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Malaysia’s economic rise is a force to be reckoned with. Compared to its neighbours, Malaysia is the third most prosperous nation in Southeast Asia,1 with a GNI per capita of USD 9,690, a sharp increase from 1981’s figure of USD 1,930.2 It’s a country that is on track to become a developed nation and it’s seeing a massive increase in the middle class, which brings along with it an increased demand for retail and eCommerce.3
Singapore’s proximity to Malaysia makes it an attractive market for Singapore-based businesses to begin expanding internationally. Additionally, businesses will be spoilt for choice when it comes to shipping their goods into Malaysia since it is accessible via air, sea, and land from Singapore. So, when does it make sense to ship with sea freight to expand into Malaysia?
Before that however, let’s dive into how sea freight from Singapore to Malaysia works.
Shipping with sea freight, or ocean freight, generally follows these steps:
The way your sea freight shipments will be handled, charged, and containerised will differ depending on which shipping arrangement you’ll choose, which is either Full-container-load (FCL) or Less-than-container-load (LCL). These are the considerations to have in mind when choosing between LCL or FCL.
Shipping with FCL means you pay a flat rate for the whole container that will transport your goods. At a certain weight break, FCL may be more cost effective than LCL orders in terms of cost per cubic metre (CBM).
LCL orders are charged by the amount of volume or weight of your shipments. Below a certain volume, LCL can be cheaper than FCL if you don’t need a full container for each delivery.
As a rule of thumb, it usually makes sense to go with FCL when your shipment has filled about half of a container. This is around 10 cbm for a twenty-foot-equivalent (TEU) container. A TEU’s volume is usually between 23 to 25 cbm.
LCL shipments require more work from your freight forwarder because they need to consolidate multiple shippers’ shipments into a single container that’s heading to the same destination. This need for consolidation could also slow down loading times by 1 or 2 days. This need for consolidation also makes sailing dates for LCL less flexible than FCL. FCL is cheaper and usually faster as you are in control of the entire container.
LCL shipments also face more handling compared to FCL shipments. Since LCL shipments need to first be consolidated into a container, get unpacked at the seaport to be assigned to a last mile truck before finally arriving at the destination address, this handling could increase the chances of items getting damaged or misplaced. However, you can check with your shipping partner on how they cover potential losses during transit.
FCL shipments on the other hand can be packed and sealed at the container at the origin address then get opened only once it arrives at the destination. This ensures that all of your items are in place during transit. Depending on the nature of your shipments, your shipping partner will advise you on which of the two arrangements is better.
Looking to start shipping with FCL or LCL? Janio’s flexible freight forwarding solutions will get your items into Malaysia fuss-free! Talk to our supply chain consultants to get the best solution now!
After collecting your shipments, it needs to be cleared for export by Singapore’s Customs at the sea port. Goods being exported from Singapore are not subject to customs duties and Goods and Services Tax,4 but all goods exiting the country must be declared. With Singapore being one of the busiest ports in the world, the customs clearance procedures are simple and streamlined.
To get your goods cleared for export, your shipments minimally need to have the following documents ready:
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 Singapore’s government agencies.5 This number 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 your shipments contain dutiable or controlled goods, you’ll need to obtain extra export permits. You may refer to Singapore’s Customs website to check the list of goods that are exempted from an export permit.6 This permit can be applied for via Singapore’s Trade.net portal, and the FOB value of your shipment must be declared when applying for an export permit. While shippers based in Singapore still need to provide their UEN, your freight forwarding partner will be able to apply for your export permit on your behalf.
After checking these documents and clearing your shipments for export, your shipments can be loaded onto a vessel.
After your shipment is cleared for export from Singapore, it will be loaded onto a vessel that’s bound to Malaysia.
Singapore’s port benefits from huge economies of scale. From its developed infrastructure and efficient container processing speeds, this hub is a cheaper and faster alternative compared to the regional competition. In 2019, Singapore’s port processed 37.2 million TEU containers alone.7
Singapore’s geographic advantage also means unrivalled access to trade lanes in the Eastern and Western hemisphere. Its strategic position as a hub or exchange port to lanes in China and the USA means it has access to feeder lanes like Singapore to Jakarta, Indonesia or Singapore to Bangkok, Thailand.
Sea freight between Southeast Asian countries can, in certain cases, be a better alternative to air freight. With major sea ports in SEA being clustered in a relatively small geographical area, sea freight shipments between these countries aren’t that slow, and some lanes can just be 1 or 2 days slower than air freight. This is especially for the Singapore-Malaysia lane, as sea freight delivery timing ranges between 3 to 4 days, compared to air freight’s 1 to 2 days for a fraction of air freight’s cost.
Once the shipment arrives at Malaysia, it will be unloaded at the destination port for customs clearance. In West Malaysia the main port where your goods would be unloaded is at Port Klang (MYPKG), whereas in East Malaysia, there’s Kuching Port (MYKCH) for addresses in Sarawak and Kota Kinabalu Port (MYBKI) for those in Sabah.
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.8
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.9
Once your goods have cleared customs, it enters the last mile delivery stage. How this is handled depends on whether the shipments are FCL or LCL, and where the consignee’s address is.
If your shipment is shipped with LCL, it needs to be unpacked at a container freight station (CFS) at the destination port first prior to entering the last mile delivery stage. Depending on how it was packed prior to entering an LCL container, it will be transported as loose cartons or as pallets. Shipments will be transported via vans or trucks depending on the size of the shipment.
FCL shipments will be transported as-is to the consignee’s address during this leg of the journey. The container is first loaded onto the chassis of a lorry and then transported to the consignee’s address. Then the goods are unpacked at the address before a haulier comes back to bring the container back within a few days from unpacking.
Sea freight is the transportation of goods within containers by sea. Carrying 90 per cent of goods worldwide,10 sea freight is the most common way of transporting goods while also being cost-efficient and comparatively environmentally friendly.
With that said, sea freight isn’t for everyone. This mode of transport works well based on factors such as:
While not as fast as air freight, sea freight works best when you’re prioritising cost savings over speed. Sea freight is also great for a wider range of goods that may be too costly to ship via air freight like bulky or oddly-sized items, or too dangerous to meet air freight’s tight restrictions on what can be shipped.
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.
Sea freight between Southeast Asian nations has the added benefit of only being slower by a few days compared to air freight while costing much less.
This is great news for eCommerce merchants during the current COVID-19 pandemic. If you’re currently working with Janio for air freight, switching to sea freight involves the exact same steps. You simply need to tell us that you’d like your parcel shipped by sea freight and we’ll take care of the rest.
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.
This is part of a series on how to ship with sea freight throughout Southeast Asia. You may also be interested in the following lanes:
Find out the process of shipping via air freight and sea freight from Hong Kong to Singapore including customs documentation here!
Getting accurate data on the shipping label is crucial in the cross-border shipping process. Find out how you can ensure data integrity for a smooth eCommerce delivery.
With different import duty and tax rates for every country and every type of item, customs payments may appear daunting. Read on to find out how customs clearance can be made smoother with delivered-duties paid (DDP) so that you can expand into the Southeast Asian market with a peace of mind!
Customs Clearance requires your shipment to gain official permission to enter a country and for the required duties and taxes to be paid. That's the gist of it, but there's more, click here to find out more!