What Is a Bonded Warehouse?

Duty-deferred storage for imported goods, explained: the law, the warehouse classes, the paperwork and the limits.

What is a bonded warehouse? A plain definition

What is a bonded warehouse? It is a building or other secured area approved by U.S. Customs and Border Protection (CBP) where imported goods can be stored, and in some cases handled, without paying duty or taxes until they leave. The operator, called the proprietor, posts a bond with CBP guaranteeing that the goods will be accounted for, which is where the word bonded comes from.

The customs bonded warehouse definition comes from 19 U.S.C. 1557 and CBP's regulations in 19 CFR Part 19 and Part 144. Imported goods entered for warehousing may stay for up to five years from the date of importation. On a warehouse withdrawal for consumption in the U.S., the importer pays duty at the rate in effect on the withdrawal date. When they are withdrawn for export, they generally leave without paying U.S. duty.

In short, the bonded warehouse meaning for an importer is control over timing, a theme that runs through our guide to importing through Los Angeles and Long Beach: duty becomes payable when goods are sold into the U.S. market, and never for goods that are shipped abroad.

The CBP bonded warehouse classes in 19 CFR 19.1

CBP sorts bonded warehouses into classes by what they store and what they are allowed to do. Most importers deal with Class 2, 3 or 8; Class 11 matters when cargo is not entered on time.

Under 19 CFR 19.1(b), part or all of a Class 1, 2, 3, 4, 5, 6, 7 or 11 warehouse may also be designated for Class 8 manipulation.
Class	Type	What it is used for
1	Government premises	Government-owned or leased space for goods under examination, seized, or awaiting release, stored at CBP direction
2	Private bonded warehouse	Stores only the proprietor's own imported goods or goods consigned to it
3	Public bonded warehouse	Stores imported goods for any importer; the common commercial model
4	Bonded yards, sheds, pens and tanks	Heavy or bulky goods, live animals, and bulk liquids in tanks
5	Bonded bins	Grain storage in bins or separated parts of buildings or elevators
6	Bonded manufacturing warehouse	Manufacturing articles solely for export from imported or taxed materials, plus a specific cigar provision
7	Bonded smelting and refining	Smelting and refining imported metal-bearing materials
8	Manipulation warehouse	Cleaning, sorting, repacking or otherwise changing the condition of goods, short of manufacturing, under CBP supervision
9	Duty-free store	Selling conditionally duty-free goods to departing travelers, plus supporting storage
10	Reserved	Not currently used
11	General order warehouse	Storing and disposing of general order merchandise, meaning goods not entered on time

How bonded warehouses work, start to finish

01
Arrival in bond
Imported cargo travels from the port to the warehouse under an in-bond, usually an Immediate Transportation (IT) movement, carried by a bonded carrier. Arrival at the warehouse must be reported to CBP within two business days. Our guide to in-bond shipments covers that leg.
02
Warehouse entry
The importer, almost always through a licensed customs broker, files a warehouse entry (ACE entry type 21) within 15 calendar days of in-bond arrival. Duty is calculated but not paid.
03
Receipt and storage
The proprietor reconciles what arrived against the entry, records each lot with its location and running balance, and keeps bonded goods identifiable by entry for as long as they stay.
04
Optional manipulation
With a prior CBP permit on Form 3499, goods may be cleaned, sorted, repacked or otherwise changed in condition, provided the result is not a manufactured new article.
05
Withdrawal
Goods leave on a withdrawal: for consumption (ACE type 31, or 32 and 34 for quota and antidumping or countervailing duty goods), for export, or for transportation to another bonded warehouse. Partial withdrawals are normal.
06
Close-out
Once the last unit of an entry is withdrawn, the entry's records are closed and retained for CBP. Goods may not stay past five years unless CBP extends the period for good cause.

Key rules of a customs bonded warehouse

Five-year limit. Goods must not remain beyond five years from the date of importation, unless CBP grants a longer period on a proper request showing good cause (19 CFR 144.5).
Duty at the withdrawal-date rate. 19 U.S.C. 1557 applies the rate of duty in force on the date of withdrawal. A rate increase while goods are stored applies to later withdrawals, and a decrease benefits them.
Not everything is eligible. The statute excludes perishable articles and explosives other than firecrackers.
Manipulation needs a permit. No manipulation without a prior CBP permit (19 CFR 19.11). Blanket permits of up to one year can cover repetitive work.
No manufacturing in a storage warehouse. Manufacturing is limited to Class 6 and 7 bonded manufacturing and smelting warehouses, under their own rules.
Ownership can change. The right to withdraw can be transferred to a buyer who files a bond covering the duties; the transfer is irrevocable (19 U.S.C. 1557(b)).
Export is not always duty-free to North America. 19 U.S.C. 1562 attaches USMCA conditions to some goods withdrawn for export to Canada or Mexico.

