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When thinking of expanding your eCommerce reach, it helps to think beyond your country’s borders. For merchants in Indonesia, the country’s proximity to other ASEAN markets also makes it an ideal country to expand from. One of these markets in ASEAN that eCommerce merchants can look into is the Philippines. This archipelago has a growing market, enjoying 4.54 billion internet users in 2020. Among these internet users, 76% of them have shopped online.1
Currently at USD 1 billion in 2020, the Philippines’ eCommerce market is forecasted to grow to USD 1.4 billion at a Compound Annual Growth Rate (CAGR) of 7.9%.2 We’ve covered the Philippines’ market information extensively on our Philippines country guide if you’d like to find out more.
In terms of eCommerce activity in the Philippines, most eCommerce orders tend to take place in the Metro Manila region. This region consists of 16 cities including Manila, Quezon City, Las Pinas, Taguig, and more. This region also has a population of 13 million people, making it the most populous area in the Philippines.3
In light of COVID-19 however, flights have been limited in an attempt to fight the virus. This would have implications on your deliveries to your eCommerce consumers, so it helps to stay on top of regulatory changes within the region so that you can prepare your supply chain accordingly.
The logistics supply chain can vary depending on your requirements and considerations. But generally, shipping B2C parcels or B2B freight from Indonesia to the Philippines would usually follow these steps. The example outlined here will show how shipments enter Metro Manila from the Jakarta region.
First mile delivery in international shipping, being the first stage of the logistics supply chain, is where the shipment leaves the merchant’s address. This starting address is also known as the origin, which can be a storefront, office, or warehouse. Prior to your goods leaving your storage facility, the product has to be packaged and labelled appropriately to facilitate smooth cross border shipping.
While transporting your goods, your packages may go through bumpy rides from turbulence and other events. Thus, having extra padding is recommended for fragile items, like using bubble wrap and packing peanuts. This is to prevent your goods from bouncing around within the packaging or the package getting deformed during shipping. You can learn more about these best practices in our article on packaging.
On top of that, you need to ensure that your shipping labels and customs documents are labelled clearly and accessible for customs inspection. To find out these best practices, you may check out our guides on labelling your shipments which is also part of our B2C Southeast Asia shipping resources.
When you’re ready to hand your shipments to your logistics partner, you can choose to have it picked up from your address or to drop off your shipment at your shipping partner’s designated drop-off points. Most shipping partners have a cut-off time for submitting orders in order to optimise their delivery routes so be sure to check the timings of any new logistics partners you’re looking to work with.
B2C parcels will typically be consolidated at a transportation hub along with other packages heading to the same country prior to customs clearance in Indonesia. B2B shipments, on the other hand, can be transported directly to one of the customs clearance warehouses at the port or airport since they already make up a larger weight and volume.
Depending on where your address is located, your parcel may need to be transported via a domestic flight to an international airport or port. For instance, it could be transported to Soekarno-Hatta International Airport, which is also the busiest airport in Indonesia.4 As for ports, international shipments typically leave from Tanjung Priok in North Jakarta.
When your parcel arrives at the port or airport, Indonesian customs officers will inspect the shipment to determine if it’s exportable from Indonesia. This is where they will first inspect your parcel’s shipping labels and documentation. To check if your B2B parcels require any special permits for export, you may search for the requirements in Indonesia’s Customs website.5
When it comes to the freight stage, shipping your goods from Indonesia to the Philippines can be done via air freight or sea freight.
For merchants shipping B2C parcels, air freight is the faster option, and the flexibility it provides by paying transportation costs only on confirmed orders helps especially if you don’t have a consistent order volume and need your parcels to reach the destination country quickly.
To ship into Metro Manila, your shipment will leave via Soekarno-Hatta Airport (CGK) and then enter Ninoy Aquino International Airport (MNL). Usually, airfreight’s speed makes it the preferred option for eCommerce merchants who want to test the market and pay for logistics costs only for confirmed orders.
However, due to the limited number of flights due to the COVID-19 pandemic, prices for air freight have increased from the lack of cargo space. The limited number of flights may also cause delays and affect the delivery timing for shipments.
On the other hand, sea freight is generally more cost-effective for shipping in bulk. Bulk sea freight can be done via full container load (FCL), or in less than container load (LCL). In the case of FCL, you’re paying for the entire container’s space to ship your goods, while in LCL’s case your order will be consolidated together with other shippers’ orders to fill up the container.
