Cross Border Shipping in Southeast Asia: 6 Things You Should Be Doing

JANIO

International shipping can be tricky, with the potential for deliveries to be stuck in customs, delivered to the wrong address or even causing additional charges. Read on to find out 6 best practices that can help you avoid these issues and more.

2018 looks set to be an exciting year for Southeast Asia’s eCommerce scene, with Alibaba investing another US$2 billion in Southeast Asian eCommerce marketplace Lazada and Google investing US$550 million in Chinese eCommerce behemoth JD.com. The tech giants are all vying for a larger share of the pie in Southeast Asia’s rapidly growing eCommerce market.

As the Southeast Asian eCommerce market becomes more lucrative, you may be looking to list your products online on regional marketplaces and ship them to consumers in countries across the region.

Southeast Asia is a region comprising of 11 countries stretching from India to China. The eCommerce market in these countries is unique from each other, with differences in customs regulations and logistical infrastructure.

These differences between Southeast Asian countries give rise to complications in cross border logistics and it is no wonder that business owners who are new to cross border shipping are often unaware of the potential pitfalls they may fall into when starting out.

In this article, we will explore some of the best practices that will help you avoid potential pitfalls in cross border shipping.

1. Complying with Customs Regulations

Check whether the item you’re shipping is prohibited or restricted in the country you’re shipping to and which documents are required by the respective country’s customs.

The different countries in Southeast Asia have their own specific customs requirements. While your product may pass one country’s customs, it might get stuck in the customs of another. This will delay delivery to your customers’ doorstep for as long as a week, or worse, your package may not reach there at all, leading to customer dissatisfaction.

For example, Indonesia Customs require the shipper to provide an insurance certificate when the goods are insured outside Indonesia or if they must be put in a bonded warehouse. Not providing one may cause your shipment to be stuck in customs. Malaysia Customs have no such requirement, hence your package would’ve been able to clear customs, as opposed to Indonesia.

2. Checking your Shipping Labels

Always ensure that you have provided the logistics carrier with the required address details and that it is accurate. One of the most common shipping mistakes is shipping your package to an invalid customer address.

Sending packages to the wrong address incurs additional costs in customs and shipping charges when the shipping company sends the packages back to you. Subsequently, having to ship a second time with the correct address means your profits will be thinned further.

Additionally, your packages will also need other specific labels that reveal information such as the country of origin and the presence of any hazardous materials.

You may discover that checking thousands of delivery addresses and specific labels manually is a tedious process and prone to human error. Making use of proper software systems that incorporates standardised documentation and procedures can help you to simplify the process and avoid mistakes.

Apart from addresses entered wrongly, in parts of Indonesia, you may face difficulties in ascertaining the exact address of your recipient, especially when road names change, or consumers are uncertain of their postal code or address. This is where local expertise is vital in bridging the gap in information.

3. Choosing the Right Shipping Company

Explore your choice of shipping companies amongst the many logistics providers in today’s competitive logistics industry. Some carriers may have a more extensive network and better expertise than others in certain regions.

Selecting shipping companies with an established presence in specific destinations may speed up delivery to your customers in those countries. Shipping companies that are a major player in a country will most likely also have a physical office location in the destination. Carriers with a physical base of operations at the destination country can provide you with local expertise and your customers with more effective customer service.

In today’s logistics industry, there are eCommerce logistics service providers aimed at providing end-to-end fulfillment solutions for businesses intending to ship cross border. Working with a logistics partner that has a larger network of carriers can help you to reduce costs and improve customer satisfaction.

4. Appropriately Packaging Your Products

You don’t want to be sending customers a damaged product. For a package to arrive at its destination intact, it needs to be packaged correctly depending on the mode of transport. Ensure that your packaging is tough enough to handle rough handling, harsh weather and humidity changes.

Different destination countries and marketplaces have different requirements for packages. At the same time, there are also implicit differences. Delivery in Singapore is usually fulfilled via vans or trucks whereas Indonesia largely relies on motorbikes, which can move goods faster in heavy traffic than cars. As such, the way you would pack your product would differ, i.e. small enough to fit in a motorcycle top-box yet sturdy enough to withstand the bumpy ride.

Hence, it is important that you work with the right shipping partner who knows the lay of the land and can package your items appropriately to suit the item being shipped and the mode of transport, ensuring that your package arrives safely to your customers.

5. Proper Calculation of Weight

Determine your shipping costs more accurately by buying a scale that will accurately weigh the package instead of estimating the weight. Carriers will reweigh the package and charge extra fees if the original estimate is inaccurate.

Most couriers have shifted to a volumetric weight pricing, which pegs the shipping charges to the amount of space that it occupies on an aircraft, rather than the actual weight. The volumetric weight is calculated and compared with the actual weight of the shipment.

The higher of the two weights would be used to calculate the shipment cost.

Hence, a product that is bulky but light may cost you more in shipping charges than something that is heavier but significantly smaller.

6. Being Aware of Additional Charges

Take into consideration any additional fees you may incur, such as shipping-related charges, package-handling charges and duties to be paid upon arrival at customs.

For example, most couriers charge a fuel surcharge that is pegged to changes in fuel prices, which can go up to as high as 18% of transportation charges. You may also face a surcharge if your parcel pickup location is remote or far away from the courier’s usual collection route. There are also additional handling charges if your shipping container is made of metal or wood, or if it’s cylindrical. It is important to account for such additional charges before shipping your package.

Avoid under-declaring the value of the items of your shipments on the commercial invoice. You risk incurring a fine if the custom clearance agencies suspect that the declared value is below market price. The courier may also charge you additional fees for undervaluing your goods.

At the same time, you may be subjected to warehouse storage fees if your package remains in customs over an extended length of time.

We all know that cross border eCommerce holds great potential for your business’ revenue streams by allowing you to tap into overseas markets. However, the complexity of cross border logistics may prove to be a substantial barrier to entry. Don’t let this stop you from expanding into foreign markets and reaching your international customers. Instead of handling everything by yourself, working with the right logistic partners who are able to meet your cross border logistics needs can make the cross border shipping experience much more seamless.

To find more on the latest news on logistics and eCommerce in Southeast Asia, consider signing up for our Janio newsletter.

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.

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