Terms & Glossaries of Shipping and Trading
A bonded warehouse is a building or other secured area in which dutiable goods may be stored, manipulated, or undergo manufacturing operations without payment of duty. It may be managed by the state or by private enterprise. Like a standard warehouse, bonded warehouses let businesses store their goods closer to foreign customers for faster delivery, with the advantage of pushing out the payment of custom duties until the goods are released from the bonded warehouse. They are used for storing imported or exported goods.
Companies use bonded warehouses to legally and safely deliver their products to customers.
Each country is subject to different requirements for a bonded warehouse.
It may be managed by the state or by private enterprise.
What makes it different from a regular warehouse is that bonded goods are retained here until the customs duty is paid.
For an organisation that imports and exports goods, the use of bonded warehouses can be used to cancel out the need to pay duties, creating further efficiencies.
The advantages of a bonded warehouse:
1.No duty needs to be paid until the item is released for delivery to the buyer, giving full control of payment to the importer.And, if the goods go unsold, they can be exported without having to pay the duty at all, as VAT is only paid when you sell your products and not on re-exported goods from the bonded warehouse. Some businesses report saving 25% to 30% off taxes.
2.Restricted items are allowed to be stored. These items can be safely stored in bonded storage until they need to be sent out.
3.Facilities are equipped to handle different types of storage. Good bonded storage can store any kind of product for as long as needed. A good example would be for perishable food items - there are freezers, dry containers, and other temperature controlled rooms available.
4.You receive a bond on your items. When you store bonded goods, the warehouse authority will give you a bond which ensures that you won’t face any monetary loss at the time of the release of the shipment after the payment of taxes, including VAT or GST.
5.They offer additional logistics solutions. It's possible to have access to a complete logistics solution, as bonded warehouses are affiliated with freight forwarding companies who handle distribution, deliveries, and more.
The difference between bonded and non-bonded warehouse:
A non-bonded warehouse is a storage space for goods on which the duty is already paid. They do not have a deferred payment model like bonded warehouses. These warehouses are supervised by the port authorities rather than customs authority. A bonded warehouse falls under the regulatory supervision of the country's customs agency. When goods are stored in a non-bonded warehouse, an importer must pay taxes on goods received and ensure they are fully inspected immediately.
Depending on different countries, it is difficult to choose what kind of warehouse should be chosen for different situations, for example, goods may be entered for temporary warehouse and afterwards for consuming locally or they may be transported out-bound to another country and are placed in warehouse for a while, or they are entered for warehouse waiting for retailers to transfer them. Under such a complex circumstances, many importers and exporters try to use automation to help manage issues in bonded warehouse which, to some extent, can respond rapidly to customer orders and dispatch products
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