customs bonded warehouse Cleveland Ohio

Ways a Customs Bonded Warehouse Boosts Your Company’s Bottom Line

If international imports are central to your operation, using a customs bonded warehouse may be key to your supply chain efficiency.

Successful navigating global logistics requires effective coordination of numerous components: Transportation, warehousing, inventory management, etc. In that context, a bonded warehouse can be an ideal means to cost-effectively store imports closer to the final destination for extended periods of time while also maintaining compliance with the maze of legal and regulatory requirements for such goods.

As noted by U.S. Customs and Border Protection, companies that move large volumes of imports (particularly those subject to customs duty tax) in a secure site – where it can be stored, manipulated and undergo manufacturing) – without payment for up to 5 years. Liability is transferred to the warehouse proprietor, who guarantees the goods will be stored securely and appropriately until cleared by customs for release.

Federal regulations for bonded warehouses are outlined in Title 19, U.S.C. section 1555 and 19 CFR 19, which includes details on the 11 different classifications for bonded warehouses. Businesses shopping for a Cleveland bonded warehouse may have several options of bonded warehouse providers, depending on their volume, special storage requirements, and last-mile delivery locations.

Probably the most common are public bonded warehouses, which are used exclusively for storage of imported merchandise, and bonded warehouses utilized for cleaning, sorting, repacking, etc. Other types include privately-owned bonded warehouses (all goods in the facility belong to the warehouse owner), bonded yards or sheds (used for storing heavier, bulkier imports), bonded warehouses for manufacture in bond (mostly for exported goods made in whole or in part of imported materials), and bonded warehouses set up for smelting and refining imported metal materials.

Shield Against Supply Chain Disruptions

A primary feature of customs bonded warehousing is that it defers duty tax payments on imported goods for up to five years. Products can be stored, manufactured and manipulated while at the facility, but the shipper doesn’t pay duties until they are ready to be shipped out for delivery. For a company that ships sizable volume, the ability to hold off on paying duty taxes until goods actually sell and are ready to be shipped out can insulate businesses from sudden market swings and dips. By strategically controlling stock levels in this way, companies can protect themselves from the brunt of supply chain volatility impacts.

Perfect example: The pandemic. Dramatic demand shifts led to major bottlenecks and high inflation for all kinds of goods. Certain goods (luxury, for instance) saw a sharp drop in demand, but manufacturers and distributors didn’t want to lose out on supplier contracts. By utilizing bonded warehouse facilities to store excess stock without the need for immediate duty payments, lot of operations were able stay afloat until demand bounced back.

Potential tax savings is another upside for many bonded warehouse clients. Duty taxes on bonded warehouse items don’t have to be paid upfront. They only pay when items are released. If the import tax has been lowered during storage, the company gets to take advantage of the lower rate.

Furthermore, if demand stagnates long-term, bonded warehouse users can export goods elsewhere without paying any duties.

Tighter Security, Safer Facilities

Not just any Cleveland warehouse can be a bonded warehouse. Customs bonded facilities are subject to stringent regulation that requires tight security and oversight by customs authorities. That means they’re subject to 24/7 monitoring, strict access limitations and regular inspections by customs officials.

Such rules are required to protect the market from a flood of cheap imports that aren’t properly taxed, inspected, etc. But the added benefit to customers using these warehouses is the peace of mind knowing this enhanced security minimizes the risk of theft, damage, or loss is minimal.

Added bonus: Many insurance companies offer lower premiums when goods are stored in bonded warehouses because of their security standards.

Easier, Faster Customs Clearance

International supply chains can get complicated. Customs regulations can be tricky. The option to store goods long-term can relieve a lot of the stress of the typical customs clearance process and protocols. Having a logistics partner with experience in dealing with customs, storage and transport can make a huge difference.

All imports require at least some red tape to clear customs, often on a tight timeline. This is especially true of CBP restricted goods (ie., alcoholic beverages, cars, firearms, medicines, plants and seeds, gold, soil, textiles, etc.).

If you’re using a bonded warehouse, you can relax: You’ve got up to 5 years. There’s no rush on paperwork, payment or inspection. This is especially beneficial if demand for your goods is currently low or prone to sharp swings. A non-bonded warehouse might be a little cheaper, but any delays or incorrect filings, and your stored goods may be subject to disposal or destruction.

Better Customer Service

When you have inventory on hand, ready-to-go, you can quickly fulfill orders and immediate customer demand. Sidestep issues with backorders, stockouts and delays – which improves customer relations and brand standing.

On Time Delivery & Warehouse: Trusted Bonded Warehouse in Ohio

By leveraging the services of a trusted customs bonded warehouse partner, your business gets the benefit of maintaining continuity of operations, reduced tax burdens, maximized customer satisfaction and supply chain resilience in an increasingly complex and unpredictable global environment.

Contact On Time Delivery & Warehouse by calling (440) 826-4630 or send us an email.

Additional Resources:

Bonded Warehouse, U.S. Customs and Border Protection

More Blog Entries:

Who Needs a Customs Bonded Warehouse? Dec. 30, 2021, Cleveland Customs Bonded Warehouse Blog

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