Logistics Terms What are the Differences? General Warehouse vs Bonded Warehouse

When importing or exporting goods, warehouses play an important role in storing goods. Warehouses can be categorized into seven general types based on various criteria, such as the type of operation, goods stored, and storage type. There are seven most common types of warehouses. Among them, let's compare general warehouses and bonded warehouses, which are important for importing and exporting of goods.

1) General warehouse (public warehouse)
Warehouses that provides storage and various services to multiple customers on a rental basis.

2) Bonded warehouse
Warehouses where imported goods can be stored before they are cleared through customs.

3) Logistics center (distribution center)
Warehouses that acts as an intermediary between manufacturers and retailers, where large quantities of goods can be stored in a short period of time, and serves as the center of distribution.

4) Refrigerated/frozen warehouse
Warehouses for storing perishable foods, pharmaceuticals that need to be stored at low temperatures to preserve quality, etc.

5) Cross-docking warehouse
Warehouses where goods can be efficiently transferred from one mode of transportation to another by reducing storage time.

6) Large warehouse
Warehouses that stores large quantities of one type of product, such as grain or raw materials, and is usually located near production facilities.

7) Private warehouse
Warehouses owned and operated by individual businesses, storing goods specific to their business.

8) Automated warehouse (fulfillment center)
Warehouses that focus on picking, packing, and shipping individual customer orders, and utilize advanced technology such as robotics and automated vehicles to streamline operations.

General warehouses are also called public warehouses and other names. The goods stored in general warehouses are not intended for re-exporting, but for domestic distribution, and it is a warehouse where goods can be stored before being sold and distributed in Korea.

A general warehouse is where goods are stored in the desired area after all duties and taxes have been paid and is supervised by the authorities. Since they are located within the domestic market, they can efficiently distribute goods to local customers. They also allow products to be transported and traded freely within the country without additional customs restrictions and are often used for retail and local distribution.

When goods imported from abroad arrive in Korea, they go through the 'import declaration' process, and an import declaration certificate is issued. In addition, a delivery order (DO) must be submitted before the goods can be released, and taxes must be paid in full amount before the shipper can receive the goods. The place where the goods are stored until the import declaration is completed is called a bonded area or bonded warehouse.
Bonded warehouses can only be operated by those with certain qualifications, such as shipping companies. Bonded warehouses are places where goods are temporarily stored before taxes are paid, usually near a port or airport, and the goods stored are mostly imports. Different bonded warehouses have different rates depending on the quantity and capacity of goods, and therefore it is important to plan ahead when importing goods.

Goods stored in bonded warehouses are not subject to customs duties, excise taxes, etc. because the import process has not been completed, and you do not need to pay customs duties until the goods are released from the warehouse. This has the advantage of reducing costs, keeping goods safe, and managing them efficiently because there is no need to pay taxes and duties until the goods are distributed and exported from the warehouse.

The ways bonded warehouses store goods vary depending on the country or region.

Public bonded warehouse
A warehouse owned and operated by the government, and is open to anyone.
They are used to store goods that have been imported into a country but are not intended to be sold in that country.

Private bonded warehouse
A warehouse owned and operated by a private party that stores goods allowed by its customers to be sold. They are used to store goods that have been exported from a country and are intended for sale in that country.

Customs bonded warehouse
A warehouse that is privately owned and operated, but regulated by the government, where goods are stored for sale in the country from which they were imported.

Duty-free bonded warehouse
A facility owned and operated by a third-party logistics provider that stores goods for sale in the country of import, but is exempt from taxes or duties.

Cost savings
As duties are paid when goods in a bonded warehouse are re-exported, importers can minimize the tax burden and manage their goods efficiently.

Geographical advantages
Most bonded warehouses are located near major ports, where products can be stored until their scheduled distribution date. This saves costs in the supply chain, including lead times and transportation costs.

Long-term storage
Different bonded warehouses offer different terms, but in general, goods can be stored for up to five years at no extra cost, giving importers flexibility to manage their inventory according to market conditions where they can store goods until the economic market recovers from excess demand.

Value-added services
Bonded warehouses offer a wide range of services, including labeling, sorting, repackaging, and assembly of goods, allowing importers to customize their products according to market demand and distribute them to specific locations.

Simplified processes
By providing a single point of contact for all of importers’ storage needs, importers can simplify their processes by not having to deal with multiple contacts or vendors. Importers can also quickly identify and resolve questions and issues with their stored goods.

Similar to but different from a bonded warehouse, a foreign trade zone (FTZ) in the United States is an area formally designated by U.S. customs law that is considered outside of customs territory.
Like a bonded zone, it is exempt from import duties and taxes, but unlike a bonded warehouse, which must be licensed and regulated by authorities before it can be re-exported, it can be processed, manipulated, and manufactured. FTZs are categorized into Privileged Domestic, Privileged Foreign, Non-privileged Domestic, and Non-privileged Foreign FTZs.

Streamlining customs procedures
By utilizing FTZs, it is possible to streamline customs procedures to save time, reduce costs, and improve global competitiveness.

Supply chain management
Since products can be stored, manipulated, and manufactured, FTZs are useful for supply chain management by managing products before re-export in response to changes in the market.

Indefinite storage
FTZ warehouses can store goods indefinitely, allowing you to manage inventory according to market demand and fluctuations, which can improve efficiency.

If the imported goods are stored in a general warehouse after all duties are paid and exported later, then the importer is responsible for all costs.
However, since bonded warehouse is where import procedures are not completed, importers can store the imported goods in a bonded warehouse before declaring the import and then export them to a foreign country to mitigate the cost risk.

In case of general warehouses, importing and storing restricted goods from certain countries (such as tobacco, alcohol, antiques, etc.) requires a lot of time to process paperwork. However, a bonded warehouse is a duty-free zone for restricted or imported goods, where you can store goods while all the necessary documents are submitted and processed.

When importing by sea or air, goods are stored in bonded warehouses at ports and airports, where they are subject to several days of customs clearance. One option is to use bonded transportation before customs clearance to move the goods to a bonded warehouse inland, which is relatively inexpensive.

Once the import declaration is complete, the bonded goods become domestic goods. In this case, you can move the goods to the general storage area of the bonded warehouse and use the bonded warehouse as a general warehouse as the goods are no longer bonded goods, but domestic goods. In addition, inland patent bonded warehouses can also be used as general warehouses.