Customs Bonded Warehouse Consulting & Services

Services Customs Bonded Warehouse Consulting & Services

Delay — or avoid — paying customs duties with a Customs Bonded Warehouse

What Is a Customs Bonded Warehouse?

A Customs bonded warehouse is a secured facility used to import and store goods without immediately triggering the obligation to pay import duties. Goods can also be transported within the US — between bonded facilities — with duties becoming due only once the goods are removed from the bonded warehouses and “enter” into the marketplace. Besides storing goods, bonded warehouses can host services, such as manufacturing, assembling, manipulating, cleaning, and sorting goods.

Want to Establish a Customs Bonded Warehouse? We Can Help!

DB Schenker Trade Solutions provides everything you need to establish a Customs Bonded Warehouse. We help you:

Determine which type of warehouse you need. According to Customs and Border Protection (CBP), there are eleven different types, or classes, of bonded warehouses. DB Schenker’s experts will help you determine which option is best for you.
Apply in writing to your Area Port Director. The Port Director will want information about your location, including a description of the premises, and which areas you intend to bond. The Port Director will also be interested in who is staffing your facility. And you will need to demonstrate that good bookkeeping and inventory tracking are in place. This assures the Port Director that duties will be properly calculated and paid as needed. We help you gather required documents and submit your letter to the Port Director, along with any necessary follow-up.
Obtain an Activity Code 2 – Custodian of Bonded Merchandise Customs bond. A Customs bond ensures that any duties due to the CBP are immediately paid. The amount of the bond required varies, and is determined by the Port Director upon approval of your application. The minimum bond amount is $25,000 per bonded space. As one of the largest Customs bond providers in North America, we’ll get you the right bond at the best price.

Click here to request more information about establishing a Customs Bonded Warehouse.

Why Use a Customs Bonded Warehouse?

Bonded warehouses improve importers’ cash flow by allowing them to delay paying duties on goods imported or stored in a bonded warehouse. Duties become due only when importers “enter” the goods into the marketplace. For example, an importer might want to store goods closer to their customers, but wait until a sale is complete before paying customs duties. Likewise, an exporter that manufactures, assembles or re-processes imported goods can avoid paying customs duties altogether if they keep the goods in a bonded facility prior to export.

Who Should Establish a Customs Bonded Warehouses?

Importers and exporters may wish to have all or part of a facility bonded. Warehouse operators and trucking companies may also want to establish a Customs Bonded Warehouse in order to offer this valuable service to their customers.

Whether you are an importer, exporter, warehouse operator or trucking company, we can help you with the entire bonding process!

What Types of Customs Bonded Warehouses are There?

There are 11 classes of Customs Bonded Warehouses. Each class of bonded warehouse is subject to strict usage restrictions:

Class 1: Government-owned bonded warehouses. These premises are owned or leased by the US Government. They are generally used by Customs and Border Protection (CBP) to store seized merchandise that is being evaluated for release, confiscation, destruction, etc.
Class 2: Private bonded warehouses. These are warehouses owned by a company or individual that exclusively uses the property to store its own imported goods, prior to entry into the domestic market.
Class 3: Public bonded warehouses. These warehouses are open to importers looking to store their goods under bonded conditions. The owner of a public bonded warehouse usually provides this service to multiple clients, typically offering each importer their own segregated space within the warehouse.
Class 4: Bonded yards or sheds. These are areas used to store heavy or bulky imported agricultural merchandise (such as stables, feeding pens, corrals, or similar animal enclosures) and imported animals. They can also include tanks used for storing bulk liquids.
Class 5: Bonded grain bins. These are bins, elevators or parts of buildings used to store imported grain.
Class 6: Manufacturing & assembly bonded warehouses. This type of warehouse allows importers to manufacture or assemble products using imported parts, and then export the finished product without paying customs duties. Cigars assembled in a class 6 warehouse are exempted from the export requirement — they may be either exported or entered into the domestic market (after paying customs duties).
Class 7: Smelting & refining locations. These are bonded areas used to process imported raw “metal-bearing materials” (such as ore or bullion). The resulting product can be either for export or domestic consumption.
Class 8: Cleaning, sorting, and repacking warehouses. Imported goods can be cleaned, sorted and/or repacked, under CBP supervision. Manufacturing is not allowed. The resulting product can be for either export or domestic consumption.
Class 9: Duty-free stores. These are areas located outside the Customs territory (usually at international airports). They sell duty-free merchandise to individuals departing the country who intend to consume the items oversees.
Class 10: On-board duty-free areas. These areas hold merchandise that can be sold duty-free to passengers traveling on international flights.
Class 11: General Order Warehouses. These are bonded warehouses used to hold “General Order” (GO) merchandise (goods that have not been cleared by CBP, usually because they were improperly imported and/or documented). After holding unclaimed GO merchandise for 15 days, the CBP will transfer it to a Class 11 bonded warehouse. After six months, the goods are subject to confiscation and may be auctioned or destroyed.
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What Type of Customs Bonded Warehouse Do I Need?

