How Using Bonded Warehouses Could Benefit Your Business
With the increased uncertainty of international trade, many businesses are looking for ways to keep their capital as flexible as possible. One tactic is to take advantage of Automated Clearing House payments, where cash flow for international duty can be extended over 50 days. Another strategy that has been rising in popularity is the use of bonded warehouses.
In short, a bonded warehouse is a secure storage facility where shippers can hold imported goods without immediately import taxes and duties. This is because, while at a bonded warehouse, goods are still considered in transit by Customs and Border Protection.
Explaining How Bonded Warehouses Work
All of these facilities are government-licensed, with some even being run by the United States government. There are three types of bonded warehouses: private bonded warehouses (run by a single authorized business), public bonded warehouses (open to different importers), and government bonded warehouses (owned and operated by customs authorities). CBP maintains a list of all approved bonded warehouses with dozens to hundreds available near every port in the country.
The process is straightforward. International goods are imported and transported to the bonded warehouses; no duties or VAT are paid upfront. Duties are paid only when the goods leave the warehouse for local consumption. This provides time to inspect your goods before selling and does not require any taxes if the goods are destroyed or re-exported.
The Benefits of Bonded Warehouses
The real benefit to bonded warehouses is the flexibility they provide. Under customs supervision, goods can be cleaned, sorted, or repacked within the warehouse. The key thing to note is that while the goods can be manipulated in a bonded warehouse they cannot be manufactured there.
“Bonded warehouses are often utilized for short-term storage of LCL (less than container load) and air cargo during customs clearance,” says Andrew Ciccarone, President of Sheltered International. “It’s also possible to store cargo in a bonded warehouse for an extended period, up to five years.” This means an importer can leave their goods in a bonded warehouse to wait for market conditions or demand to improve.
Even if a shipper does not plan on holding their goods for a prolonged period of time, using a bonded warehouse can reduce upfront costs, freeing up capital, and streamline the import process.
What Businesses Need to Do to Use a Bonded Warehouse
Storing imported goods in a bonded warehouse is surprisingly simple. All that is required is to complete a filing for each entry and exit of the goods, and arrange for a bonded carrier for transport from the port. While it is not a requirement to use a bonded warehouse near the port, finding one that is geographically convenient can save money (i.e. utilizing a bonded warehouse near the Savannah port instead of using the bonded carrier to deliver goods from the Savannah port to a warehouse in Jacksonville).
Certified freight forwarders like Sheltered International can help businesses of all sizes with every detail.
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