Latest news with #bondedwarehouses
CTV News
21-05-2025
- Business
- CTV News
Importers race to turn U.S. warehouses into tariff-free zones
A container ship sails off from a container terminal in Qingdao in eastern China's Shandong province Sunday, April 6, 2025. (Chinatopix Via AP) LONDON/NEW YORK - Companies importing goods into the United States from China are rushing to convert warehouses into facilities that are exempt from President Donald Trump's tariffs until they are ready to sell the merchandise. The U.S. has more than 1,700 bonded warehouses, facilities where imported goods can be held without immediate payment of customs duties such as tariffs, currently 30% for shipments from China. Such fees are only paid when the goods leave the bonded warehouse, allowing businesses to manage funds more effectively at a time of extreme trade policy volatility. The rush to bond U.S. warehouses for goods ranging from clothing to auto parts is a bet for some that raised U.S. tariffs will be only a short-term policy by the Trump administration. Due to Trump's tariff war, many of these bonded warehouses are now at full capacity, and prices for space in them have skyrocketed, four industry sources told Reuters, prompting companies to apply to U.S. Customs and Border Protection to expand bonded space. Utah-based fulfillment firm LVK Logistics, for instance, is in the process of making one of its warehouses bonded 'in response to the tariffs,' CEO Maggie Barnett told Reuters, adding she expects the process to take three to four months. 'You can bond more or less anywhere,' said Chris Rogers, who manages the supply chain research team at consultancy S&P Global Market Intelligence. 'It involves money and it takes time, but if you are a big company and expect tariffs are going to remain elevated for an extended period, you can convert (existing) spaces into bonded warehousing.' Other companies and logistics firms are seeing their applications with the CBP backlogged in some cases by over six months, said Chris Huwaldt, vice president of solutions at WarehouseQuote, a logistics research firm. Last year, the process would have taken a couple of months, he added. Huwaldt said getting storage space certified as bonded 'could cost thousands of dollars or it could cost six figures,' depending on the state the warehouse is based in, the financial status of the company and the additional security measures required by the CBP for a specific location. Trump's on-again, off-again tariff policy - which pushed duties on Chinese goods to as much as 145 per cent in April before lowering them - makes the flexibility afforded by bonded warehouses appealing to companies. 'A lot of companies importing from China - not just China-based, but U.S. importers as well - are taking advantage of bonded warehouses to assist with cash flow,' said Cindy Allen, shipping consultant at Trade Force Multiplier and a former FedEx Logistics executive. 'It doesn't necessarily save them money as the tariffs have to be paid when the goods are withdrawn from the warehouse. But it allows companies to pay duties in smaller increments as they are sold,' she said. The CBP said it has noticed an increased interest in the use of bonded warehouses for continued compliance with new regulations and executive orders. The White House did not immediately respond to a request for comment. 'Unprecedented' warehouse rush In early 2024, bonded storage space was rented at approximately twice the cost of standard storage rates, but since the start of 2025, it has risen to four times the price to rent non-bonded space, according to WarehouseQuote data. 'This rush to bonded warehouses to ease cash flow is unprecedented,' Allen said. During the first Trump administration, many companies simply accepted the levies on China. But this meant firms paid more over a prolonged period of time while also being forced to invest in alternative sources to China. Importers 'don't want to repeat the past mistakes,' Allen said. Setting up new bonded warehouses could be risky, because the United States may go back to higher tariffs once its 90-day reprieve ends. Vladimir Durshpek, cofounder of Venice, Florida-based warehousing and storage company CargoNest, said he is weighing adding a third bonded warehouse to his assets until U.S. tariff negotiations are completed. 'What we don't want to do is rush into providing more capacity, and then things change,' he said. Fremont, California-based storage company DCL Logistics has not made definitive plans for bonded space because 'it's unclear if the demand will stay this high,' Chief Revenue Officer Brian Tu said. 'By the time a lot of warehouses would be able to achieve bonded status right now, these additional tariffs might be gone, and the demand for bonded space might not be there,' said Jacob Roseburrough, director of marketing at WarehouseQuote. Reporting by Richa Naidu and Arriana Mclymore in London; additional reporting by Trevor Hunnicutt; Editing by Lisa Jucca and Rod Nickel, Reuters
Free Malaysia Today
21-05-2025
- Business
- Free Malaysia Today
Importers race to turn US warehouses into tariff-free zones
The US has had more than 1,700 bonded warehouses, facilities where imported goods can be held without immediate payment of customs duties such as tariffs. (EPA Images pic) LONDON : Companies importing goods into the US from China are rushing to convert warehouses into facilities that are exempt from President Donald Trump's tariffs until they are ready to sell the merchandise. The US has more than 1,700 bonded warehouses, facilities where imported goods can be held without immediate payment of customs duties such as tariffs, currently 30% for shipments from China. Such fees are only paid when the goods leave the bonded warehouse, allowing businesses to manage funds more effectively at a time of extreme trade policy volatility. The rush to bond US warehouses for goods ranging from clothing to auto parts is a bet for some that raised US tariffs will be only a short-term policy by the Trump administration. Due to Trump's tariff war, many of these bonded warehouses are now at full capacity, and prices for space in them have skyrocketed, four industry sources told Reuters, prompting companies to apply to US customs and border protection to expand bonded space. Utah-based fulfillment firm LVK Logistics, for instance, is in the process of making one of its warehouses bonded 'in response to the tariffs,' CEO Maggie Barnett told Reuters, adding she expects the process to take three to four months. 