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Definition of Bonded Warehouse – Pros & Cons

What Is The Definition Of Bonded Warehouse?

The definition of a bonded warehouse is simple: It’s a place run by a licensed operator where your goods are stored tax-free, mid- to long-term until they are sold again. To choose one for your company, you should consider its location, the length of time you want your products held, and the price per month.

What Are The Advantages Of a Bonded Warehouse?

Selling your products through a bonded warehouse is extremely beneficial if you want to trade internationally. Since you already pay for customs and duty when you ship your items to the bonded warehouse, you don’t have to worry about it later. This allows you more time to deal with other paperwork and fees that need to be paid.

Also, your products are safe due to high-security measures like multiple cameras monitoring the facility at all times. That’s the main reason why companies that need to store large, expensive shipments take advantage of these special warehouses.

The average price per square foot is $18. However, a lot of bonded warehouses offer storing products for free, so it’s a cost-efficient strategy to import/export. Additionally, businesses use them to keep their own inventories low.

What Are The Disadvantages Of a Bonded Warehouse?

A major downside is that you’re goods are tied up in that warehouse so it takes time to get them out of storage again and transport them quickly to your customer. To ensure the fastest order possible and, for example, guarantee 2-day shipping, companies should use fulfillment centers instead.

Different Names for Bonded Warehouses

  • Customs Bonded Warehouse (CBW, used in the UK & the US)
  • Excise Equivalent Goods (EEG, used in Australia)
  • Customs Controlled Areas (CCG, used in New Zealand)
  • Private Bonded Warehouse

Who Uses Bonded Warehouses?

  • Importers & Exporters
  • Manufacturers
  • Companies selling fragile products like electronics

Resources for Bonded Warehouses

How to use a customs warehouse to import goods to the UK
Types of CCAs, Licence requirements & costs in the US

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