What are Bonded Warehouses?
Bonded Warehouses and their Importance.Yugjeet Singh
There are many business organizations that are into exporting of products on a regular basis. Such businesses, to store their products in overseas nations greatly depend upon the facilities of bonded warehousing. They are suppose to use this facility till they clear off their taxes and organize the shipping logistics. Such kind of facility is secure and protected for storing shipments or products which is good for businesses. While the bonded warehouse takes care of the shipments, the business organization can divert their time in resolving matters that involve international shipping.
Defining Broadly the Bonded Warehouses
The bonded warehouses are mostly located close to the ports. These facilities remain in the command of Custom officials. They are authorized by Governments to receive overseas shipments and store it till customs duties are paid. This seems to be good enough reason to term such facility as custom bonded warehouses. In such warehouses the shipments or consignments are kept safe by inducing ‘bond’ which denotes complete control of Customs authorities. The holder of shipments cannot budge them until and unless permitted by the officials. Doing so might be regarded as an action against the law. If someone doesn’t pay the taxes and duties in due time the shipment would be confiscated by the concerned authorities.
The products that are stored in custom bonded warehouses are accountable for taxes and duties. The payment can be done when products are either moved or sold. The businesses do have certain advantages when they store their shipments in such warehouses. The most frequent users of the bonded warehouse are businesses that export wine, food, tobacco, etc. The stored products in this warehouse can yet be prepared for selling after the mandatory branding and packaging.
The Importance of Bonded Warehouses
For making deliveries of product safely and legally to their customers the bonded warehouses are being used by businesses. Such type of storages are safe and under the control of Customs. The stored products are carefully watched upon and maintained by bonded inventory system. Most businesses utilizes this facility not because of the security factor but it has wide range of importance:
1. Time for Storage :- The bonded warehouse is supposed to provide storage for the shipments till 24 months, from the date of its arrival. The time for storing is extended for 12 more months subject to the condition of shipments. In many countries the time given for storage is 4 years and in some 5 years whereas there are options of indefinite time also. Such warehouses also provide bulk storage, deep freezers, dry container for various types of shipments. This is of huge convenient factor for businesses that carry out trade internationally. On a number of occasions businesses transport their products to such warehouse facility and wait for the appropriate opportunity to market them.
2. Savings on Expenses :- Using a bonded warehouse can be beneficial in saving money also. As one have to pay the taxes only when products are sold. If the products are sent back the taxes need not need to be paid. As per some analysis, many businesses cut down their expenses from 25% - 30%, as Value Added Tax is accountable only if selling is initiated.
3. Security of Shipments :- By storing the shipments in custom bonded warehouses the businesses won’t have to worry about their safety and wellbeing. These kind storages have all the required safety harness. Security personals of enhanced training keep their eyes on everything. Top quality security cameras monitor the entire facility 24×7. Besides all of these there are facilities of bar coding and bonded inventory systems. The bonded warehouses are capable of keeping all the shipments safe and protected irrespective of its size, shape or weight. They are also capable of dealing with fresh or unpreserved items.
4. Storing Restricted Products :- The custom bonded warehouses are not just meant for products to be exported, it can be used by businesses doing imports also. Certain items to be imported are enlisted as restricted products. Such products can be stored in such a warehouse, till the required legal works are completed. Possessing the legal papers helps transporting restricted products to a different location.
5. Assurance of Value :- Upon storing of the products at a bonded warehouse, the custom authorities would provide a bond to the product holder. This purpose of this bond is to guarantee that the product holder would not suffer any financial loss while releasing the products. The products are to be released only when the businesses pay out the entitled taxes and duties covering GST or VAT.
6. Ease in Global Shipping :- As said above the bonded warehouses are situated near ports which makes it easy to transport products to anywhere in the world. These ports are well connected by all kind of routes – land, air and water. This helps in accomplishing better shipping solutions that too in a quicker way. In a way it can be an efficient way to lessen the costs of shipping.
A lot of people might have taken notice of bonded warehouses; however they must not be just familiar with the bonded warehouse definition. They also don’t have precise knowledge on how they operate. Basically, a bonded warehouse is a protected site where products are stored for export and import. These warehouses are either under the control of the Government or owned privately by the bigger companies. What makes these warehouses different from the usual ones is that the products are kept on hold until the payment of customs duties. Such kind of warehouses exists everywhere in the world. But, the rules that govern their functioning differ in every country.
If you are thinking of growing your business at a global scale, it would be very necessary to store your products in one of the bonded warehouses overseas. The option of using such facility would open up many probabilities. The reason why such warehouses are of immense importance is that the shipment or cargo is stored with authorization and in total security till it is further delivered.