Customs warehousing is a cost-effective way to store foreign products in your country that are destined for another. How can a business benefit from it?
Recent global events fuelled a surge in demand for warehouse space among retailers and logistics providers. More and more importers are considering bonded or customs warehousing as a solution to the extra duties and red tape.
Bonded warehousing allows you to delay paying customs charges and VAT on goods imported from outside your country until they are removed and sold. This offers significant cash flow benefits to businesses and owners, who can avoid the double duty on goods that are imported into one country and then exported to a different country.
My word is my bond
But firms need to be sure they are working with warehousing and logistics partners who understand the rules and regulations governing these duty-free zones. And logistics firms expanding into bonded warehousing for the first time to meet growing demand need a clear understanding of their reporting and compliance obligations.
You have to fulfil certain requirements when applying to your customs authorities for a licence to operate a customs warehouse, such as having an economic operator's registration and identification (EORI) number. You’ll also need to have a good customs compliance record and demonstrate you have a real business need for your bonded warehouse.
Bear in mind that you may also have to provide a financial guarantee to cover potential import duty and VAT liabilities. It takes about eight weeks to process an application, so it’s advisable to plan well in advance.
Do your sums
It’s essential that you work out whether the amount of duty you are likely to save with a bonded warehouse justifies the investment in time and money. Also, ask yourself whether you have the necessary infrastructure to operate such a facility.
If you’re a logistics operator, you’ll need to satisfy potential clients that you have a robust IT system in place for tracking goods going in and out. This means being able to provide a clear audit trail to demonstrate your compliance with customs’ stringent reporting requirements.
Handle with care
Remember that goods stored in bonded warehouses are subject to strict rules and regular checks from customs officials. These govern what type of products can be stored and what you can and can’t do with them.
Bonded goods can only be handled in certain ways: to preserve them in storage, improve their presentation, and prepare them for distribution or resale.
Operating a customs warehouse certainly offers attractive benefits to both importers and the third-party logistics providers who operate them. But there are both costs and time-consuming reporting requirements that need to be considered before opening such a facility.
Ultimately, importers need to be confident that they are working with logistics partners who really understand the rules and regulations governing bonded warehouses.
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Find out how we can help
Customs Manager Ltd has customs warehouse expertise on staff to assist you with effective planning, design, and formulation of relevant standing operating procedures, as well as managing change within your organisation to prepare for the efficient management of the customs storage permission. We collaborate with you to complete the application in a timely and accurate manner, and we support you in submitting it to the authorities. We use processes that are based on cutting-edge technology that has been approved by the authorities. So, if you're tired of seeing money thrown away, or if you're ready to go but lack resources or a helping, guiding hand, get in touch.