Bonded Warehousing vs. Non-Bonded Warehousing: Differences and Benefits

7 Sep 2023

Two concepts are key for any company engaging in local and international logistics: bonded warehousing and non-bonded warehousing. Each has its own benefits for users.

In today’s globalized economy, efficient, secure warehousing is essential for companies, as it plays a key role in ensuring a seamless flow of goods and provides a strategic edge in inventory management.

Warehousing often revolves around two key terms: bonded warehousing and non-bonded warehousing. In this article, we will explore both concepts and explain their substantial differences and the benefits they bring to the table.

What is Bonded Warehousing?

A customs warehouse, also known as a bonded warehouse, is a storage unit designated and controlled by a country’s customs authorities. With bonded warehousing, imports and exports are supervised by the government, allowing to defer the payment of applicable taxes and duties until the products leave the warehouse.

Advantages of Bonded Warehousing

Deferral of Tax/Duty Payments

One of the biggest advantages of customs warehouses is that they allow companies to pay taxes and duties at a later time, when the merchandise leaves the warehouse, increasing liquidity and boosting the cash flow, as they can use the money that they would use to pay those taxes and duties for other business activities.

According to data from the World Customs Organization (WCO), several countries operate bonded warehouses to manage more than a third of the global merchandise trade, allowing companies to cut costs and keep a steady flow of business operations.

Flexible Inventory Management

Bonded warehouses also allow companies to control their inventory more efficiently, as they can store their merchandise there for long periods without additional costs. This gives them flexibility to manage their inventory according to demand and market conditions.

Bonded Warehousing vs. Non-Bonded Warehousing

Customs warehouses help companies keep strategic inventory close to their target markets, a competitive edge due that speeds up delivery and increases responsiveness to customer demands.

Simplified Re-Exports and International Trade

Bonded warehouses make it easy to re-export any goods stored in them, a significant benefit for international traders. The merchandise stored there can be re-exported without having to pay taxes or duties in the country where they are stored, streamlining export processes and adding efficiencies to the global supply chain.

According to data from the World Bank, international trade has been growing consistently over the past few decades, from $2.3 billion in 1980 to 30.9 billion in 2022.

Bonded warehouses play a key role in facilitating cross-border trade, as they are used to efficiently store and distribute merchandise, leveraging competitive edges from various regions and helping companies expand into new markets.

Practical Applications of Bonded Warehousing

Companies focused on international trade, distribution, and logistics often resort to bonded warehouses for their benefits. Some common examples of this include:

Import/Export Companies

Importers and exporters often use customs warehouses to increase control over their inventory and leverage the deferral of duty/tax payments.

According to the Economic Commission for Latin America and the Caribbean (ECLAC), the value of exports to that region increased 20% in 2022, driven by a 14% rise in prices and a 6% expansion in volumes, while imports increased by 24% in value.

Logistics Operators and Distributors

Logistics and distribution service providers can also use customs warehousing to optimize operations, allowing them to provide secure, efficient services for customers, ensuring merchandise is protected, and reducing shipping times and costs.

According to Statista, the value of the global logistics service market is expected to exceed $15 billion by 2027. In this context, bonded warehouses are emerging as an effective solution for logistics operators and distributors, as they allow them to provide strategic warehousing services and comply with customs requirements.

What is Non-Bonded Warehousing?

Unlike bonded warehouses, in regular or public warehouses, also known as non-bonded warehouses, the stored merchandise is not supervised by the government.

Examples of non-bonded warehousing include private warehouses and distribution centers. Taxes and duties in non-bonded warehouses are not deferred and products can be moved and traded freely inside the country without additional customs restrictions.

Non-Bonded Warehousing vs. Bonded Warehousing

The main differences between bonded and non-bonded warehousing are customs supervision and the deferral of tax/duty payments.

Bonded Warehousing vs. Non-Bonded Warehousing

In customs warehouses, products are controlled by customs agencies, and taxes and duties are deferred, whereas non-bonded warehouses are not controlled by customs and duties must be paid immediately upon introducing the goods. Because of this, non-bonded warehouses are widely used for retail and local distribution.

Each kind of warehousing has its own benefits and practical applications for businesses. Companies must assess their needs and consider the requirements and benefits of each type of warehousing to inform their decision-making.

Aerodoc stands out in the warehousing and distribution market for providing leading logistics services and offering additional solutions for organizations.

Choosing between a bonded and a non-bonded warehouse will depend on several factors, such as the type of merchandise, the frequency of import/export operations, and your country’s customs regulations.

By leveraging the advantages of both types of warehousing, companies can optimize their supply chain and maintain effective control over their inventory.

Aerodoc’s Offer

Cecilia Sandoval, US Operation & IT Solution Team Leader at Aerodoc, explains that bonded warehouses play a key role in Aerodoc’s operations for several reasons, including:

  • Customs Control. Bonded warehousing allows storing imported or export-bound goods under supervision of customs authorities to ensure regulatory compliance.
  • Deferral of Tax Payments. Under in-bond importing, importers can defer paying their taxes and duties until the products are cleared for sale or export, potentially improving the company’s cash flow.
  • Faster Customs Procedures. By centralizing the operations and documentation needed to clear the merchandise, the whole customs process is streamlined to help meet our customer’s needs.
  • Temporary Warehousing. Bonded warehouses keep products secure in a safe, regulated place while all procedures and requirements needed for distribution/export are managed.
  • Flexible Logistics. Using bonded warehouses, our customers can store products in strategic locations, making distribution and timely delivery of products to customers easier.

Bonded Warehousing vs. Non-Bonded Warehousing

Aerodoc stands out in the warehousing and distribution market for providing leading logistics services and offering additional solutions for organizations. We have not only bonded/non-bonded warehousing services tailored to each customer’s needs, but also corporate experience boosters regarding warehousing and distribution:

Export Clearance

Aerodoc handles exports procedures at the point of origin, ensuring the goods comply with every applicable regulation and requirement.

International Shipping 

Aerodoc also manages international shipping by sea, air, or land, ensuring efficient, secure delivery.

Import Procedures

In the country of destination, Aerodoc takes responsibility for completing import procedures and customs clearance, ensuring compliance with local standards and regulations.

Regulatory Compliance and Customs Problem Solving

Aerodoc also performs pre-compliance tasks, checking import requirements and staying ahead of every potential customs issue. In case issues do appear, the company solves them.

Last-Mile Delivery

Finally, Aerodoc carries out the delivery to the final destination, ensuring the merchandise arrives on time and in optimal condition.

If you are looking for a service like this, contact us. Our team of experts will be available for whatever you need.

Topics on this article: Global Logistics | Logistics | Warehouse

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