Freight Agreement (Malaysia)
FREIGHT AGREEMENT
Carriage by Road Act 1950 (Act 424) | Carriage of Goods by Sea Act 1950 | Carriage by Air Act 1974 (Act 148) | Customs Act 1967 (Act 235)
THIS FREIGHT AGREEMENT is entered into on [Agreement Date]
BETWEEN:
(1) [Shipper Name], of [Shipper Address] (hereinafter referred to as the "Shipper"); AND
(2) [Carrier Name], of [Carrier Address] (hereinafter referred to as the "Carrier").
1. CARGO AND TRANSPORT
1.1 The Carrier agrees to carry the following cargo for the Shipper: [Cargo Description]
1.2 Mode of transport: [Mode of Transport]
1.3 Origin / port of loading: [Origin Port]
1.4 Destination / port of discharge: [Destination Port]
1.5 Incoterms 2020 trade term applicable to this Agreement: [Incoterms]. The agreed Incoterm determines the allocation of freight costs, insurance obligations, and risk of loss between the Shipper and the consignee.
2. FREIGHT CHARGES AND PAYMENT
2.1 The Shipper shall pay the Carrier the following freight charges: [Freight Rate]
2.2 Freight charges are payable in [Freight Currency]. Service tax at 8% under the Service Tax Act 2018 (Act 807) is added to freight charges for domestic road freight where the Carrier is a service tax-registered business.
2.3 The Carrier shall issue a House Bill of Lading (for sea freight), Air Waybill (for air freight), or consignment note (for road freight) upon receipt of cargo in apparent good order and condition.
3. CARRIER LIABILITY AND INSURANCE
3.1 The Carrier's liability for loss, damage, or delay to cargo is governed by the applicable legislation for the mode of transport: (a) Sea freight: Carriage of Goods by Sea Act 1950 incorporating the Hague-Visby Rules — limited to SDR 666.67 per package or SDR 2 per kilogram, whichever is higher; (b) Road freight: Carriage by Road Act 1950 (Act 424); (c) Air freight: Carriage by Air Act 1974 (Act 148) incorporating the Montreal Convention — approximately SDR 22 per kilogram.
3.2 Cargo insurance: [Cargo Insurance]
3.3 The Carrier shall maintain adequate liability insurance for the duration of this Agreement and shall provide evidence of insurance coverage to the Shipper on request.
4. CUSTOMS COMPLIANCE
4.1 Customs declarations under the Customs Act 1967 (Act 235) of Malaysia shall be the responsibility of: [Customs Responsibility]
4.2 The party responsible for customs declarations shall ensure timely and accurate filing through the National Single Window (NSW) platform operated by Dagang Net Technologies Sdn Bhd and the Royal Malaysian Customs Department (RMCD) Customs Information System (CIS).
4.3 Any customs duties, anti-dumping duties, or penalties arising from incorrect or late customs declarations shall be borne by the party responsible for the relevant declaration.
5. GENERAL PROVISIONS
5.1 This Agreement is governed by the laws of [Governing Jurisdiction] and the Parties submit to the jurisdiction of [Governing Jurisdiction] for all disputes arising from or in connection with this Agreement.
5.2 Stamp duty at a fixed rate of RM10 under the Stamp Act 1949 (Act 378) shall be paid to render this Agreement admissible as evidence in Malaysian courts.
5.3 This Agreement constitutes the entire agreement between the Parties with respect to the carriage of the specified cargo and supersedes all prior quotations, correspondence, and understandings.
Shipper
________________
Signature
Carrier / Freight Forwarder
________________
Signature
What Is a Freight Agreement (Malaysia)?
A Freight Agreement in Malaysia sets out the rights and obligations the parties agree to be bound by.
Malaysia's freight law draws from multiple statutes depending on the mode of transport. Road freight is governed by the Carriage by Road Act 1950 (Act 424) and the Road Transport Act 1987 (Act 333), with goods vehicle licensing administered by the Land Public Transport Commission (SPAD) under the Land Public Transport Act 2010 (Act 715). Sea freight originating from Port Klang (Pelabuhan Klang), the world's 12th largest container port by throughput, Penang Port, and Johor Port is regulated by the Merchant Shipping Ordinance 1952, the Port Authorities Act 1963 (Act 488), and the Malaysia Ports Act 1963. Air freight through Kuala Lumpur International Airport (KLIA) is governed by the Carriage by Air Act 1974 (Act 148), which gives effect to the Warsaw Convention and its amendments.
