Logistics Wordbook

Bonded Warehouse

Logistics Glossary

Like a standard warehousebonded 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.

Bonded vs Non-bonded Warehouse

Unlike a bonded warehouse, nonbonded warehouses store goods on which the duty is already paid. They do not have a deferred payment model like bonded warehouses.

What are the Advantages of a Bonded Warehouse?

So what are the benefits of storing goods in a bonded warehouse? The main benefits are that the goods can be stored tax-free, goods can stay in a warehouse for long time and they are securely located.

Store goods tax-free

In a bonded warehouse duty is not paid for the goods until the goods are sold hence the goods can be stored in a bonded warehouse until the business owner finds the market for the goods and they are ready to be sold.

Long-term storage

Goods can stay in a bonded warehouse until the business person finds the targeted market for the goods hence it gives business people time to look for the market of the goods.

Secure locations

A bonded warehouse is normally located at a place where all the imported goods can be stored. This avoids smuggling of goods into the country hence all business people have to pay duty to the imported goods hence creating revenue to the government.

Handling of restricted goods

Goods that are not allowed in the country are taken and kept in these warehouses which makes it safe for the country. Goods that may heart people’s health are taken and are not released to the public hence bonded warehouses are good.

Storing closer to foreign customers

Bonded warehouses are normally situated near the ports. This makes it possible for foreigners to get access to the goods from the warehouse hence increasing the market of the goods.


What are the Disadvantages of a Bonded Warehouse?

The main disadvantages for a bonded warehouse can be the following:

All products should be removed and duty paid for at the end of two years

Some goods take long to find their right market hence when they are removed at the end of two years, it may make the business person sell goods at a loss hence not a very good place to store goods.

Only taxable goods can be warehoused

Once the goods are in this type of warehouse duty and tax should be paid on the goods hence not easy for business people to evade paying duty and tax. Those goods that should not be paid duty are not allowed in this type of warehouse hence disadvantage to those who want to do business locally to use such type of warehouse.

The long process when clearing

No products can be allowed to be out of the warehouse unless the good procedure has been followed to clear the goods. The clearing process is normally long and tiresome hence can make the business people be discouraged from using the bonded warehouse.

Requires a license from the customs authority within that area

A bonded warehouse cannot be started unless the custom authority of that area has allowed it to be constructed hence making it hard for it to be constructed without permission.


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