What a bonded warehouse proprietor must do

Proprietor duties explain why bonded storage costs more than ordinary storage. These come from 19 CFR 19.12 and the custodial bond conditions in 19 CFR 113.63.

Duty	Requirement
Inventory system	Track all goods from receipt to disposition, by entry, with location and running balance
Receiving	Record every receipt against its entry number and report discrepancies to CBP
Shortages and theft	Report theft and extraordinary shortages to CBP immediately, confirm in writing within five business days
Physical counts	Take an annual physical inventory or run cycle counts covering every category during the year
Annual reporting	Prepare CBP Form 300 within 45 calendar days after the business year, or an annual reconciliation within 90 days where permitted, and keep it five years
Custody and bond	Keep goods safe, release them only as CBP authorizes, and answer for defaults through liquidated damages under the bond

Bonded warehouse vs. foreign-trade zone vs. CFS vs. general order warehouse

These four facility types all hold imported goods under CBP control, but for different purposes.

See our guide to what a container freight station is for more on CFS operations.
	Bonded warehouse	Foreign-trade zone	Container freight station	General order warehouse
Purpose	Duty-deferred storage and limited handling	Duty deferral plus authorized production	Deconsolidating and consolidating LCL cargo	Holding goods not entered on time
Time limit	5 years from importation	None	Short-term, until release	Held until entered or otherwise disposed of under CBP rules
Who chooses it	Importer	Importer or zone user	Carrier or forwarder	Carrier, under CBP rules, at the owner's expense
Processing	Manipulation with a permit	Production with FTZ Board approval	Sorting by house bill	None

Advantages and drawbacks of bonded storage

Advantage, cash flow: duty is paid as goods are sold, which can matter a great deal for importers of high-duty products.
Advantage, re-export: goods sent abroad avoid U.S. duty without a separate drawback claim.
Advantage, time to fix problems: cargo leaves the terminal while a document or ruling is pending, which limits demurrage and detention after the last free day.
Drawback, handling cost: in-bond transport, bonded storage and extra entries cost more than duty-paid storage.
Drawback, rate exposure: duty is assessed at the rate in effect on withdrawal, so storage cannot lock in a lower rate.
Drawback, limits: five years maximum, no manufacturing, and every manipulation needs a permit.

Common misconceptions

"Bonded means insured." The bond guarantees obligations to CBP. It does not insure the owner's goods against loss.
"Any warehouse near the port can hold uncleared cargo." Only a CBP-approved bonded facility can receive goods under a warehouse entry.
"Bonded storage avoids new tariffs." The withdrawal-date rate applies, so higher rates still reach goods withdrawn after they take effect.
"Goods can be relabeled freely while in bond." Relabeling is manipulation and needs a prior CBP permit.

Using a bonded warehouse near Los Angeles and Long Beach

We operate a CBP customs-bonded warehouse in Long Beach and hold bonded carrier authority for in-bond pickups at both San Pedro Bay ports. See our bonded warehousing service for cost drivers and a decision framework, or our Long Beach bonded warehouse for how we run it, including bonded storage for Port of Los Angeles cargo.

Ask about bonded storage

Frequently asked questions

How long can goods stay in a bonded warehouse?

Up to five years from the date of importation under 19 U.S.C. 1557 and 19 CFR 144.5. CBP may allow a longer period on a proper request showing good cause.

Do you pay duty on goods re-exported from a bonded warehouse?

Generally no. Goods withdrawn for export leave without paying U.S. duty. Some goods exported to Canada or Mexico are subject to USMCA conditions, so check with a customs broker.

What is the difference between a public and a private bonded warehouse?

A Class 3 public bonded warehouse stores goods for any importer. A Class 2 private bonded warehouse stores only the proprietor's own goods or goods consigned to it.

Who files the paperwork for a bonded warehouse?

The importer, usually through a licensed customs broker, files the warehouse entry and each withdrawal. The proprietor keeps the inventory records and reports to CBP.

What duty rate applies to goods withdrawn from a bonded warehouse?

The rate in effect on the date of withdrawal for consumption, under 19 U.S.C. 1557. For manipulated goods, duty is based on their condition and quantity at withdrawal.

Is a bonded warehouse the same as a general order warehouse?

No. A general order warehouse (Class 11) holds goods that were not entered on time, at the owner's risk and expense. A bonded storage warehouse holds goods the importer chose to enter for warehousing.

What happens if goods arrive in bond but no warehouse entry is filed?

Under 19 CFR 18.1(k), goods must be entered, exported or admitted to a foreign-trade zone within 15 calendar days after the whole in-bond shipment arrives. After that, general order procedures apply and the goods can be moved to a general order warehouse at the owner's risk and expense.

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