considering the high competition for air cargo space due to grounded flights following COVID-19, sea freight is a competitive alternative for shippers looking to bring their goods outside of Malaysia to Southeast Asian markets.
Want to find out how to incorporate more sea freight into your MY-ID supply chains? Reach out to our supply chain consultants below to find out more!
If your shipment is heading to Indonesia, it will be unloaded at one of the main ports such as the Port of Tanjung Priok (IDTPP), Port of Tanjung Perak (IDTPE), Port of Kuala Tanjung (IDKTJ), Port of Makassar or Soekarno-Hatta (IDMAK), Port of Bitung (IDBIT), and Port of Sorong (IDSOQ). Your shipment will then be inspected by Indonesian customs for clearance.
To get import clearance in Indonesia, your shipment will need the following documents:
- Commercial invoice
- Bill of lading
- Certificate of insurance
- Packing list
- Import permit
- Customs import declaration
- Customs identification number (Nomor Identitas Kepabeanan, NIK)
- Importer Identification Number (Angka Pengenal Import, API)
Your manufacturer or supplier needs to sign the commercial invoice as true and correct. As for the bill of lading, you’ll need three endorsed originals and four non-negotiable copies.
Your shipment also needs the customs import declaration, import permit and customs identification number (Nomor Identitas Kepabeanan, NIK) and importer identification number (Angka Pengenal Import, API) of the importing party.
There are three types of import licenses in Indonesia. API-U is the general import license used for importing finished goods. API-P is the producer import license used for bringing raw or unfinished products into the country. There is also a third importer license called API-T, which is limited to a specific industry and does not permit you to import goods not related to that sector of the business.
If you’re also interested in Indonesia’s customs clearance for B2C shipments, check out our updated customs clearance guide, which gives a comprehensive coverage of tackling customs clearance in a dynamic region like Southeast Asia.
Once your goods have been cleared for import, the last mile depends on whether you’re shipping LCL or FCL and which part of Indonesia your destination is.
Last-mile in Indonesia
If your shipment is FCL, it’ll be transported directly to your consignee’s address. You’ll be able to unpack your goods at the consignee’s address before a haulier comes back to pick up the container.
However, if your shipment is LCL, the container your order is in will be unpacked to distribute the different shipments to their respective destinations. Your shipment will be shipped for the last mile leg either as loose cartons or as pallets depending on how they were initially packed.
Depending on where your destination in Indonesia is, you may need either an additional flight or sea shipment to an airport or port closer to the consignee. Either way, the final leg of the delivery will be done via vans or trucks.
When Should You Use Sea Freight?
Sea freight is the most common method of transporting goods, carrying 90 per cent of goods worldwide.6 This mode of transport has the added benefit of being cost-efficient and comparatively environmentally friendly. However, sea freight’s effectiveness as a mode of transport depends on what you need in terms of:
- The weight and size of your shipment
- The products being shipped
- Shipment Speed
While not as fast as air freight, sea freight works best when cost savings are more important than shipping speed. Sea freight is also great for a wider range of goods that may be too costly to ship via air freight like bulky or oddly-sized items, or too dangerous to meet air freight’s tight restrictions.
As an example, these products generally can’t be shipped via air freight: flammable products, products containing gases, toxic or corrosive items like batteries, magnetic substances like speakers, perishable items, and more.
Sea freight between Southeast Asian nations has the added benefit of only being slightly slower than air freight while costing much less. In Southeast Asia, some lanes take only 1 or 2 extra days more than air freight.
This is great news for eCommerce merchants during the current COVID pandemic, if you’re currently working with Janio for air freight, switching to sea freight involves the exact same steps. You just need to tell your trusted shipping partner like Janio that you’d like your parcel shipped by sea freight and we’ll take care of the rest.
If you’d like to find out more about how we can solve your SEA eCommerce cross-border delivery needs, come and have a conversation with us.
- Expanding Middle Class Key for Indonesia’s Future
- GDP growth (annual %) – Indonesia | Data
- Malaysian Customs: Export Procedures (in Malay only)
- JKDM HS Explorer
- Maritime highway: Keeping the spirit and hope of people in eastern Indonesia