Comprehensive Guide to International Logistics for E-commerce Sellers in Malaysia

Logistics in Malaysia currently ranks at the top of the list of contributors to Malaysia’s trade and economic growth. In fact, it has been predicted that by 2026, the industry’s annual compound growth will be 11% and will continue to grow for the preceding decade. Moreover, Free Trade Agreements with the SEA region and Malaysia’s placement as a trading port offer the advantage of unrestricted connectivity, helping urge international movement of goods forward.

International Logistics largely entails transporting goods, particularly finished goods, between countries. It is an international distribution system and consists of cross-border supply chain efforts. In the globalized world we live in today, international logistics is vital. Moreover, with Malaysia finding a voice in the SEA region amongst logistics giants, integrating with an international logistics provider has become a non-negotiable requirement. 

But how exactly do you determine that your international logistics efforts internationally from Malaysia are not going in vain? You must have a thorough understanding of the key elements of international shipping in Malaysia, key trends that make up the industry, and the different components and associated challenges in the international logistics industry. Read along as we look at these topics in greater depth and offer crucial insights and tips that might help ensure a smoother cross-border logistics experience for you.

Key elements of international shipping in Malaysia

For Malaysian e-commerce sellers venturing into the global market, navigating the intricacies of international shipping can be daunting. However, understanding three key elements – freight forwarding, customs clearance, and warehouse management – can streamline the process and ensure smooth delivery to your customers.

1. Freight Forwarding

Think of freight forwarders as your international shipping experts. They manage the entire journey of your goods across borders, ensuring cost-efficiency and compliance with global trade regulations. Their services encompass:

• Negotiating Rates: Freight forwarders leverage their established relationships with shipping lines and airlines to secure competitive rates for your shipments.
• Documentation and Customs Clearance: They handle the complex paperwork involved in international shipping, ensuring all necessary documents are accurate and meet customs requirements, avoiding delays and potential penalties.
• Multimodal Transport: Depending on factors like cost, urgency, and cargo type, freight forwarders can arrange the most suitable combination of air, sea, or land transportation for your goods.

Outsourcing freight forwarding can benefit Malaysian e-commerce sellers by allowing them to gain valuable expertise and peace of mind while allowing them to focus on their core business.

2. Customs Clearance

Customs clearance is a crucial step in which your shipment undergoes inspection by the destination country’s authorities. To ensure a smooth passage, several factors need consideration:

• Understanding Import Regulations: Different countries have varying import regulations regarding duties, taxes, and prohibited items. Researching these regulations beforehand is essential to avoid delays at customs.
• Accurate Documentation: Accurate documentation, including commercial invoices, packing lists, and certificates of origin, is vital for a swift customs clearance process. Freight forwarders can be invaluable partners in ensuring all documents are prepared correctly.
• Tariffs and Duties: Be prepared to pay any applicable import tariffs and duties levied by the destination country. Factoring these costs into your pricing strategy is crucial.

E-commerce sellers can efficiently navigate customs clearance by partnering with a freight forwarder or a customs broker familiar with Malaysian exports and the regulations of the target market.

3. Warehouse Management

For e-commerce businesses with high international order volume, strategically located warehouses can significantly optimise delivery times and costs. Warehouses can be used for:

• Decentralised Inventory Storage: Storing popular or frequently ordered items in warehouses closer to your target markets can expedite delivery times and improve customer satisfaction.
• Consolidation: Consolidating multiple smaller shipments into larger ones for international transport can lead to significant cost savings. Warehouses can facilitate this process.
• Fulfilment: Warehouses can be equipped for order fulfilment activities like picking, packing, and labelling, ensuring faster dispatch of orders to international customers.

While establishing and managing warehouses can add complexity, for high-volume sellers, the benefits of faster delivery times and potentially lower shipping costs can be substantial.

