A guide to shipping goods into Europe

In the last two decades, Indonesia has made significant strides towards economic stabilisation in a bid to recover from the 1997 Asian Financial Crisis that took a hit on its economy. In the second quarter of 2022, its GDP grew by 5.44%. A major part of this growth was driven by commodity exports to various regions in the world, accounting for 21.6% in 2021. Out of these regions, Europe is one of the top destinations for Indonesia’s exports. In this article, we provide some of the reasons why Indonesian businesses should consider selling their product to Europe, as well as how to handle the shipping process to this region.

What makes Europe attractive to Indonesian businesses?

Europe has a population of 746 million and is distributed among 44 nations. This provides a vast market for Indonesia’s top exports, such as palm oils, coal briquettes, and petroleum gas. The European Union – a supranational political and economic union located within Europe – is the second largest economy in the world. It is also the fifth largest trading partner of Indonesia – making it a crucial export destination for Indonesia. According to Trading Economics, there were US$19.78 billion worth of exports from Indonesia to the EU in 2021.

The rising trend of online shopping in Europe further opens greater demand for international products, such as Indonesian goods. According to Eurostat, prior to 2021, 66% of the surveyed individuals aged 16-74 have shopped online in the last 12 months.

Free Trade Agreements (FTAs) also helps to facilitate the flow of trade between Indonesia and the EU. The EU-Indonesia Free Trade Agreement that is currently in negotiation that has the potential to facilitate new market penetration, trade, and sustainable growth for Indonesian businesses in the EU.

Opportunity is ripe for small businesses in Indonesia. With the current efficient global shipping logistics and booming e-commerce markets, have access to these buyers from Europe and can ship to this region directly, providing many business opportunities to those that expand there.

Top Indonesian products that are sought after in Europe

While Indonesia is a major exporter of crude oil, petroleum and natural gas, there are many other products from various industries that make up its export numbers. According to Trading Economics (source above), top Indonesian exports to Europe include:

Animal or vegetable fats and oils and their cleavage products (US$3.53 billion)
Chemical products (US$1.73 billion)
Electronic products (US$1.52 billion)
Various kinds of footwear including gaiters (US$1.51 billion)
Rubber products (US$1.17 billion)

In addition, the growing demand for organic products such as edible fruits, nuts, cereal, miscellaneous edible preparations by consumers in Europe puts Indonesia, one of the world’s largest agricultural producers — in an advantageous situation. Small businesses in Indonesia, especially those in these industries, should explore ways to market and sell their product online. This way, they would be able to reach out to potential customers in Europe to increase their sales.

Tips to start shipping to Europe

Recently, the Indonesian government implemented the Omnibus Law that will streamline shipping procedures for businesses. The new provisions seek to encourage investors to tap into the shipping sector by removing barriers in certifications, logistics, and cabotage rules. Some of the procedures under the new law include;

1. Note the differences and similarities between European nations

Most European nations share several similarities. Notably, the 27 European countries that form the European Union (EU) member states share trade policies, single market policies, and more. Nonetheless, the nations differ to a certain extent in language, values, and other human demographics. Another aspect that might influence your shipping decision is that only 19 out of 27 EU states use the Euro as the de facto currency.

When marketing your business to Europeans, you should consider differences and similarities that are favourable to you. If you realise that issues like language barrier might affect your customer satisfaction, target countries that speak the language you prefer. Alternatively, you can add a plugin on your website to translate content to the local language for a wider reach.

2. Obtain licences and shipping documents

Shipping documentation required depends on the export destination and country of origin. In Europe, your parcel will be inspected at the customs offices. Part of this inspection involves lodging declarations using various documents such as certificates of origin (COO). Other documents include a commercial invoice, packing list, bill of lading and export declaration of goods (PEB). Preliminary licences required to export commodities out of Indonesia are: business Identification number, export registration licence and export approval licence. The Indonesian Ministry of Trade (MoT) is primarily in charge of shipping activities such as registration and licensing. However, other bodies might be involved depending on the commodity you are exporting to Europe.

3. Customs regulations and duties

It is also important to understand the customs regulations when you ship parcels to Europe. Customs authorities will inspect commodities from Indonesia in Europe. Part of the inspection is to curb smuggling and facilitate file export declarations. The EU-Indonesia trade negotiations aim at simplifying and modernising the shipping process for businesses.

Taxes and duties are also charged on parcels accordingly. Like most export destinations, customs duties in Europe are calculated based on rules of origin, the value of goods, and customs tariffs. The good news is that European customs fees are relatively low compared to other markets.

4. Offer favourable shipping services

Due to the high levels of competition in the European markets, businesses are striving to keep up with the competition in order to meet customers’ high expectations. According to a study by E-commerce Delivery Compass, European online shoppers expect a maximum of three-day delivery for goods. Customers are not likely to repeat their orders from businesses that take more than three days to deliver. That is why logistics companies like DHL Express offer time-sensitive services and last-mile delivery services to meet the demand for fast shipping.

Another competitive area is delivery costs. A survey by YouGov and Seven Senders found that 55% of European online customers choose an e-commerce store based on delivery costs. Furthermore, nations like Spain and France expect low or zero delivery fees. For Indonesian businesses looking to expand into the European market, it is important to consider some of these factors in order to remain competitive.

Start shipping to Europe with DHL Express

From these numbers, one pattern emerges – small businesses from Indonesia can reach European markets via e-commerce. This means there's a huge opportunity to start shipping to Europe.

Success in international e-commerce mostly depends on logistics. Are you delivering packages on time? Are you offering customers competitive delivery fees? Is the shipment being handled properly? Outsource your shipping services to DHL Express, and we will handle all your shipping needs as you focus efforts on other aspects of your business. Sign up for an account with DHL Express today and start sending a parcel to Europe.