Customs Bonded Warehouse vs. Free Trade Zone Warehouse

Advantages of a Customs Bonded Warehouse

Each type of warehouse has advantages. Some businesses choose a Customs bonded warehouse because goods stored there can move between other bonded warehouses. Further, goods can also move into free trade zones for export, deconstruction or permanent storage of the product.

Another advantage to Customs bonded warehouses is associated with increased storage times. Some countries allow unlimited storage time. In the U.S., however, imported goods are allowed to be stored for up to five years. This creates an opportunity to delay the introduction of a product to market until there is greater demand.

Because no duty is collected until the product is withdrawn for consumption, importers have greater control over their finances. Lastly, if an importer is unable to find a buyer in the U.S., the goods can be exported without paying duty.

Advantages of a FTZ Warehouse

With a FTZ warehouse, goods do not go through an official Customs entry process when first stored in the warehouse. This allows for duty payment to be delayed, reduced or even eliminated in some cases. FTZ warehouses also don’t have regulations as strict as bonded warehouses.

Goods can be inspected, repaired and repacked within a FTZ warehouse. This allows a business to remove damaged products and withdraw them before going to market. These processes must be approved by U.S. Customs and Border Protection beforehand.

In a FTZ warehouse, goods can be manipulated, manufactured or destroyed, which is only possible in certain classes of bonded warehouses. All non-prohibited merchandise may be admitted. Lastly, merchandise can remain in a FTZ warehouse indefinitely, whereas bonded warehouses have a five-year limit.

Is a Custom Bonded Warehouse or a FTZ Warehouse Right for You?

Which type of warehouse is right for your business? Choosing between bonded warehouses and FTZ warehouses essentially comes down to how much control you want over the Customs process and your products. If you are storing foreign goods for export, Customs bonded warehouses represent the best option.