Key Trends in International Logistics for E-commerce in Malaysia

1. Government as a Catalyst for Growth: The Malaysian government actively supports the logistics industry through initiatives like the National Logistics Master Plan, Digital Free Trade Zones, and the Third Industrial Masterplan (IMP3). These programs focus on infrastructure development, fostering innovation, and attracting foreign investment, creating a fertile ground for logistics businesses to thrive.
2. Efficiency Powered by Technology:  The Malaysian logistics industry is embracing modern technologies like automation, artificial intelligence, and data analytics to optimise operations. Warehouse automation, route optimisation software, and real-time shipment tracking are examples of how technology is transforming the sector. These advancements improve efficiency, reduce costs, and enhance transparency throughout the supply chain.
3. Collaboration for Growth: Recognizing the interconnectedness of the global marketplace, Malaysia is forging strategic partnerships with international logistics leaders. These collaborations facilitate knowledge sharing, joint infrastructure projects, and access to new markets, propelling the Malaysian logistics sector towards becoming a major player in the global arena.

Capitalising on these trends allows Malaysian logistics companies to be well-positioned to not only support the country’s burgeoning e-commerce sector but also become key players in the international logistics landscape.

Steps to International Shipping in Malaysia

Conquering international shipping can feel overwhelming, but with a well-defined process, you can ensure your Malaysian products reach your global customers smoothly. Here’s a breakdown of the key steps:

1. Find the Right Shipping Partner

Your first crucial step is choosing a reliable shipping partner. Consider factors like:

• Services Offered: Does the carrier cater to your specific needs (e.g., express delivery, door-to-door service)?
• Destination Coverage: Do they deliver to your target markets?
• Competitive Rates: Compare pricing options to find a cost-effective solution.
• Reputation: Research the carrier’s track record for reliability and customer service.

Shipping partners can be excellent since they offer expertise, manage complex paperwork, and negotiate competitive rates.

2. Destination Warehouse Handling

For high-volume sellers, consider using warehouses strategically located in your target markets. This allows for faster delivery times, potential cost savings through consolidation, and efficient fulfillment.

3. Package Your Goods Securely:

Use high-quality packaging materials appropriate for the weight, size, and fragility of your items. Double-boxing for delicate items and proper cushioning are essential to prevent damage during transit.

4. Choose the Right Level of Service:

Select the most suitable shipping service to balance speed with cost. Options range from express delivery for urgent shipments to more economical sea freight for less time-sensitive items.

5. Provide Accurate Shipment Details:

Carefully prepare all necessary documentation, including:

• Commercial Invoice: This details the value of the goods, product descriptions, and HS codes (harmonized system codes for classifying goods).
• Packing List: This provides an itemized list of the contents in your shipment.
• Customs Declaration Form: This outlines the shipment’s value, destination, and purpose (commercial or personal).
• Print and Attach Shipping Labels and Documents: Clearly print and attach all shipping labels and documents securely to your package. Ensure the information on the labels matches your documentation precisely.

6. Pass Your Shipments to the Carrier:

Once everything is prepared, schedule a pick-up with your chosen carrier or drop off your package at their designated location.

By following these steps and remaining organized, Malaysian e-commerce sellers can confidently navigate international shipping and ensure their products reach their global customers efficiently and securely.

Challenges in International Logistics in Malaysian E-commerce

While the potential rewards of international sales are significant, Malaysian e-commerce businesses must also navigate logistical hurdles. Here’s a closer look at some key challenges:

1. Timely Deliveries:  Ensuring fast and reliable delivery across vast distances can be complex. Factors like customs clearance procedures, dependence on international carriers, and potential delays can significantly impact delivery times. This can frustrate customers accustomed to swift domestic deliveries.
2. High Container and Shipping Costs: International shipping costs are always sky-high. Nevertheless, these costs get even more expensive when they are done ad-hoc due to fluctuations in weight and product size. This can be a catalyst towards increasing the price of shipping, causing buyers to drop off your website.  
3. Late Shipments:  Unforeseen events like bad weather, port congestion, or delays in customs clearance can cause shipments to arrive later than expected. Implementing robust contingency plans and clear communication with customers can help mitigate the impact of such delays.
4. International Customs and Taxes:  Understanding and navigating the customs regulations and tax structures of different countries can be a significant challenge. Incorrect documentation or failure to declare items properly can lead to delays, penalties, and frustrated customers. Partnering with a freight forwarder or customs broker can help ensure smooth customs clearance.
5. Returns Management: Managing international returns can be complex and costly. E-commerce sellers need to establish clear return policies and efficient reverse logistics processes and factor in potential return shipping costs when calculating their international pricing strategy.

