BONDED WAREHOUSE VS NON-

BONDED
Ever since the world became just one big market, Customs Bonded Warehousing has

made life easy for traders. The option to safely store goods is a great advantage to both

importers and exporters, especially when you are moving around very valuable goods.

\And when you delve deep into the world of warehousing and logistics, you are often

met with two major choices – Bonded Warehouse and Non-bonded warehouse. What

makes them different?

WHAT IS A BONDED WAREHOUSE
Customs bonded warehouse is a secure place to export-import or store goods. The

importer has to pay the duties only when the goods are removed from the storage. The

reason why we call it a “bonded” warehouse is because when the goods enter the

bonded warehouse, the importer and the warehouse owner sign on a bonded

agreement.

Bonded Warehouses are in place to encourage budding entrepreneurs to enter the

import-export business. In March of 2020, the US imports stand at $232.2 Billion and

exports at $187.7 Billion.

Most of the customs bonded warehouses are owned by the government, and many are

privately owned as well. If a private storage space aims to become the custom bonded

warehouse, the operator has to apply for being a certified import storage facility with

the customs office.

To get approved, bonded warehouses have to designate a specific area for the storage

of the goods and also prove the financial and operational integrity. Once approved, the

bonded warehouse has to post a customs bond and agree to the various customs

inspections.
WHAT IS A 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.

The main reason why importers would choose Non-bonded Warehouse over a bonded

warehouse is to use the goods in domestic markets, rather than to re-export.

The imported freight has to be approved and inspected by the customs, after which the

goods can be delivered to a specific destination. In the non-bonded warehouse, the

importer of the goods has to immediately pay the taxes and get the goods inspected,

irrespective of their final destination. Customs bonded warehouses are sometimes

managed by the customs officials, which facilitates the exporter to defer the payments

until the goods are bought

STORAGE
A bonded warehouse is good for long term storage. In the US, the customer can go as

long as five years without having to pay the duties. Many countries keep the storage

periods set to infinity. When the customer stores for a long time, he/she avoids

unnecessary travel, and this also allows them to develop good professional

relationships with the most reliable vendors. In the case of the non-bonded

warehouses, long term storage means additional cost, which is not a very convenient

setup for businesses looking for long term storage plans.

DEFERRED DUTIES
Custom bonded warehouses save money. When the goods are stored in a bonded

warehouse, the duties are deferred until the goods leave for the final destination. The

importer can save a lot of money regardless of what he/she intends to do with the

cargo. This also buys time to complete the legal framework, essential to export goods

in a country. As compared to the non-bonded warehouses, importers can save up to

30% in terms of the deferred taxes.

STORING RESTRICTED GOODS
When it comes to non-bonded warehouses, the importers have a strict time limit,

during which any restricted goods are held, and the paperwork has to be approved.

Customs bonded warehouse, on the other hand, are exempted from this probationary

period. This means that just like the duty deferment, it is more convenient to store the

restricted goods for as long as 5 years, while the importer files all the required

paperwork. Just to remind you again, it takes a lot of time to process the paperwork

for restricted goods, and non-bonded warehouses do not allow that much time.
INTERNATIONAL SHIPPING
When you talk about the ease of shipping internationally, a custom bonded warehouse

takes the lead. Any importer can import the goods across the globe and store them

without having to pay an advance duty fee. This condition is suitable for two business

scenarios. First, the goods can be stored in a bonded warehouse until there is a

significant increase in the demand for the same. This is when the importer can pay the

duties and get these demanded goods delivered to the destination within the country

of holding. You do not have to import it all together. It can be done easily and at your

convenience.

Secondly, the importer can keep on storing the goods at the custom bonded warehouse

to process the consolidation of the assets. You can do all of this before going for the

export again. Whenever the consolidated goods are moved from the country of the

holding, the importer does not have to pay the duty fees because the goods have been

staying under the supervision of the customs. This helps the importer avoid double

taxes.