A bonded warehouse is a storage location where commodities imported into a new market are stored and processed. Customs duties are not levied on goods held in bonded warehouses. Any applicable duties become payable when the items are delivered to their final destination. Bonded warehouses, which the government or private firms can own, can help create inventory and cash flow efficiencies. Using a bonded warehouse allows commodities to be transferred closer to their final destination, and duties can be delayed until the product is relocated. It offers considerable advantages to businesses that trade across borders.
Why should you consider bonded warehousing?
- Improved cash flow: Deferring payment of duty until items are purchased can improve cash flow. By holding your goods in a bonded warehouse, you will only pay import duty when they enter the market, so if you have any difficulty shifting your products, you will not be out of cash by paying the taxes upfront when you have no guarantee of sales to recuperate the costs. Bonded warehousing classifies all commodities as duty suspended, avoiding upfront duty payment on things that may remain in stock for months.
- Duty-free imports when exporting: Keeping your items in a bonded warehouse eliminates the need to pay import duties on products you export, saving you both time and money. This means that a company can avoid paying duty twice, resulting in typical savings of 25-30%. It is also significant to note that if your items must be destroyed without getting sold, you will not be required to pay the import charge on them.
- Port Centric Logistics: Most bonded warehouses are located at or near ports, allowing you to store your products at the point of entry and distribute them as needed. This decreases costs throughout the supply chain by shortening lead times, reducing the chance for damage, saving money on transportation, and lowering carbon emissions.
Advantages of using a bonded warehouse
- Payment of duty can be deferred
Duty payment is needed only when the goods leave the warehouse for sale. This provides breathing room for any extra pre-sale activity and can also serve as a welcome boost to cash flow. If the goods are to be exported, these charges are entirely avoided. Tax savings of 25–30% can be claimed as a result of adopting bonded warehousing.
- Long Term Storage
Bonded warehouses are ideal for long-term storage. You can store with one in the United States for up to 5 years without paying Customs Duties; in the United Kingdoms, the goods can be stored indefinitely. In other nations, bonded warehouse storage durations are limitless. Long-term storage eliminates unnecessary logistics costs until the goods are ready for sale.
- Quality preservation
Bonded warehouse facilities can hold any product for as long as needed while retaining quality. Temperature-controlled facilities, as well as those with dry containers and freezers, are available.
- Safety and security
You don’t have to be concerned about your items in bonded warehouses because security workers monitor the facility 24 hours daily. There are also modern and efficient security solutions, including security cameras, barcoding systems, and inventory systems, ensuring that all commodities stored are carefully documented and protected.
- Proximity to ports
There are many bond storage facilities close to ports and airports, letting importers keep their products there until they can be distributed. Because lead times and damage are eliminated, transportation costs and carbon emissions cut costs throughout the entire supply chain