Tips to ensure smooth international logistics for faster fulfillment

Conquering international logistics can unlock a world of opportunity for your Malaysian e-commerce business. However, ensuring smooth fulfillment requires a strategic approach. Opting for a 3PL can ensure that your cross-border efforts pay off and you are able to maximise your revenue. Here are some key tips to expedite deliveries and ensure satisfy your global customers:

1. Determine Product Classification

Understanding how your products are classified under the Harmonized System (HS) code system is crucial. HS codes determine import duties and customs clearance procedures. To classify your products accurately, utilize resources like Malaysia’s Department of Statistics website or consult a freight forwarder.

2. Ensure High-quality, Sturdy Packaging

Invest in high-quality, durable packaging that protects your products during international journeys. Consider Locad’s picking and packing services for efficient order fulfillment.  For complex items, Locad’s kitting and assembly services can ensure your products arrive ready for use.

3. Make Accurate Cost Considerations

Factor in international shipping costs when determining your pricing strategy. Utilize online shipping calculators or consult your chosen carrier for accurate estimates. Locad’s borderless fulfillment solution can provide a cost-effective alternative to traditional international shipping, especially when launching into new markets.

4. Update Your Website and Policies

Clearly communicate your international shipping policies on your website. Include details like estimated delivery times, and any potential duties or taxes customers might encounter, and your return policy.

5. Estimate Shipping Times and Offer Tracking

Provide realistic estimates for international shipping times. Partner with a carrier that offers international shipment tracking so you and your customers can monitor the progress of deliveries.

6. Find A Reliable Cross-Border Partner 

Choosing the right international logistics partner is vital. Look for a company with experience handling shipments to your target markets. Locad’s cross-border services can streamline your international fulfillment process. Their automated last-mile carrier assignment ensures your shipments are delivered efficiently through the most suitable local carrier at the destination. 

Simplify International Logistics for your E-Commerce Business with Locad

Navigating the complexities of international logistics can be a daunting task for Malaysian e-commerce businesses. This is where Locad comes in. We offer a comprehensive solution designed to streamline your cross-border operations.

• End-to-End Logistics Management: Locad provides a one-stop solution for all your international logistics needs. From import and export clearance to warehousing, fulfillment, and last-mile delivery, we handle it all.
• Seller and Importer of Record Services: We offer both seller and importer of record services, providing flexibility and control over your cross-border operations.
• Sea, Air, and Land Freight: Whether you’re shipping by sea, air, or land, Locad has the capabilities to handle your freight movements efficiently.
• Consolidated Platform: Say goodbye to managing multiple brokers for each stage of your cross-border journey. Locad offers a unified platform for all your logistics needs.

Conclusion

Venturing into the exciting world of international e-commerce opens a treasure trove of opportunities for Malaysian businesses. However, navigating the complexities of international logistics can feel daunting. By understanding the key elements – freight forwarding, customs clearance, and warehouse management – Malaysian e-commerce sellers can establish a strong foundation for success.

The journey towards becoming a global e-commerce leader requires embracing current trends. The Malaysian government’s focus on infrastructure development and technological advancements positions the country for significant growth in the logistics sector. Additionally, Malaysian businesses can capitalize on the increasing adoption of sustainable practices and forge strategic partnerships with international logistics leaders to expand their reach.

While challenges like ensuring timely deliveries, managing international customs, and handling returns exist, they can be effectively addressed with a proactive approach. By meticulously classifying products, employing secure packaging solutions, and partnering with a reliable international logistics provider, Malaysian e-commerce sellers can streamline fulfillment and ensure a satisfying experience for their global customers.

Locad stands ready to be your trusted partner on this exciting journey. Our comprehensive services, including picking and packing, borderless fulfillment, and automated last-mile carrier assignment, empower Malaysian businesses to conquer international logistics confidently. Contact Locad today and unlock the full potential of your Malaysian e-commerce venture on the global stage.