What Is A Bonded Warehouse? Here’s What Shippers Need To Know

As the Trump administration’s tariffs took shape, importers rushed to find ways to soften the financial blow.

One increasingly popular solution has been bonded warehouses—facilities where goods can be stored for up to five years without paying tariffs until they leave the warehouse.

These warehouses, certified by U.S. Customs and Border Protection, are similar to foreign trade zones (FTZs) but offer different advantages. Bonded warehouses allow importers to delay paying duties until merchandise is sold or moved, which has made them highly sought-after during times of trade uncertainty.

However, the surge in demand has nearly exhausted the supply. With only about 1,750 bonded warehouses in the U.S., most are now full. Companies are scrambling to piece together space from multiple third-party logistics (3PL) providers, especially on the West Coast. In some cases, shippers have chosen to leave goods on vessels rather than pay immediate duties, waiting for bonded space to open up.

Setting up a bonded warehouse isn’t cheap or quick. Costs can range from $20,000 to $50,000, not including consulting and compliance expenses. FTZ warehouses are even pricier and have different customs rules: duties are assessed when goods enter the facility, not when they leave.

The unpredictability of trade policy, especially under the second Trump term, has made bonded warehouses more attractive. But this isn’t a long-term fix.

As Lance Ryan of Watson Land Co. put it, “Waiting out things with products sitting in a warehouse isn’t a business model.”

While some landlords may own qualifying properties, they aren’t the ones cashing in—occupiers handle the certification and pay the setup costs. Still, awareness of bonded and FTZ spaces has grown, and more developers are looking into activating their properties for future demand. But for those trying to enter the market now, it may already be too late.

“Nobody is taking advantage of this bonded demand right now if they weren’t already in the bonded space,” said JLL’s Danny Reaume.

Source: Bisnow