With 273 million people and counting, Indonesia has both the largest population size and GDP in Southeast Asia. Despite headwinds in 2020, Indonesia’s eCommerce economy stood at USD 32 billion according to Google and Temasek.1 These statistics coupled with Indonesia’s rising middle class makes it a prime target for international businesses to expand to, particularly those with suppliers in China.
Most eCommerce orders take place in the Greater Jakarta area, known locally as Jabodetabek. This area consists of Jakarta and its satellite cities Bogor, Depok, Tangerang, Bekasi, Puncak, and Cianjur. Jabodetabek is one of the most populous regions in Indonesia and also has infrastructure that facilitates eCommerce deliveries.
But what does it take for both direct-to-consumer (B2C) and bulk freight (B2B) orders to be shipped from China to Indonesia?
If you’re looking to expand to Indonesia via cross-border eCommerce, it makes sense to test the market first through cross-border shipping before committing to heavier commitment supply chain strategies like local distribution. But how exactly do shipments, be they parcels or larger shipments like pallets or containers reach Indonesia from China?
If speed is the most important factor in your supply chain, air freight’s shorter delivery timings are the way to go. When not looking at other legs of the journey, a flight from Hong Kong to Singapore will take around a day at most. Sea freight could take between one and two weeks depending on the schedule.
On the other hand, air freight rates tend to be higher than sea freight. Interestingly though, there are actually times when air freight can be cheaper than sea freight. To understand this, it helps to see how air freight rates are calculated.
For air freight, rates are charged to the order’s volumetric weight (how much space it takes up) or its actual weight depending on which is greater. For less-than-container-load shipments, sea freight tends to be charged by volumetric weight, with a minimum chargeable volume being 1 cubic metre (cbm).
Sea freight saves you money if your order is larger than 2 cbm. However, you won’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 as 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 on your own. 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 terms of what you’re allowed to 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 instance, 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. If you’re shipping these, it makes more sense to use sea freight.
While finer details can differ between shipping partners, shipments tend to follow similar steps. If you’re shipping with Janio Asia, we detail how B2B and B2C shipments will be handled for both air and sea freight for the Guangdong province and Hong Kong to Jakarta, Indonesia.
The first mile stage in international shipping is where your order leaves the origin address, be it a storefront, office, or warehouse. Prior to your goods leaving your storage facility, the product needs to be packaged and labelled properly to facilitate smooth cross border shipping.
Packages may sometimes go through events during delivery which can shift your shipment around. 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 a previous article.
Additionally, the orders’ shipping labels and the appropriate customs documentation must be accessible for customs officers to inspect the shipment. For more details, you can look at our full parcel labelling guide which you can also find in our resources for B2C shipping to Southeast Asia.
Your shipping partner will collect your shipments from a specified collection point. Depending on the arrangements made with them, this could be a specified drop off point or your origin address like your warehouse or your supplier’s address. If you’re shipping with Janio, you’ll be dropping off your shipments at our warehouse in Shenzhen – especially good for shippers operating in Guangdong province.
After your shipments have been collected, they need to be cleared for export by China’s Customs at the international port or airport closest to your origin address. For sea freight, this could be one of the ports at Shenzhen or Hong Kong Port.
If you are shipping via air freight, the airport your goods will be shipped from will defer depending on the type of goods you are exporting. If you aren’t shipping dangerous goods, also known as DG, your goods can depart from Shenzhen Airport (SZX). Otherwise, your goods will be shipped from Hong Kong Airport (HKG).
To get your goods cleared for export, your shipment usually needs to have the following documents ready:
Exporting in bulk from China requires you to have an export permit or exporter of record before you can ship your goods out. Additionally, if you’re shipping any restricted goods, you’ll need to apply for a special export permit for these goods before it can be exported. You can check the Ministry of Commerce Republic of China’s website to find out more on how to apply for the export permit.2 We’ve provided a site with an English translation in our references as well.3
To check if your goods fall under the restricted goods category, you can look up China’s Customs website.4 B2C exports from China don’t need export permits or exporters of record.
If you’re ever unsure about what kind of steps you need to take to export your goods from China, you can always 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.
If you’re shipping by sea freight, chances are your shipment will be heading for the Port of Tanjong Priok (IDTPP), Jakarta’s busiest port. The sea freight mid-mile shipping time from Guangdong Province to Jakarta usually takes 7 to 10 days.
If you’re shipping via air freight with Janio from Guangdong Province to Jakarta’s Soekarno-Hatta Airport, below are the mid-mile delivery timings:
Once your item arrives in Indonesia’s airport or port, your shipment will be moved to a customs warehouse for customs clearance. Here, customs officers will inspect your shipment and shipping documents and determine if your product is allowed to enter Indonesia.
