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Indonesia has great potential as a manufacturing hub and produces products like cosmetics and fashion products. With all this potential, it makes sense for Indonesian-based merchants to expand their reach beyond Indonesia to maximise this potential. Fortunately, Indonesia is surrounded by strong markets, and one of them really worth considering is Thailand.
Thailand has an internet penetration of 75 per cent, or 52 million internet users out of 69 million people. They are mobile-first with We Are Social’s recent 2020 report1 highlighting that 69 per cent of internet users bought products online via mobile devices compared to just 34 per cent who make online purchases through laptops or desktops.
Some popular products categories in Thailand consumers include fashion, mom and baby products as well as consumer electronics. Based on We Are Social’s report above, fashion and consumer electronics are particularly worth noting - the amount spent on these in 2019 are USD 1.03 billion for fashion and USD 1.15 billion for electronics and physical media.
In a report by McKinsey2, their Thai respondents mentioned they are brand-loyal but look out for affordable alternatives. In that report, they believed that spending on luxuries was great for rewarding themselves. However, with the recent COVID-19 outbreak, cheaper alternatives are likely to do even better in Thailand.
Most eCommerce purchases in Thailand will usually take place in the Greater Bangkok Metropolitan region. This region consists of Bangkok, Samut Prakan, Pathum Thani, Samut Sakhon, Nakhon Pathom and Nonthaburi. Together, the Greater Bangkok Metropolitan Region made up 46.38 per cent of Thailand’s total GDP in 2017, with Bangkok contributing 32.5 per cent of Thailand’s total GDP on its own, according to the National Economic and Social Development Council3. Mitsui4 believes that Bangkok is on its way to becoming a megacity, with its population breaching the 10 million mark.
As an economic centre, Thailand’s busiest airport and its main economic gateway, Suvarnabhumi Airport5 (BKK) is located in the Bangkok Metropolitan Region. This area’s closest sea port is the Bangkok Modern Terminal (THBKK).
Depending on factors like what you’re shipping, how much you’re shipping, and how quickly your orders need to get into Thailand, your supply chain needs will vary. But usually both B2B and B2C deliveries will follow these general steps. For this example, we’ll go through how B2C parcels and B2B shipments will be transported from Jakarta, Indonesia to the Greater Bangkok Metropolitan Region in Thailand.
First mile delivery in international shipping is where the shipment leaves the origin address. The origin address 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 events like turbulence or other bumpy rides which move the orders about. 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.
Shipping labels and required customs documents need to be displayed clearly and be accessible by customs officers for inspection too. Check out the best practices in labelling your shipments along with our other B2C shipping tips.
When you’re ready to hand over your shipments to your logistics partner, you can choose to have it picked up from your address or drop off your shipment at your shipping partner’s designated drop-off points. Most shipping partners have a cut-off time for submitting orders to have enough time to optimise their delivery routes.
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 the origin warehouse for customs clearance since they already make up a larger weight and volume compared to individual B2C shipments.
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 our example where our origin is in Jakarta, the shortest direct flight into Thailand is from Soekarno-Hatta International Airport. As for ports, international shipments typically leave from Tanjung Priok in North Jakarta.
When your parcel arrives at the port or airport in Indonesia, 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 deliveries require any special permits for export, you may look up Indonesia’s Customs website.6
For the freight leg of the journey, shipping your goods from Indonesia to Thailand can be done via air freight or sea freight.
For merchants shipping B2C parcels, air freight is usually preferred as it’s the faster option. Air freight is also especially good if you don’t have a consistent order volume and need your parcels to reach the destination country quickly. Depending on your arrangement with your logistics service partners, some flights will use Singapore as a hub to consolidate air freight volumes. This can help to reduce freight costs.
To ship into the Bangkok Metropolitan Region, your shipment will leave via Soekarno-Hatta Airport (CGK) and then enter Suvarnabhumi Airport (BKK). Airfreight’s speed also makes it the preferred option for eCommerce merchants who want to test the market, as inventory will mostly be held in Indonesia or the merchant’s regional fulfilment centre.
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, your order occupies the entire container 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.
The Bangkok Metropolitan Region’s closest port is the Bangkok Modern Terminal (THBKK), 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 can work with a reliable sales forecast for Thailand, as sea freight is suited to delivering large amounts of inventory at once. This forecast will also allow you to make use of a local distribution centre within Thailand for faster last mile fulfilment.
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. Check with your shipping partner if they offer this option for you.
Once your shipment arrives at the port or sea port in Thailand, it’ll be moved to a customs warehouse for clearance. This is where Thai customs officers will inspect your shipment and customs documents to determine if your product can be cleared for import into the country.
To clear customs for import into Thailand, you or your shipping partner would generally need to provide the following documents:
If your goods are below Thailand’s de minimis value of THB 1,500, your shipment will be exempted from duties.
The de minimis rate refers to a price threshold where fewer or no duties and taxes are charged on shipments valued below that point. In Thailand, this value takes into account your shipment’s CIF (cost, insurance and freight) value, which includes your good’s price, shipping fee, and insurance costs if any.7 However, this exemption only applies to shipments sent via air freight. If your goods are entering Thailand via sea freight your shipment will still face import duties and taxes.
However, if your goods exceed the de minimis threshold, you’ll need to pay import duties in the range of 5% to 30% and a value-added tax (VAT) of 7%. The percentage of the import duties 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 Thai Customs’ official Tariff Finder.8
If you’re a merchant 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 can be determined from the incoterms 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 also helps to familiarise with what these arrangements mean.
After clearing Thai customs, your shipment will enter the distribution stage. If you’re shipping a B2B order, it can be delivered directly to the destination address. B2C shipments will first need to be sorted at a transportation hub before they enter the last mile delivery stage. At the transportation hub, B2C parcels will be distributed to appropriate vans or motorcycles before the final leg of the delivery to consignees.
Last mile delivery refers to the stage where your shipment is delivered from the destination warehouse to your consignee’s address. In Thailand, this is normally done via motorcycles or vans, with multiple delivery attempts if the first one fails. Unlike the Philippines or Indonesia, deliveries in Thailand usually don’t require domestic flights before last mile delivery can begin.
With the knowledge of the whole shipping process for shipments from Indonesia to Thailand, you’re now in a better position to choose a suitable shipping partner. It’s best to find one who can cover every step of the logistics supply chain and is flexible enough to adapt to the world’s changing circumstances. When choosing a logistics service provider, consider their cost, speed, and delivery experience you’d like to offer before committing to a shipping solution.
With eCommerce likely to play a greater role in all over Thailand and Southeast Asia, expanding internationally into the Land of Smiles is definitely worth considering. To give your Thai consumers a great eCommerce experience, it helps to have a reliable and flexible shipping partner. With the right eCommerce logistics solutions, you can delight your customers with efficient delivery speeds while ensuring that your hottest products are always in stock.
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.
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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