Bonded warehouses, also known as bonds, are popular among importers and exporters. Working with a bonded warehouse can make supply chain management and cash flow more straightforward and efficient. That said, if you don't know what a bonded warehouse is or what the benefits of one are, it can be challenging to take advantage of the opportunity.
This article will discuss what a bonded warehouse is and what benefits you can expect when working with 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.
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.
If you want to learn more about bonded warehouses and how they can help your business, you can get help by consulting an international shipping expert. WTA UK can help you find a solution, regardless of your delivery needs. Contact us to find out more.
Or, read about our specialist warehousing service at WTA Group.