This greatly depends on the needs of your business. If you’re looking to store your own imports duty-free on your own property, you’ll likely want to establish a Class 2 bonded warehouse. If you plan to offer bonded warehousing services to clients, a Class 3 bonded warehouse might be what you’re looking for. If you want to assemble or manufacture products for export using imported parts only, a Class 6 bonded warehouse may work for you. If the products are intended for domestic consumption and you would like to use imported and domestic components, then an FTZ may be your only option. But if you need to clean, sort and/or repackage imports, for either domestic consumption or re-export, then a Class 8 bonded warehouse would likely be a good fit.

Questions? Our experts can help you determine which class of bonded warehouse is best for you, and help you navigate the entire bonding process.

What is the Difference Between a Customs Bonded Warehouse and a Foreign Trade Zone (FTZ)?

Both Customs Bonded Warehouses and FTZs allow shippers to delay — or avoid altogether — paying import duties and excise tax. However, there are some key advantages and disadvantages to both:

Foreign Trade Zones

Foreign Trade Zones (referred to as Free Trade Zones in other countries) are restricted areas within the US, usually near a port, that are classified as being outside of US Customs territory. They are therefore exempted from customs duties. FTZs can be used to store, process, and manufacture goods using both imported and domestic components. Taxes on imported components are due only if/when the goods are entered into the US. At that point manufacturers can choose to pay duties on either the separate components, or the finished product, whichever is more cost effective.

FTZ advantages:

Increased flexibility of how goods are handled and taxed
Unlimited storage time
24-hour access
Reduced risk of theft due to increased CBP security
Can be used to store both imported and domestic goods
Waste or destroyed materials are not subject to import duties
Streamlined logistics (e.g., “weekly entry” or “direct delivery”)
A customs bond is not required to enter goods into an FTZ

FTZ disadvantages:

Geographically restricted to areas at/near ports of entry
Opportunities for expansion within an FTZ are limited to its physical boundaries

Customs Bonded Warehouses

Customs Bonded Warehouses (CBWs) are secured buildings operating under US Customs Border Protection (CBP) regulations. A CBW can also be a designated secured area within a building. CBWs are used to store imported goods that have passed Customs but have not yet entered into the US marketplace. Duties become due once the goods are withdrawn for consumption. This allows importers to delay paying tax until they find a domestic buyer. If the goods are ultimately exported without being entered into the US, then no tax is due.

Customs Bonded Warehouse Advantages:

Geographic flexibility allows importers to choose locations closer to customers, wherever they may be located in the US
Goods can be moved duty-free from one bonded warehouse to another
Existing facilities can apply with the CBP to become bonded
All or part of a facility can be bonded

Customs Bonded Warehouse Disadvantages:

Domestic components cannot enter a CBW
Manipulation and manufacturing are restricted to select types of CBWs
Since they operate under CBP supervision, CPWs can only be accessed during normal business hours
Goods cannot be stored for more than 5 years

Customs Bonded Warehouses vs FTZs: which is the best option for you?

FTZs are generally best for those who import goods for re-export. They’re also usually the best option for manufacturing — especially if they use both imported and domestic components. FTZs offer more flexibility for handling goods and how they’re taxed once they “enter” the US.

Customs Bonded Warehouses are often the better option for those who import goods for domestic consumption, rather than for export. Since they can be located virtually anywhere, importers can choose the best location based on geography and the specific needs of their supply chain. A CBW may also be a viable alternative when your local FTZ is at or near capacity.

Ready to get started? We help you with the entire process! Contact us by clicking here or call us at (844) 724-8723.

DB Schenker has over 150 years of experience. Once you’re ready, we’ll help you obtain approval from CBP and get you bonded. And since we’re one of the largest Customs Bonds providers in North America, we’ll make sure you get the best bond at the very best price. Simply put, we make Customs compliance easy!

Questions?

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Additional Products & Services

Custodian Bonds

Transport goods within the US without paying Customs Duties with an Activity Code 2 Bond.

Customs Bonded Warehouse Bond

Bonded warehouses help improve importers’ cash flow. Delay paying duties on goods until they “enter” into the marketplace.

Trucking Solutions

Everything carriers and freight brokers need to get licensed and stay in compliance. Let us do the paperwork! We simplify the whole process.

Contact

Have questions? Click below to contact us anytime. Click here to send us an email. Or call us and speak directly with one of our experts (Monday through Friday, 8 a.m. to 5 p.m. ET).

Schenker, Inc.
Trade Advisory & Risk Solutions
41 Pinelawn Road, Suite 110
Melville, NY 11747
Phone +1 (844) 724-8723 (in USA)
Phone +1 (516) 690-2171 (outside USA)
TradeSolutionsUS@dbschenker.com