Technological advancements increase international trade. Inventory storage is a limiting factor as some goods require specialized storage and warehouses due to their fragile nature. Customs-bonded warehouses address this issue by offering cost-efficient storage solutions. These warehouses help businesses store goods without tax or fees until the goods are sent for sale or distribution. To understand the business’s engagement in global trade, you must know how these warehouses operate. 

Moreover, this blog will help you explore the purpose and operations of customs bonded warehouses and how they contribute to managing global trade. We will also explore their different classes and how these warehouses are set up. 

What are customs-bonded warehouses? 

Some private or government-owned entities severely regulate customs bonded warehouses through the concerned customs agency. These warehouses store imported goods intended for export without requiring any import or export code. Conventionally, they are a duty-free zone for restricted or imported goods. 

Businesses generally use customs-bonded warehouses to store restricted goods like antiques, tobacco, artwork, and alcohol from some countries that want to export these items from one container depot to another. Secure bonded warehouses are ideal for businesses requiring deep freezing or bulk liquid storage. Within the bonded warehouses, items can be manipulated by the warehouse operators or placed under the customs authorities. 

The general bonded warehouses need government approval so that no taxes can be applied. If you use these stored goods for domestic purposes, you need to pay customs duties when you store them, but you do not have to pay taxes if you use them for international purposes. The role of warehousing in supply chain management is described in further detail. 

Types of customs bonded warehouses

Different types of custom bonded warehouses have some unique features that allow freight types to be accommodated. The following are different types of bonded warehouses: 

1. Public warehouses: These are the authorized spaces for storing goods by any individual or group of individuals. They store goods belonging to others, also known as depositors, licensed by section 57 of the Customer’s Act. 
2. Private warehouses: These bonded warehouses are designed for businesses that want to store their dutiable goods imported on their behalf. Here, the licensee and the depositor are the same person. They are licensed under section 58 of the Customs Act. 
3. Special warehouses: Special bonded warehouses are designed for specific dutiable goods prescribed under CBIC. They are licensed under section 58A of the Customs Act. 

Benefits of customs-bonded warehouses

Customs bonded warehouses offer various benefits to the companies involved in international freight forwarding operations. Furthermore, below are various advantages of bonded warehouses: 

1. Enhanced service quality: The top and foremost significant advantage of these international bonded warehouses is the enhanced service quality of the shipping container company concerned. These warehouses will ensure the life expectancy of your product. However, this implies you will have more stock and can provide customers with goods whenever needed. 
2. Cost efficiency: As these houses are free from any customs duties or taxes, goods entering foreign regions will have duty-free storage rooms. Consequently, this will decrease the overall supply chain expenses.  
3. Distribution efficiency: The warehouse facilitates the easy and simplified partial shipment of goods. This contributes to greater product distribution and delivery efficiency, enhances the customer experience, and aligns the logistics cycle. 
4. Quality control: They help maintain the quality of the goods by using their specialized features cost-efficiently. Good consolidation in bonded warehouses will also help you quickly and efficiently store goods for a long time. Reduced delivery times can improve customer satisfaction. 
5. Supports international shipping: These customs bonded warehouses support international shipping by offering their services near ports and airports. However, there are some goods that you cannot store in these warehouses. They simplify the logistics trends and customs clearance for most goods transported. 
6. Resolves staggered goods issue: They help resolve staggered goods issues such as stockouts. You can slowly transport goods as you have warehouses for your goods at every spot. Indeed, this will help you prevent sudden stockouts, agile shipment, and bonded warehouse management. 
7. Reduce port waiting times: These warehouses store goods when they reach the container port, reducing port waiting times. You can directly shift the cargo to the bonded warehouses, giving space to the other shipments to tackle their goods more efficiently and avoid port congestion. 
8. The sole point of contact: These warehouses act as the sole point of contact for all shipments and store their goods. Warehouse management can simultaneously handle the day-to-day operations, such as inventory control and cargo handling. 

How do bonded warehouses function? 

Utilizing bonded warehouses is very simple, as the primary function is only to store goods. Here is how these customs bonded warehouses function: 

1. Import: The primary step in operating bonded warehouses is storing imported goods. Importers must obtain the necessary permissions to store the goods in these warehouses. After the approval, the importer submits the data about the goods to the concerned authority. Then, they take the necessary measures to store the goods. 
2. Storage: The second step in bonded warehousing procedures is storage, where you can store goods in warehouses; continuous monitoring ensures the safety of the goods. The duration of the bonded storage depends on the agreed-upon time by both sides, shippers, and the authority. In addition, you can take and complete the documentation in these warehouses. 
3. Dispatching to the next destination: After storing the goods for the agreed time, you can transfer them to the next destination. They can also offer documentation to facilitate container transportation with ease. They make sure that you have paid all the required taxes and duties. 
4. Fee payment for release: The importer has to pay the fees related to the release of the cargo. The customs complaint warehouse owner provides a comprehensive invoice for all payments. Afterward, you can release the imported goods from these warehouses. 

Standard inventory stored in bonded warehouses

Exporters can store a wide variety of goods in these customs bonded warehouses without paying any duty until they release the goods. You can store freight types ranging from bulky to fluid goods, packed in different types of containers, without any duties. Big and small companies can use these government and privately owned warehouses. Hence, the following are the goods that you can store in the warehouses: 

• Original artwork and paintings
• Tobacco products
• Gourmet chocolates
• Perfume, skincare, and cosmetics
• Antiques
• Alcohol 
• Coffee
• Other restricted goods
• Handbags
• Watches
• Luxury clothing and accessories (sunglasses, jewelry, etc.)
• Electronics
• Specialty candy

What are the purposes of customs-bonded warehouses?

Because of their practical and cost-efficient functioning, customs bonded warehouses are very useful for startups to kick-start their international trade. In addition, these warehouses have various purposes. Let’s delve into the other purposes that they serve: 

1. Duty deferral: The most crucial purpose of these warehouses is deferring duty. As stated in the above content, these customs-bonded warehouses allow exporters to store their goods securely in these storage rooms without any extra duty or tax payment. 
2. Facilitate international trade: These warehouses make trade and customs regulations more manageable for shippers by providing accessible and customized space to exporters without customs duties. Overall, countries with the facility of bonded warehouses have seen a significant increase in international trade. 
3. Storage of goods: The warehouse plays a significant role in optimizing the supply chain, as storage for imports and exports is a part of the chain and decides the future of the transportation process. Above all, you won’t be able to store goods in these warehouses until the buyer arrives and takes them to their destination. 

Customs bonded warehouses are storage rooms that do not charge customs duties to exporters. They provide various advantages for companies that want to support their transportation. Analyzing these warehouses’ functioning, advantages, and purposes will help optimize your supply chain management. Therefore, you must use these warehouses to optimize the storage of goods in your international trade. 

LOTUS Containers also offers port logistics services such as loading, unloading, and warehousing operations. These services simplify logistics operations, optimize supply chains, and increase international trade.