What Is A Bonded Warehouse: All you want to know about bonded warehouses 2019

What Is A Bonded Warehouse: All you want to know about bonded warehouses 2019


Importing into the USA comes attached with some specific questions, and one among them that carries a great deal of importance is where are you going to store the goods? Bonded Warehouses are the obvious choice for many. But to a person who is just getting into the world of trade, the term bonded warehouse might be unfamiliar.


In this article, we will help you understand the importance of bonded warehouses in the US and why you should consider them!


What are bonded warehouse


Bonded warehouses in the US are storage areas where you can store goods imported into the US. But such a simple definition doesn’t do justice because bonded warehouses are much more than storage spaces. We will discuss them in detail in the following sections.


Bonded warehouses can be privately owned or by the government. In the US, bonded warehouses are regulated by the CBP or Customs and Border Patrol.  There are 9 different classes in bonded warehouses mentioned in Section 19.1 customs regulations (19 CFR 19.1).


Class 1: Bonded warehouses owned by the government explicitly for storing goods that are under customs examination, seizure or pending the final release form.


Class 2: Bonded warehouses that are privately owned for the storage of goods that are imported by the proprietor.


Class 3: Publically owned Bonded warehouses for the storage of goods.


Class 4: Premises that are designated for bulky merchandises or building that are designed for keeping imported animals, or tanks made for storing liquids.


Class 5: Spaces used for the storage of grain.


Class 6: Bonded warehouses where are goods are stored for exportation.


Class 7: Bonded warehouses for smelting or refining imported metals, either for domestic use or exportation.


Class 8: Bonded warehouses made for cleaning or sorting the goods stored in the warehouse. It includes changing the condition of the goods stored in the warehouse, but the manufacturing processes of any kind are not allowed.


Class 9: Duty-free zones that are used to sell duty-free goods outside of the customs territory.


Therefore, the type of bonded warehouse you can get for storing your goods will depend on many factors ranging from the type of goods to the function of the warehouse. Form 301 is used to place the bond between two parties. The bond specifies the duration of time the goods are to be stored in the warehouse.


One of the primary reasons why importers use bonded warehouses is because of the security that they offer. The merchandise will be well guarded and properly maintained. However, that is just one facet of bonded warehouses that makes them so popular. Other advantages of using a bonded warehouse for your imports to the US are:

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Port manager standing with a colleague in a commercial shipping yard talking on a cellphone and reading an inventory list on a clipboard[/caption]

1.   Delayed Duties

The biggest advantage of using a bonded warehouse is that you, the importer, doesn’t have to pay the Duty on the goods until the goods are moved from the bonded warehouse (which can be stored duty-free up to 5 years). This is a great way to save on money as there are no upfront payments to pay.


2.   Exemption from Duties

The importer is exempt from paying duty if the merchandise is exported from the bonded warehouse to another buyer. In this case, the import is not using the goods for domestic consumption, hence they are exempt from paying any duties. This is a boon for importer can’t find a domestic buyer for their products. It gives them a chance to re-export and excludes themselves from duties.


3.   Duty Calculation on Consumption

The duty of the goods being stored in the bonded warehouse is not calculated at the time of admission. They are calculated at the time of withdrawal. Hence, importers have a possibility of having a reduction in the duty if the goods have undergone in-house manufacturing since the duty of the raw materials may not apply to the finished products.


4.   Easy Logistics

 Most of the time, the bonded warehouses extend their services by providing logistics support for the importer. This helps them to move their goods on time and get it to the domestic market at the right time.


5.   Store Restricted Goods


Goods that have restriction in the home country can be stored in the bonded warehouse. Their acceptability will depend on the nature of the goods. Get more info on storing goods in bonded warehouses by giving us a call!


How to set up a bonded warehouse of your own!


As we discussed before, Bonded Warehouses can be government-owned or privately owned. If you want to establish a bonded warehouse of your own, it starts with an application written to the local port director where you must describe the details of the premise. A near-exact estimation of the volume of goods that can be stored in the warehouse.


The application must state whether the bounded warehouse is meant for your personal use or as a public bonded warehouse. This doesn’t apply to class 2 and class 7 warehouses. If the warehouse is to be used as a private warehouse, then details on the nature of goods to be stored in it should be mentioned, along with an approximate total of the duty that will be incurred on the goods at any one time.


The next step is to get some important certifications from the authorities. You are required to submit a certificate signed by the secretary or the president of a board of fire underwriters stating that the warehouse is built to right standards, and is acceptable to apply for fire insurance. The document is a blueprint that contains all the measurements of the building.


If the warehouse is a tank, like that we discussed in Class 4 warehouse, the blueprint must contain the specifics of the tank like the inlets, outlets, pipelines, etc.


Bottom line…


As an importer, bonded warehouses become increasingly efficient when you want to;


  • Import goods into the US don’t want to sell them immediately
  • Delay paying duties on the merchandise
  • Manufacture products from the imported merchandise and sell it


Want to know more about how you can utilize a bonded warehouse? Let us help you! Pedraza Customhouse Brokers have been in the trade business for more than 15 years. We provide bonded warehouse and FTZ solutions, along with top tier logistics services. Contact us today, we make trade easy!




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Pedraza Content Team

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