What are Bonded Warehouses and What are the Key Benefits of Using One?

What is a Bonded Warehouse?

A bonded warehouse is a site where shippers can store imported goods before customs have processed them. Goods stored in bonded warehouses aren't liable for customs duties. When the goods have been delivered to their next destination, all applicable duties become payable. 

Generally, there are two kinds of bonded warehouses; wet and dry. Wet bonded warehouses allow for the storage of alcohol and tobacco. Dry bonded warehouses can store most other imported goods. 

Using a bonded warehouse means you can deliver your goods closer to their final destination. It also means that duty payments can be postponed until the product has been moved. 

This system can provide significant benefits for businesses that trade across different jurisdictions. The use of a bonded warehouse can cancel out the need to pay duties, creating inventory and cash flow efficiencies.

Get started

Benefits of Bonded Warehouses

There are many advantages associated with using a bonded warehouse. Here are just some of the benefits:

You can defer or avoid duty and tax payments

You can defer VAT payment and other duty taxes in a bonded warehouse until the goods have been removed and shipped. This can provide you with breathing room and space to carry out additional pre-sale activities. Additionally, if you export these goods, you can avoid these costs entirely.

Companies have reported tax cost savings of 25-30% due to utilising bonded warehouses.

Storage can be long term

Most bonded warehouse facilities can agree to store your goods for up to five years or more. This can be useful if work is required to satisfy import licensing requirements or demand isn't as high as expected. With a bonded warehouse, you can store your goods until you've met the requirements or demand has increased.

You can improve service for your customers

By leveraging bonded warehouses, you can order goods in advance of anticipated demand. As goods are stored closer to the customer, you can quickly deliver and offer a better overall experience.

The quality of your product can be preserved

Bonded warehouse facilities have been equipped to store all kinds of products for as long as necessary while maintaining quality. For example, many bonded warehouses contain dry containers, deep-freeze systems, temperature control facilities, and bulk storage facilities.

Bonded warehouses can keep your products safe and secure

In addition to regular safety measures like CCTV, goods in a bonded warehouse must be fully documented. Security personnel monitor the space 24 hours a day, so you don't need to worry about your cargo. Bonded warehouses are subject to detailed assessment and regular auditing, so you can feel confident you're working with a reputable organisation. 

Your goods are stored closer to ports

Most bonded warehouses are located near major ports. This allows companies to store goods at the port of entry until they are ready to be distributed. Utilising these bonded warehouses can create savings across the entire supply chain by reducing lead time, transport cost, and potential damage.

Should you store your goods at a bonded warehouse?

Bonded warehouses offer a lot of advantages when it comes to shipping. If you expect to store your goods for some time during customs or want to get ahead of an expected demand increase, working with a bonded warehouse can be a fantastic advantage for your business.


Back to Blog