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. They can be found all over the world and can form a key part of your businesses' supply chain.
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. Consequently, the bonded warehouse market is growing significantly each year, expected to reach $273.6bn by 2031.
There are many advantages associated with using a bonded warehouse. Here are just some of the benefits:
The key benefit is the ability to defer VAT payment and other duty taxes in a bonded warehouse until the goods have been removed and shipped. This obviously improves cashflow, providing you with breathing room to carry out more pre-sale activities, before the duty payment is due.
Additionally, if you export these goods, you can avoid these costs entirely, meaning companies have reported tax cost savings of 25-30% due to utilising bonded warehouses.
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. Combining this with the deferral of duty payments and it's easy to see sizeable financial benefits of using bonded warehouses as part of a supply chain.
By leveraging bonded warehouses, you can order goods in advance of anticipated demand. That means when an order comes in, you're ready to deliver much sooner, significantly lowering lead time. Quick delivery leads to a better overall experience and increased chances of a repeat purchase.
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.
This means using bonded warehousing doesn't have to come at the expense of product quality.
In addition to regular safety measures like CCTV, goods in a bonded warehouse must be fully documented. Security personnel monitor spaces 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.
Most warehouses will state in their terms and conditions that goods are stored at the owners risk, so these are entirely normal questions."
Liam Launders, Head of Sales, WTA
Most bonded warehouses are located strategically near major ports. This allows companies to store goods at the point 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 costs, and potential damage.
Bonded warehouses offer a lot of advantages when it comes to shipping, delivery time, cash flow and supply chain management. If you expect to store your goods for some time before the sale is secured, or want to get ahead of an expected demand increase, working with a bonded warehouse can be a fantastic advantage for your business.
Obviously they come with storage costs of their own, so you need to perform your own assessment to establish whether they would be good for your business.