Question

Discuss the advantages of Bonded Warehouse to importers.

Discuss the services rendered by bonded warehouses to the importer.

Explain the advantages of bonded warehouses to importers.

Answer 1

1. Importers can keep the imported goods in bonded warehouses. They can pay customs duty in installments and withdraw the goods in small quantities. Importers need not lock up a large amount of working capital for the payment of import duty at one time.
2. Importers who do not have their own warehouses can keep their goods by paying nominal charges. They need not take away all the imported goods at once from the port town. The safety of goods is assured.
3. Importers can regulate the supply of goods according to demand by storing them in bonded warehouses. If all the imported goods are put to market for sale at once, there may be a heavy fall in prices, and the importer may suffer a huge loss.
4. Goods imported for the purpose of re-export can be kept in bonded warehouses. The importer can thereby save on transport costs by removing them to his godown and bringing them again to the port. He need not pay import duty and later claim a refund.
5. Goods which are imported for re-export can be stored in bonded warehouses, thereby saving on transportation costs. The importer can perform blending, grading and repacking processes in bonded warehouses. As a result, importers can re-export goods at a lower price and face competition in the international market. In this way, bonded warehouses encourage re-exports.
6. The importer can take the intended buyers to the bonded warehouses for inspection of the goods before sale.
7. The importer can borrow money from banks on the security of warrants or receipts issued by bonded warehouses. Warehouse receipts can be used as collateral security.
8. The goods stored in bonded warehouses can easily be sold with an endorsement on a warehouse warrant.