However, sea freight is slightly slower than air freight. When managing your inventory, you’ll need to take into account the estimated delivery date so that you can plan out your supply chain accordingly.
Metro Manila’s main port is the Port of Manila (PHMNL), with your goods leaving the Port of Tanjung Priok (IDTPP) if you’re shipping via sea freight from Jakarta. This transport mode is usually preferred if you have consistent sales volumes in Metro Manila or are planning to expand aggressively into the Philippines, as sea freight is suited to delivering large amounts of inventory at once.
With the COVID-19 pandemic around, sea freight could be a good alternative to air freight considering the shortage of available international flights. While slightly slower compared to pre-COVID air freight timings, they are still preferable to facing possible air freight delays during this period. If you’re shipping B2C, the process is similar to shipping via air freight. You may check with your shipping partner if they offer this option for you.
While there are direct air freight lines into the Philippines, you could also opt to have it routed to Singapore first before getting it transported to the Philippines. Although this will add to your delivery lead times, this can also be a cheaper option to deliver into the Philippines from Indonesia. Additionally, you’ll also be able to store your goods in Singapore for use as a regional fulfilment centre.
Once your shipment arrives at the airport or port in the Philippines, it will be transferred to a customs warehouse for clearance. This is where Philippine customs officers will inspect your shipment and shipping documents to determine if your product is allowed to enter the country.
To clear customs for import into the Philippines, you or your shipping partner would generally need to provide the following documents:
If your goods are below the Philippines’ de minimis value of PHP 10,000, you don’t need to pay for import duties and taxes.
The de minimis rate refers to a price threshold where fewer or no duties and taxes are charged if the shipment’s CIF value is below that point. A shipment’s CIF value includes the good’s price, shipping fee, and insurance costs if any.6 However, this exemption only applies to shipments sent via air freight. Thus, if you’re sending your goods with sea freight into the Philippines, you still need to pay import duties and taxes.
If your goods exceed the de minimis threshold, you’ll have to pay import duties ranging from 0% to 20% and a value-added tax (VAT) of 12%. The import duties’ rate is determined by your product’s harmonised systems code (HS Code). You may find out the percentage of import duties for your specific goods in this Tariff Finder.7
If you’re shipping a B2C parcel, you can choose to either pay for the import duties and taxes yourself or let your customers pay for the import duties and taxes. This is determined from the incoterms you choose, which is either Delivered Duties Unpaid (DDU) or Delivered Duties Paid (DDP). While we strongly encourage you to opt for DDP to keep your B2C shipping experience smooth, it helps to know what these arrangements mean.
Your shipment will enter the distribution stage once it has cleared customs. If the consignee is within the Metro Manila region, your B2B shipments can be delivered directly to the end address. B2C shipments on the other hand have to go through sorting at a transportation hub before it can enter the last mile delivery stage. However, if the address is in an area that can’t be reached with a van or truck, your shipment will go through an additional domestic flight or ship before it can be sorted and sent for last mile delivery.
Last mile delivery refers to the stage where your shipment is delivered from the destination warehouse to your consignee’s address. This stage of the delivery is done using vans in the Philippines. In this stage, your shipping provider will ensure that your shipment is received by the consignee. This is typically done through multiple delivery attempts and notifications to your consignee.
In light of COVID-19, the Enhanced Community Quarantine (ECQ) and General Community Quarantine (GCQ) have been put in place to try to curb its spread. Thus, last mile delivery throughout the Philippines may be delayed. It helps to set expectations with your customers and consignees on these delays, and to plan your supply chain accordingly.
Now that you know the full shipping process for sending your items from Indonesia to the Philippines, you’re in a better position to choose a shipping partner for your logistics needs. It’s best to find one who can cover the entire logistics supply chain from first mile to last mile, but having a flexible logistics partner can also take the burden off your supply chain woes. When choosing a logistics service provider, it helps to consider the cost, speed, and delivery experience before committing to a shipping solution.
If you’re considering expanding your online presence into the Philippines, it’s important to be able to make your eCommerce experience seamless. Thus, having a reliable eCommerce shipping partner that takes care of the logistics process will help you wow your customers so that they can keep coming back for more. That way, you’ll be way ahead of your competitors as you grow your regional presence within Southeast Asia.
Looking to ship internationally throughout Southeast Asia? Contact us to find out how.
We have other guides on how to ship from Indonesia to Southeast Asian destinations here:
For more information on Indonesia as a destination, we also have these guide here:
References:
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