Prior to recent events in 2020, the Philippines was seen as a rising star by Standard Chartered Bank.1 Benefitting from regional trade deals, physical and digital infrastructure investments and increasing openness amid US-China trade tensions, Standard Chartered also credited it for its economic dynamism and GDP growth potential.
The Philippines’ economic potential shouldn’t be overlooked, even with 2020’s recent uncertainty. For instance, a study by Google and Temasek in 20192 highlighted the Philippines’ internet economy was growing between 20 – 30 per cent annually, with more details which can be found in our Philippines’ eCommerce guide. The Philippines also imported a total of USD 112.9 billion in 2019.3
Being an archipelago that comprises more than 7,000 islands,4 the Philippines shares maritime borders with China, Taiwan, Japan, and various Southeast Asian countries. Ocean freight within Southeast Asia is unique in that sea freight shipments between SEA countries are fast enough to be a viable alternative to air freight. This is due to Southeast Asia having most major international sea freight hubs reasonably close to one another.
With that in mind, anyone eager to sell goods to the Philippines’ needs to know when to use sea freight in their Philippines-bound supply chains, including businesses based in Singapore. Singapore being one of the world’s busiest ports5 in terms of container throughput traffic provides shippers with costs and connectivity advantages when shipping sea freight from Singapore to other countries in Southeast Asia.
But for businesses with inventory based in Singapore, it helps to run through the general steps and documents involved and when it makes sense to use sea freight.
In this step, your shipping partner collects your shipment from your business address or your supplier, otherwise known as the origin address. The way your sea freight order will be handled, charged, and containerised will differ depending on whether you’re shipping by Full-container-load (FCL) or Less-than-container-load (LCL). You can find the main differences between FCL and LCL below.
For FCL shipments, your goods will be shipped in a container just for your order. For this, you’ll pay a flat rate for the whole container that you’ll be using. While expensive upfront, it may be a cheaper option than shipping a particularly large LCL order in terms of cost per cubic metre (cbm).
LCL orders are generally charged by volume, since your shipment will be sharing the container with other people’s shipments. Below a certain volume, LCL can still be cheaper than FCL on a per shipment basis if you don’t need a full container for each delivery.
When your shipment has filled about half of a container, it usually makes sense to buy a whole container (FCL). 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 your freight forwarder to consolidate multiple shippers’ shipments into a single container. This need for consolidation could also slow down loading times and make their sailing dates less flexible than FCL. FCL is cheaper in terms of price per cbm and usually faster as you are in control of the whole process. On the other hand, FCL requires you to have the volume to justify using a whole container.
LCL shipments face more handling compared to FCL shipments. FCL shipments can be packed and sealed into a container at the origin address before being opened only after it arrives at the destination.
LCL shipments, on the other hand, 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. All this handling could increase the chances of items getting damaged or misplaced, but you can check with your shipping partner how they cover potential losses during transit.
Depending on the nature of your order, your sea freight shipping partner will help to recommend whether FCL or LCL suits your shipment better. Once the order is collected, your shipping partner will transport it to one of Singapore’s seaports.
Whether you need LCL or FCL for your upcoming shipment, Janio Asia’s got the right sea freight solution tailored to your freight forwarding needs. Chat with our supply chain consultants via the link below!
After collection, your goods need to be cleared for export by Singapore Customs at the seaport. Aided by its strategic geographical position, Singapore has one of the world’s busiest ports and has simple and streamlined import and export procedures. In Singapore, goods being exported are not subject to customs duties and Goods and Services Tax but all goods must be declared.6
To get your goods cleared for export, your shipment at the usually needs to have the following documents ready:
A UEN number and Customs Account are needed for exporting from and importing into Singapore. A UEN is a standard identification number for businesses to interact with Singapore’s government agencies.7 The UEN can be obtained by registering with a UEN issuing agency, such as Singapore’s Accounting and Corporate Regulatory Authority (ACRA). After getting your UEN, you can register for a Customs Account on Trade.net online portal.
