Singapore’s a prime locale due to it being close by to its Southeast Asian neighbours. With the country sharing ocean borders with hot, up-and-coming markets like Malaysia, businesses looking to expand from the island-nation don’t need to look further than their neighbours across the causeway.
Compared to its neighbours, its status as the third most prosperous nation in Southeast Asia makes Malaysia 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.
Malaysia’s capital city and economic hub, Kuala Lumpur, is only an hour away by flight from Singapore. Thus, Singapore-based businesses can benefit from tapping into the Singapore-Malaysia air freight supply chain.
Air freight is a great option if speed is the most important factor. With Singapore and Malaysia being quite close by, the mid-mile air freight process just takes a few hours. This is compared to sea freight which could take a few days longer.
Having this speed comes at a premium. 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 (how much space it takes up) or its actual weight depending on which is greater. For less-than-container-load (LCL) shipments, sea freight tends to be charged by volumetric weight, with a minimum chargeable volume being 1 cubic metre (cbm).
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 extensive customs documentation and pay fewer 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.
While the logistics supply chain from Singapore to Malaysia can vary depending on your requirements, shipping via air freight from Singapore to Malaysia would usually follow these steps.
The first mile stage in international shipping refers to the first stage of the shipping supply chain, where it either leaves the origin address, which can be the merchant’s address, be it a storefront, office, or warehouse. Before your goods leave your origin address, the product has to be packaged and labelled appropriately to facilitate smooth cross border shipping.
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.
Additionally, shipping labels and the appropriate customs documentation must be accessible for customs officers to inspect the shipment. You can check out our guide on labeling your shipments which you can also find in our resources for B2C shipping to Southeast Asia.
After this, you can choose to drop your order off at your shipping partner’s drop-off point, or have it picked up from your address. Most shipping partners would have a cut-off time for submitting orders for drop offs and pick ups so that they can optimise their route.
If your shipment is a B2C parcel, it has to be consolidated on a pallet at a transportation hub or at a warehouse closer to the origin airport together with other packages with the same destination country before it can be sent for customs clearance. Since B2B shipments are already consolidated, the shipment can be transported directly to the origin warehouse for customs clearance.
Some warehouses in Singapore also have transportation hub capabilities, and are able to sort your parcels and have it ready for customs clearance within the same location such as those within Singapore’s Free Trade Zone.
Free Trade Zone warehouses also have the benefit of deferring tax charges on non-dutiable goods until they enter a country’s official borders, which helps with both cash flow and also as a storage area for regional hubs in Southeast Asia.
After collection, your goods need to be cleared for export by Singapore Customs at Changi Airport. In Singapore, exported goods are not subject to customs duties and Goods and Services Tax (GST) but all goods must be declared.2
To get your goods cleared for export, your shipment at the usually needs to have the following documents ready:
If you’re using air freight to export out of Singapore in bulk, you’ll also need to prepare the following documents and information for Singapore customs:
A UEN number and Customs Account are needed for both exporting from and importing into Singapore. A UEN is a standard identification number for businesses to interact with government agencies in Singapore.3 The UEN can be obtained by registering with a UEN issuing agency, such as Singapore’s Accounting and Corporate Regulatory Authority (ACRA). Once you have your UEN, you can register for a Customs Account on the Trade.net online portal.
If the goods are dutiable or subject to control, you must obtain an export permit. Goods that are exempted from needing an export permit can be found on Singapore’s Customs website.4 This permit can be applied for via Singapore’s Trade.net portal. You must declare the FOB value of your shipment in the export permit.
After checking these documents and clearing your shipment for export, your shipment can be loaded onto an airplane headed towards Malaysia.
One of the benefits of shipping via air freight from Singapore is its interconnectivity with surrounding countries, which makes it a great regional hub for Southeast Asia. In this example, Singapore has consistent flights every week to feeder lanes such as to Malaysia and Indonesia.
Before being loaded onto the plane, your products go through a few cargo handling procedures. These include security checks, consolidation of cargo, palletization or containerization if it hadn’t been done earlier and inspection and documentation. Once all that’s done, your order leaves Singapore, bound for Malaysia. The mid-mile leg of the journey will take a couple of 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:
The importing party must first register with the Companies Commission of Malaysia to import or export goods which require a license. Some of these items include certain livestock, 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.5
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.6
If your order which was shipped in via air freight has its customs valuation below Malaysia’s de minimis rate of MYR500, it won’t be charged additional duties and taxes before it can enter Malaysia.
The de minimis rate refers to a value threshold where fewer or no duties and taxes are charged if the shipment’s customs value, which includes your good’s price, shipping fee, and insurance costs if any, is below that point. This only applies to goods that are delivered via air freight. In Malaysia, the customs valuation is valued using the 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.7
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 within West Malaysia, your B2B shipments can be delivered directly to its destination. B2C parcels however, 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 destination warehouse 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.
Air freight works best when you need your goods delivered quickly. What’s better is when you have logistics service providers who can advise you on how to use 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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