'You can bond more or less anywhere,' said Chris Rogers, who manages the supply chain research team at consultancy S&P Global Market Intelligence. 'It involves money and it takes time, but if you are a big company and expect tariffs are going to remain elevated for an extended period, you can convert (existing) spaces into bonded warehousing,' Rogers said. Other companies and logistics firms are seeing their applications with the CBP backlogged in some cases by over six months, said Chris Huwaldt, vice president of solutions at WarehouseQuote, a logistics research firm. 'Last year, the process would have taken a couple of months,' he added. Huwaldt said getting storage space certified as bonded 'could cost thousands of dollars or it could cost six figures,' depending on the state the warehouse is based in, the financial status of the company and the additional security measures required by the CBP for a specific location. Trump's on-again, off-again tariff policy – which pushed duties on Chinese goods to as much as 145% in April before lowering them – makes the flexibility afforded by bonded warehouses appealing to companies. 'A lot of companies importing from China – not just China-based, but US importers as well – are taking advantage of bonded warehouses to assist with cash flow,' said Cindy Allen, shipping consultant at Trade Force Multiplier and a former FedEx Logistics executive. 'It doesn't necessarily save them money as the tariffs have to be paid when the goods are withdrawn from the warehouse. 'But it allows companies to pay duties in smaller increments as they are sold,' she said. The CBP said it has noticed an increased interest in the use of bonded warehouses for continued compliance with new regulations and executive orders. The White House did not immediately respond to a request for comment. 'Unprecedented' warehouse rush In early 2024, bonded storage space was rented at approximately twice the cost of standard storage rates, but since the start of 2025, it has risen to four times the price to rent non-bonded space, according to WarehouseQuote data. 'This rush to bonded warehouses to ease cash flow is unprecedented,' Allen said. During the first Trump administration, many companies simply accepted the levies on China. However, this meant firms paid more over a prolonged period of time while also being forced to invest in alternative sources to China. 'Importers 'don't want to repeat the past mistakes',' Allen said. Setting up new bonded warehouses could be risky, because the US may go back to higher tariffs once its 90-day reprieve ends. Vladimir Durshpek, co-founder of Venice, Florida-based warehousing and storage company CargoNest, said he is weighing adding a third bonded warehouse to his assets until US tariff negotiations are completed. 'What we don't want to do is rush into providing more capacity, and then things change,' he said. Fremont, California-based storage company DCL Logistics has not made definitive plans for bonded space because 'it's unclear if the demand will stay this high,' chief revenue officer Brian Tu said. 'By the time a lot of warehouses would be able to achieve bonded status right now, these additional tariffs might be gone, and the demand for bonded space might not be there,' said Jacob Roseburrough, director of marketing at WarehouseQuote.
Yahoo
08-05-2025
- Business
- Yahoo
Importers Turn to Bonded Warehouses and FTZs to Dodge Tariff Costs
As U.S. brands and other importers navigate through today's tumultuous trade environment without spending a boatload on tariff costs, bonded warehouses and foreign trade zones (FTZs) have rapidly become en vogue. Both options represent a means for companies to defer duty payments to a later date, while maintaining their imported goods on U.S. soil and allowing them to preserve cash flow that they can use to better allocate when necessary. More from Sourcing Journal A customs-bonded warehouse enables companies to store inventory for up to five years, without having to pay tariffs until they are transferred elsewhere. This can enable the business to save money through the storage period. Shippers can also re-export the goods to another country duty-free. Upon withdrawing the inventory, businesses will pay the tariff corresponding with the goods at the time of withdrawal. If a tariff is lowered or a product exclusion is announced while goods are in bond, the importer can benefit from the lower rate when they do import them. FTZs are designated zones considered outside of U.S. Customs and Border Protection (CBP) domain, often located near American ports of entry. Unlike bonded warehouses, there's no time limit to how long inventory can be hosted. These zones can also enable a host brand to carry domestic duty-paid merchandise in the same activated building they hold foreign non-duty-paid goods, while the bonded facilities exclusively serve foreign-imported merchandise. FTZs lock in the duty rates at the time of admission for goods, so the importer will not benefit from a potentially lower tariff rate in the future. However, this could also serve as a hedge for companies in the event the 10-percent baseline tariffs on most imports escalate again after the end of the 90-day tariff pause in July. 'The main difference is the intensity and need for this as quickly as possible,' Scott Taylor, leader of the FTZ practice at law firm Sandler, Travis & Rosenberg, P.A. 'A lot of the companies that we work with are interested in a Foreign Trade Zone first, especially with a lot of 3PLs setting up activated space as quickly as they can to service all these companies that traditionally haven't really had to pay much attention to duties,' Taylor told Sourcing Journal. 3PL giant Geodis, which operates 10 different FTZs across 20 different customers, is starting to feel the pressure of high demand for the space.
