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When thinking of expanding your eCommerce business’s reach, it helps to think beyond borders. For merchants based in Malaysia, Thailand is a great country to consider expanding to. As a fellow Tiger Cub economy, Thailand’s economic size, the growing prominence of eCommerce and that it shares a land border with Malaysia make it prime for expansion for Malaysian merchants.
In Thailand, 52 million people out of 69 million are internet users, giving the country an internet penetration of 75 per cent. Thai eCommerce consumers are mobile-first with We Are Social’s recent 2020 report1 mentioning that 69 per cent of internet users in Thailand bought products online via mobile devices compared to just 34 per cent who buy online through laptops or desktops.
Some of the products categories which do well in Thailand include fashion, mom and baby products as well as consumer electronics. Based on We Are Social’s report above, fashion and consumer electronics are doing particularly well - 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 be taking place in the Greater Bangkok Metropolitan region. Consisting of Bangkok, Samut Prakan, Pathum Thani, Samut Sakhon, Nakhon Pathom and Nonthaburi, this region made up 46.8 per cent of Thailand’s total GDP in 2017 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. Bangkok Metropolitan Area’s closest sea port is the Bangkok Modern Terminal (THBKK).
Depending on various factors such as the items you’re shipping, the size of the order, and how quickly your orders need to get into Thailand, your supply chain needs will vary. However, both B2B and B2C deliveries will usually follow these general steps. For this example, we’ll go through how B2C parcels and B2B shipments will be transported from the Klang Valley in Malaysia 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 can move the orders about. Thus, having extra padding is recommended for fragile items, such as using bubble wrap and packing peanuts. This is to prevent your goods from bouncing around within the packaging or the order 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. Check out the best practices in labelling your shipments and the importance of data accuracy in our previous articles.
When you’re ready to pass your shipments to your logistics partner, you can have it picked up from your address or drop it off 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 Malaysia. 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.
Before your order can be loaded onto the plane or ship, your order needs to be cleared for export by Malaysian customs. Malaysian customs officers will inspect the shipment, including its shipping label and relevant documentation to determine if it can be cleared for export from Malaysia. To check if your B2B parcels require any special permits for export, you may look up Malaysia’s Ministry of Trade and Industry webpage.6
After your shipments are cleared for export, your options for freight would be to ship to Thailand via air freight, sea freight, or cross-border trucking.
Under normal circumstances, air freight is usually the preferred option for B2C shipments, especially if you don’t have a consistent order volume and need your parcels to be sent to the destination country quickly. Shipments sent via air freight typically leave from Kuala Lumpur International Airport (KUL) and land at Suvarnabhumi Airport (BKK).
Depending on your arrangement with your logistics service provider, your order could first be sent to Singapore for consolidation with other Thailand-bound before being delivered by air freight to Thailand. This method can save you transportation costs in the long-run.
However, the COVID-19 situation has caused flights to be limited, causing the price for air freight to increase from the lack of cargo space. The flight limitations may also lead to delays in delivery speeds.
If you’re looking to ship in bulk, sea freight is the most cost-effective option. It is slightly slower than air freight, so you’ll need to plan out your supply chain and take note of your inventory. When shipping from the Klang Valley in Malaysia to Bangkok, sea freight shipments enter via the Bangkok Modern Terminal (THBKK) from Port Klang (MYPKG). This is the preferred mode of transport if you’re planning to set up or have set up a local distribution centre to expand your presence aggressively.
Sea freight shipments can be done via full container load (FCL) or less than container load (LCL). Shipping with FCL means that an entire container is used solely for your shipment to Thailand, whereas LCL means your shipments are consolidated with others and you’re paying for a part of the container.
Cross-border trucking is another option that you can consider for both B2C and B2B shipments into Thailand from Malaysia. With its speed and cost being between sea freight and air freight, it makes for a great option especially during periods when air freight rates are very high like the COVID-19 pandemic.
With the COVID-19 pandemic around, sea freight and cross-border trucking could be good alternatives 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.
After arriving at the destination port or seaport in Thailand, your shipment will be moved to a customs warehouse for clearance. At this warehouse, 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:
Thailand’s de minimis value is THB 1,500. If your shipment’s customs valuation is below this amount, it 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 with their customs valuations 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 THB 1500, 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 shipping a B2C parcel, you can choose to either pay for the import duties and taxes yourself or let your customers pay for them. These arrangements are determined from the incoterms Delivered Duties Unpaid (DDU) or Delivered Duties Paid (DDP) that you can arrange with your logistics service provider. While we strongly encourage you to opt for DDP to keep your B2C shipping experience smooth for your customers, it also helps to familiarise with what these arrangements mean.
After being cleared for import into Thailand, your shipment will be ready for the distribution stage. If you’re shipping a B2B order, it can be delivered directly to the destination address. B2C shipments, on the other hand, will need to be sorted at a transportation hub before they can be delivered to the consignees’ addresses. At the transportation hub, B2C parcels will be distributed to vans or motorcycles heading to your consignee’s area 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, be it a local distribution centre or transport hub, 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 Singapore 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 eCommerce shipping partner. With the right 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.
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