Freight forwarders in Malaysia must be licensed under the Freight Forwarders Licensing Regulations 2013 issued by the Ministry of Transport Malaysia. A Freight Agreement issued by a licensed freight forwarder using the Standard Trading Conditions of the Malaysian Freight Forwarders Association (MFFA) constitutes the contractual basis for the freight transaction, supplemented by the House Air Waybill, House Bill of Lading, or CMR consignment note issued for the specific shipment.
A Freight Agreement in Malaysia must be distinguished from a Bill of Lading, which is the document of title issued by the carrier for sea shipments, and from a logistics agreement, which covers the broader supply chain including warehousing. The Royal Malaysian Customs Department (RMCD) requires that all consignments entering or leaving Malaysia be declared under the Customs Act 1967 (Act 235), and the Freight Agreement typically specifies which party — shipper or forwarder — is responsible for filing customs declarations and paying applicable customs duties.
The legal framework governing the Freight Agreement (Malaysia) in Malaysia draws on several key statutes and regulatory bodies. Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Parties executing a Freight Agreement (Malaysia) in Malaysia should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Companies Act 2016 (Act 777) sets the foundational requirements.
When Do You Need a Freight Agreement (Malaysia)?
A Freight Agreement in Malaysia is required whenever goods are transported commercially, whether domestically or across international borders.
A Freight Agreement is needed when a Malaysian exporter ships goods via Port Klang to buyers in China, the United States, or European Union markets and engages a licensed freight forwarder to book ocean freight, handle customs export declarations under the Customs Act 1967, and issue a House Bill of Lading. Without a written agreement, the terms of the MFFA Standard Trading Conditions may apply by default, with liability caps that may not reflect the actual value of the goods.
A Freight Agreement is required when a manufacturing company in Johor or Penang engages a road haulier to transport goods under a dedicated contract, rather than on a spot-rate basis. A written contract enables Service Level Agreement (SLA) commitments on transit times, vehicle specifications, and temperature control, enforceable under Section 75 of the Contracts Act 1950.
A Freight Agreement is necessary when an e-commerce platform operator uses a cross-border fulfilment provider to handle shipments from China or South Korea into Malaysia through the Aeropolis cargo hub at KLIA, requiring customs clearance under the de minimis threshold rules of the Royal Malaysian Customs Department.
A Freight Agreement is needed when a project cargo operator moves oversized or heavy machinery for infrastructure projects, requiring special convoy permits under the Road Transport Act 1987 (Act 333) and escort coordination with the Royal Malaysia Police (PDRM).
A Freight Agreement is required when a Malaysian importer engages a customs broker as part of a combined freight and brokerage engagement, requiring the allocation of responsibility for Goods and Services duties, anti-dumping duties, and Approved Trader (AEO) obligations under the Customs Act 1967.
Parties in Malaysia should prepare a Freight Agreement (Malaysia) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.
What to Include in Your Freight Agreement (Malaysia)
A Malaysia Freight Agreement must include the following essential elements to be legally effective and commercially workable.
Parties and Carrier Licensing: Identify the shipper and carrier or forwarder by SSM registration number. State the carrier's goods vehicle licence under the Land Public Transport Act 2010 or the forwarder's licence under the Freight Forwarders Licensing Regulations 2013.
Cargo Description: Provide a precise description of the goods — commodity name, HS tariff code under the Customs Act 1967, gross weight, dimensions, number of packages, and any special handling requirements for hazardous, perishable, or oversized cargo.
Freight Rate and Charges: Set out freight rates in Malaysian Ringgit (RM) for road freight, or in USD for international ocean and air freight following market convention. Include all ancillary charges: fuel surcharge, terminal handling charges (THC), customs examination fees, and service tax under the Service Tax Act 2018 (Act 807).
Incoterms: Specify the applicable Incoterms 2020 trade term (e.g., FOB Port Klang, CIF Singapore, DDP Kuala Lumpur) that determines which party bears the freight cost, insurance cost, and risk of loss at each stage of transit.
Liability for Loss, Damage, and Delay: Define the carrier's maximum liability per kilogram or per consignment. For road freight, this is governed by the Carriage by Road Act 1950. For sea freight, the Hague-Visby Rules apply (Carriage of Goods by Sea Act 1950). For air freight, liability is set by the Warsaw Convention as amended by the Carriage by Air Act 1974 (Act 148).
Cargo Insurance: Specify whether the shipper or the carrier arranges cargo insurance. For international shipments, the Institute Cargo Clauses (A), (B), or (C) of the International Underwriting Association are typically incorporated.