You must obtain export permits if the goods you are shipping out of Singapore are dutiable or subject to control. Goods that are exempted from needing an export permit can be found on Singapore’s Customs website. This permit can be applied for via Singapore’s Trade.net portal.8 The FOB value of your shipment must be declared in the export permit application.
After checking these documents and clearing your shipment for export, your shipment can be loaded onto a vessel.
After your shipment is cleared for export from Singapore, it will be loaded onto a Philippines-bound vessel.
Using sea freight from Singapore has a number of advantages. With a port which processed 37.5 million TEU containers in 2019 alone, Singapore’s port has great economies of scale. This makes Singapore a great logistics hub as it has great connectedness to other lanes and is cheaper and faster than regional competition.
Singapore has unrivalled two-way access to main trade lanes to China, the USA, Europe and the rest of Asia. Its strategic position as a hub or exchange port means it has unrivalled access to feeder lanes like Singapore to Manila, Philippines.
Calling back to the article’s opening, sea freight between Southeast Asian countries can at times be a great alternative to air freight. With major seaports in SEA being situated in a relatively small geographical area, intra-Southeast Asian sea freight shipments aren’t as slow compared to traditional lanes such as those from Europe to China.
In exchange for taking 5 to 8 days to reach the Philippines from Singapore by sea compared to air freight’s normal 1 to 2 days, sea freight costs far less than air freight. If you’d like to find out more about how you can incorporate more sea freight into your supply chains to the Philippines, consider reaching out to our supply chain consultants via the button below.
This comparison with air freight is particularly important in light of how COVID-19 has shaken up the logistics industry recently. With the supply of air freight greatly reduced, air freight rates have skyrocketed while competition for remaining cargo space is fierce. With delays likely to arise from said shortage, sea freight is definitely worth considering for your Singapore to Philippines lanes.
If your shipment is heading to Manila, the Philippines, it will be unloaded at one of the city’s main ports such as the Port of Manila. Your shipment will then be inspected by Philippines customs officers for import clearance.
To get import clearance in the Philippines, your shipment will need the following documents:
The importer receiving your shipment in the Philippines needs to have an Import Clearance Certificate from the Philippines’ Bureau of Internal Revenue. They’ll also need to register with the Bureau of Customs and set up a Client Profile Registration System account.
If your order contains any items that the Philippine government regulates imports of, the importing party also needs to have registered with the governing body in charge of that good and obtain a valid certificate for it. For instance, bringing in soap requires your importing party to also be registered with the Philippine Food and Drug Administration as a Drug Importer while also having a relevant Certificate of Product Registration.
You can check if your commodity is regulated at the Philippine National Trade Repository website, which also shows which documents and agencies you need to register with.9 If you’re also interested in the Philippines’ customs clearance for B2C shipments, check out our updated customs clearance guide.
Once your goods have been cleared for import, the last mile leg depends on whether you’re shipping LCL or FCL and which part of the Philippines your destination is.
If your shipment is LCL, the container your order is in will be unpacked to distribute the different shipments to their respective destinations. Your shipment will then be shipped for the last mile leg either as loose cartons or as pallets depending on how they were initially packed. If your shipment is FCL, your shipment doesn’t need to be unpacked and transported directly to the last mile address.
Depending on where your destination in the Philippines is, your LCL shipment may need either an additional flight to an airport closer to the order’s destination. Either way, the final leg of the delivery will be done via vans or trucks depending on whether it’s a full container or separate pallets being delivered.
Sea freight is the most common method of transporting goods, carrying 90 per cent of goods worldwide. With ships being able to carry the greatest amount of cargo per trip, it’s the most cost-efficient and most environmentally friendly in terms of emissions per transported cargo.10 Sea freight shouldn’t be used for every type of shipment, but it can work well depending on what you need in terms of:
While slower than air freight, sea freight works best when saving on cost is more important than shipping 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 items that would normally be restricted from being transported via air freight.
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 slightly slower than air freight while costing much less. In Southeast Asia, sea freight shipments to some destinations take only 1 or 2 extra days more than air freight.
This is great news for eCommerce merchants during the current COVID 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 e-commerce cross-border delivery needs, come and have a conversation with us.
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