What Is a Bonded Warehouse and How Long Can Goods Stay

A bonded warehouse is a place where imported goods can wait in the United States without paying duty, for up to five years. It is one of the most useful and least understood tools in customs, and it is worth knowing how it works before you need one.

What is a bonded warehouse?

A bonded warehouse is a building or yard approved by US Customs and Border Protection to hold imported goods before duty is paid. The rules are in 19 CFR Part 19 and Part 144. The operator posts a bond with CBP, which is where the name comes from, and keeps a record of every item that comes in and goes out.

Goods in a bonded warehouse have arrived in the United States, but they have not entered US commerce. Until a shipment is withdrawn for use in the United States, no duty, tariff or import tax is owed on it.

CBP approves warehouses in several classes. Some are public warehouses that store goods for many importers. Some are private warehouses for one company's own goods. Others are yards and sheds approved for heavy and bulky goods, which is often what machinery and cranes need.

How long can goods stay in a bonded warehouse?

Up to five years from the date of import, under 19 USC 1557. The clock starts when the goods were imported, not when they reached the warehouse, so goods moved from one bonded warehouse to another keep their original date.

Most goods leave long before then. Anything still in bond when the five years end is treated as abandoned under customs law, so it is good practice to keep a decision date on any item likely to stay a long time.

Do you pay duty on goods in a bonded warehouse?

Not while they are in bond. Duty is paid when goods are withdrawn for consumption in the United States, and only on what is withdrawn. A company can withdraw one item this month and another next year, paying duty on each as it leaves and nothing on what stays.

Goods withdrawn for export pay no US duty at all. That is the main reason companies use bonded warehouses for goods that may end up in another country: if they leave the United States from bond, US duty never applies to them.

The three ways goods leave bond

Every shipment leaves a bonded warehouse in one of three ways, and the importer's customs broker files each one with CBP.

Withdrawn for consumption. The goods enter US commerce, and duty is paid at that point.

Withdrawn for export. The goods leave for another country, with no US duty.

Moved in bond to another bonded warehouse. The goods stay duty-deferred, with the same five-year clock.

Goods can also change owners while they wait. The right to withdraw them can be transferred to a buyer, who then files the withdrawal and pays any duty owed. For used machinery this is often the simplest path: the machine is sold where it sits, and the buyer decides whether it enters the United States or ships abroad.

Who files what

Three parties are involved. The importer of record owns the goods and is responsible for the duty when it comes due. The customs broker, licensed by CBP, files the warehouse entry when the goods arrive and each withdrawal when they leave. The warehouse operator receives the goods against the entry, keeps them secure, and records every movement. When goods change owners in bond, the buyer becomes responsible for the withdrawal and any duty from that point.

What can happen to goods while they are in bond

A bonded warehouse is mainly for storage. Under CBP rules, goods in warehouses approved for it may also be cleaned, sorted or repacked. They can be inspected, photographed and shown to buyers. Manufacturing, assembly or changing goods into something new is a different matter, and it calls for a different kind of facility.

Bonded warehouse or foreign-trade zone?

The two are often confused. Both defer duty. A foreign-trade zone is a designated area where goods can be stored, assembled or manufactured without paying duty until they enter US commerce, with no fixed time limit. A bonded warehouse is built for storage and limited handling, with the five-year limit.

For goods that only need to wait, be inspected and be sold, a bonded warehouse is usually the simpler of the two. For goods that will be worked on or built into something else, a foreign-trade zone may fit better. Your customs broker can tell you which suits a given shipment, and many companies use both at different times.

Who uses a customs bonded warehouse

Companies use bonded warehouses whenever the final destination of imported goods is not yet settled, or when the goods may leave the United States again.

A manufacturer in Mexico retooling a line is a common case. Its machinery was imported into Mexico on a temporary basis and has to leave or be imported there for good. Moving it into a US customs bonded warehouse closes the Mexican temporary import and lets the company decide later where each machine goes, without paying US duty on arrival. Our guide to the customs bonded warehouse for maquiladora machinery covers those choices, and our page on maquiladora surplus shows the whole path.

Buyers benefit as much as sellers. They inspect equipment in Texas instead of traveling to Mexico, and they pay duty only on what they bring into the United States. Other cases are just as common: a buyer abroad waiting to ship, or a company that bought a full plant and wants to sort it before deciding what to import.

We have three warehouses in Del Rio, on the border across from Ciudad Acuña, and two in Comfort, with over 200,000 square feet under roof and 50 acres of outdoor storage, including bonded US Customs warehouses.

Questions buyers and sellers ask

How long can goods stay in a bonded warehouse?

Up to five years from the date the goods were imported into the United States. Moving goods between bonded warehouses does not restart the clock.

Do you pay duty on goods in a bonded warehouse?

Not while they are in bond. Duty is paid only when goods are withdrawn for consumption in the United States, and only on what is withdrawn.

What is the difference between a bonded warehouse and a foreign-trade zone?

A bonded warehouse is for storage and limited handling, with a five-year limit. A foreign-trade zone also allows manufacturing and assembly, with no fixed time limit.

Can goods be sold while they are in a bonded warehouse?

Yes. The right to withdraw the goods can be transferred to a buyer, who decides whether they enter the United States or ship abroad.

What happens if goods stay in bond longer than five years?

Goods not withdrawn within the five years are treated as abandoned under customs law, so they should be withdrawn or exported before the period ends.

When you are ready

If you have one lot to sell, AssetRecovery™ makes one cash offer for all of it. If surplus keeps coming from plants in Mexico, the United States or both, AssetMan™ gives you one accountable partner for every site. Either way, it starts at assetman.kingsurplus.com with a call from a King Surplus rep, or at 830-995-5000.