If your item is below Indonesia’s de minimis rate of USD 3, then there is no need to pay additional import duties and taxes to the customs office. Currently in Indonesia, items below the de minimis just need to pay VAT at 10% of the order valuation.
The de minimis rate refers to a value threshold where fewer or no duties and taxes are charged if the shipment’s customs valuation is below it. In Indonesia, the valuation is calculated using the CIF (cost, insurance, freight) value, which includes your good’s price, shipping fee, and insurance costs if any. However, this only applies to goods that are delivered via air freight. Earlier in 2020, the Indonesian government revised their de minimis rates down from USD 75. To find more information about this regulatory change, you can read our article here.
On the other hand, if your goods exceed the de minimis threshold, higher import duties and taxes will be levied on your shipment. You would have to pay a value-added tax (VAT) at 10%, and the import duties and income tax depend on the product category as declared by the harmonised systems code (HS code). You may find out the percentage of your import duties, VAT and income tax paid through Indonesia’s Directorate General of Customs and Excise website.5
However, with the COVID-19 situation, the Indonesian government provided temporary duties and tax exemptions on products that are designed to fight the virus, such as hand sanitisers and personal protective equipment. You can find out more information in our article on this temporary regulation and how it could apply to your shipments.
You’ll need different customs documentation depending on whether you’re shipping a B2C parcel or a B2B shipment into Indonesia.
For direct-to-consumer (B2C) shipments, the following documents are needed:
For tax purposes, your customers or consignees in Indonesia need to provide the following documentation before the import can be cleared, particularly their Tax ID:
If you’re shipping a B2C parcel, you can choose to either pay for the import duties and taxes yourself or let your customers or consignees pay for the import duties and taxes. This is determined by the incoterms Delivered Duties Unpaid (DDU) and Delivered Duties Paid (DDP). While we strongly encourage you to opt for DDP to keep your shipping experience smooth for your B2C customer, it also helps to familiarise with what these arrangements mean.
As for B2B shipments, the following documents are needed:
The commercial invoice will need to be signed by the manufacturer or supplier as true and correct. As for the bill of lading, you’ll need three endorsed originals and four non-negotiable copies.
B2B freight shipments also need the customs import declaration, import permit and customs identification number (Nomor Identitas Kepabeanan, NIK), Single business number (NIB) and importer identification number (Angka Pengenal Import, API) of the importing party.
When it comes to the statement letter and letter of authorisation, your shipping partner can help you prepare these documents. As the shipper, you must provide the company letterhead, name and signature of the company director, company stamp and the Meterai 6000 stamp (Indonesian Stamp Duty) for the documents though.
If you are shipping goods classified as dangerous goods, commonly known as DG in the logistics industry, the shipper must also prepare the material safety data sheet (MSDS). The MSDS contains details about the potential hazards when handling the product, and how the product should be handled. If your shipment requires an MSDS, you should be able to get this from your product’s manufacturer.
In Indonesia, there are three types of import licenses. 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.
Finally, certain items require licenses or permits from controlling government agencies in Indonesia before they can be imported. For instance, health and beauty products require registration and permits from Indonesia’s BPOM (National Agency of Drugs and Food Safety).
Once your shipment has cleared customs in Indonesia, it will enter the distribution leg of the shipping journey. B2B shipments that are headed to addresses within the Jabodetabek region can be delivered directly from the port or airport.
B2C parcels will first be sorted to the right vehicles for last mile delivery at a transport hub. Depending on your consignee’s address, an domestic transfer flight will be needed before your shipments can be sorted or sent to last mile delivery.
The last mile delivery stage is where your shipment will be sent from to your consignee’s address, usually via vans or motorcycles in Indonesia. One thing to note in Indonesia is that around 1 in 10 online transactions are paid via cash on delivery.6 It’ll definitely help to offer cash on delivery in order to win the trust of your Indonesian online shoppers.
Now that you know the full process of shipping your items from China or Hong Kong to Indonesia, you’re in a better position to choose the right shipping partner who can cover the entire logistics supply chain from the first mile to the last. When choosing a logistics service provider, it helps to consider the cost, speed, delivery experience, and your whole supply chain before committing to a shipping solution.
With eCommerce likely to continue booming in Indonesia, expanding internationally here means that you’ll be riding the wave of eCommerce growth in the country. To leave a good impression on your customers in Indonesia, it helps to have a reliable shipping partner that can deliver on time. That way you can impress your customers with your hottest items in stock while wowing them with efficient delivery speeds.
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