What Is a Bonded Warehouse?
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- A bonded warehouse is a customs warehouse where imported merchandise subject to duty can be stored without paying the duty on entry. In the United States, goods can stay up to 5 years from importation, or longer if CBP permits. Duty is paid when goods are withdrawn for consumption, and goods withdrawn for export leave without payment of duties.
Also called: Customs warehouse
How it works
A bonded warehouse is a customs warehouse where an importer can store dutiable goods and put off paying duty until the goods are withdrawn. Under 19 U.S.C. 1557, any merchandise subject to duty, except perishable articles and explosive substances other than firecrackers, may be entered for warehousing and deposited in a bonded warehouse at the expense and risk of the owner, purchaser, importer or consignee.
From there, the statute allows several kinds of withdrawal:
- For consumption. The goods enter the US market, and duties and charges are paid at the rate imposed by law on the date of withdrawal.
- For exportation. The goods are withdrawn for export to a foreign country, or shipped to listed US territories such as the Virgin Islands or Guam, without the payment of duties.
- For rewarehousing or transfer. The goods move to another port for rewarehousing, or to another bonded warehouse at the same port.
The total time merchandise may remain in a bonded warehouse cannot exceed 5 years from the date of importation, or a longer period CBP may permit on proper request and good cause shown.
This is general information, not legal or customs advice.
Classes of bonded warehouses
US Customs and Border Protection (CBP) regulations at 19 CFR 19.1 classify customs warehouses:
- Class 1. Government-owned or leased premises for merchandise under examination, under seizure or pending release, held under general order.
- Class 2. Importers' private bonded warehouses, used only for merchandise belonging or consigned to the proprietor.
- Class 3. Public bonded warehouses used only for imported merchandise.
- Class 4 and Class 5. Bonded yards, sheds, pens and tanks for heavy, bulky, live or liquid merchandise, and bonded bins for grain.
- Class 6. Warehouses for manufacture in bond, solely for exportation, of articles made in whole or in part of imported materials.
- Class 7. Warehouses for smelting and refining imported metal-bearing materials.
- Class 8. Warehouses for cleaning, sorting, repacking or otherwise changing the condition of imported merchandise, but not manufacturing it, under customs supervision.
- Class 9. Duty-free stores.
- Class 11. General order warehouses.
Bonded warehouse vs. foreign-trade zone
A foreign-trade zone also lets foreign goods wait before duty is paid, but under a different program: zones are licensed by the Foreign-Trade Zones Board and supervised by CBP, and the activities the International Trade Administration lists for zones run from storage to manufacturing, with production authorized by the Board. A bonded warehouse works by class: Class 6 covers manufacture in bond solely for exportation, and Class 8 covers cleaning, sorting and repacking but not manufacturing. Time differs too: a bonded warehouse is limited to 5 years from importation unless CBP permits longer, while CBP says merchandise may remain in a zone indefinitely, whether or not subject to duty.
Example
An importer enters 2,000 cases of a dutiable product into a Class 3 public bonded warehouse instead of paying duty on arrival. The 5-year limit gives it up to 5 x 12 = 60 months from the date of importation.
Over the next year it withdraws 1,500 cases for consumption as US orders come in, paying duty on each withdrawal. At a hypothetical duty of $3.00 a case at the withdrawal-date rate, used for illustration only, that is 1,500 x $3.00 = $4,500. It withdraws the other 2,000 - 1,500 = 500 cases for exportation, without the payment of duties.
On Shopify
Shopify defines a location as any physical place where you sell products, fulfill orders, or stock inventory, and lists warehouses among the places you can add as locations. If you manage inventory across multiple locations, the quantity for a product is displayed for each location, split into quantity types such as Available, the units that can be sold, and On hand, the total units you physically have at a location.
How Uncap helps
Uncap's Infor A+ integration page describes a storefront where availability distinguishes what is on hand from what can be promised, across warehouses.
Sources
Frequently asked questions
What are the different types of customs bonded warehouses?
CBP regulations at 19 CFR 19.1 set out the classes of customs warehouses, including Class 2 importers' private bonded warehouses, Class 3 public bonded warehouses, Class 6 manufacturing warehouses for export, Class 8 warehouses for cleaning, sorting and repacking, Class 9 duty-free stores and Class 11 general order warehouses.
What does it mean to have a bonded warehouse?
Having goods in a bonded warehouse means imported merchandise subject to duty is stored without paying duty on arrival. Under 19 U.S.C. 1557, it can stay up to 5 years from importation, and duty is paid only when it is withdrawn for US consumption, at the rate in force on that date.
What is the purpose of a bonded warehouse?
A bonded warehouse lets an importer defer duty until goods are withdrawn, and avoid it for goods that are exported: under 19 U.S.C. 1557, merchandise may be withdrawn for exportation to a foreign country without the payment of duties.