Customs Compliance: The agreement must state which party is responsible for export and import customs declarations, payment of customs duties, and compliance with import licensing requirements under the Customs Act 1967 (Act 235).
Governing Law and Dispute Resolution: Specify Malaysian law and the High Court of Malaya or Asian International Arbitration Centre (AIAC) as the dispute forum.
Additional compliance elements for a Freight Agreement (Malaysia) used in Malaysia include: Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Forms-legal.com provides this template as a starting point for Malaysia-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
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author = {{Forms Legal}},
title = {Freight Agreement (Malaysia) (Malaysia)},
year = {2026},
howpublished = {\url{https://forms-legal.com/malaysia/business/services/freight-agreement-malaysia}},
note = {Free legal document template. Based on Companies Act 2016 (Act 777)}
}
Frequently Asked Questions
A Freight Agreement is legally binding in Malaysia under the Contracts Act 1950 (Act 136), subject to compliance with relevant transport legislation. For road freight, the Carriage by Road Act 1950 (Act 424) applies. For sea freight, the Merchant Shipping Ordinance 1952 and the Carriage of Goods by Sea Act 1950 govern liability. For air freight, the Carriage by Air Act 1974 (Act 148) applies. The agreement must be stamped under the Stamp Act 1949 (Act 378) — typically at a fixed duty of RM10 — to be admissible as evidence in Malaysian courts. Where standard trading conditions are incorporated by reference (e.g., the MFFA Standard Trading Conditions), those conditions bind the parties only if the shipper had reasonable notice of them at the time of contracting, applying the common law incorporation test.
Carrier liability for cargo damage in Malaysia depends on the mode of transport and the contractual terms. For road freight under the Carriage by Road Act 1950 (Act 424), liability may be limited to an agreed rate per kilogram. For sea freight, the Carriage of Goods by Sea Act 1950 incorporates the Hague-Visby Rules, limiting ocean carrier liability to approximately SDR 2 per kilogram or SDR 666.67 per package (whichever is higher). For air cargo, the Carriage by Air Act 1974 (Act 148) applies the Montreal Convention liability limit of approximately SDR 22 per kilogram. A freight forwarder acting as principal (not merely as agent) assumes carrier liability when it issues its own House Bill of Lading. Shippers who do not declare a higher cargo value on the bill of lading are bound by the statutory liability limits.
Any person or company that carries on the business of freight forwarding in Malaysia must hold a Freight Forwarding Licence issued by the Ministry of Transport Malaysia under the Freight Forwarders Licensing Regulations 2013. The licence application is processed through the Malaysian Investment Development Authority (MIDA) one-stop centre for qualifying applicants. Road haulage operators separately require a goods vehicle operator licence under the Land Public Transport Act 2010 (Act 715). Customs brokers must be registered with the Royal Malaysian Customs Department (RMCD) under the Customs Act 1967 (Act 235). Engaging an unlicensed freight forwarder may render the freight agreement unenforceable for illegality under Section 24(a) of the Contracts Act 1950 and may expose the shipper to customs compliance risks.
All commercial cargo imported into or exported from Malaysia must be declared to the Royal Malaysian Customs Department (RMCD) under the Customs Act 1967 (Act 235). Export declarations are filed through the Customs Information System (CIS) or the National Single Window (NSW) platform operated by Dagang Net Technologies Sdn Bhd. Import declarations trigger assessment of customs duty, sales tax under the Sales Tax Act 2018 (Act 806), and excise duty for specific goods. Malaysia's Harmonised System (HS) tariff schedule determines applicable duty rates. Goods moving through Free Trade Zones (FTZ) at Penang, Port Klang, and Johor are governed by the Free Zones Act 1990 (Act 438). Authorised Economic Operator (AEO) status under the RMCD AEO Programme allows simplified customs procedures for qualifying traders.
Incoterms 2020 are a set of 11 internationally recognised trade terms published by the International Chamber of Commerce (ICC) that define the obligations, risks, and costs borne by the seller and buyer in the sale of goods. In a Malaysian freight agreement, the chosen Incoterm determines the point at which risk transfers: under FOB (Free On Board) Port Klang, risk transfers to the buyer once goods are loaded on the vessel; under CIF (Cost, Insurance and Freight), the seller pays freight and insurance to the named destination port; under DDP (Delivered Duty Paid) Kuala Lumpur, the seller bears all costs including Malaysian import duties. Incoterms are not implied by Malaysian law — the parties must expressly incorporate them in the freight agreement or sales contract. Disputes about which party bears the cost of customs duties under the Customs Act 1967 (Act 235) are frequently resolved by reference to the agreed Incoterm.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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