The Need for Modern Bonded Warehouses

"Modern bonded warehouses can save significant costs on custom duties and VAT". Here is what you need to know.

A custom bonded warehouse is a facility that holds imported goods intended for exporting, duty-payable goods in storage for processing before entering the market or delivered to their final destination. In simple words, a structure or an enclosed area where dutiable products can be stored, processed, manipulated, or undergo processing operations without payment of sales tax.

The concept is simple and custom bonded warehouses are perfect for storing goods while avoiding double taxes. IAP is the leading logistics company in Jeddah, with the industry’s most significant advancements offering a vast menu of value-added logistics, warehouse services through embracing and capitalizing on new technology.

Modern warehouse facilities can be government-owned or privately owned, and a lucrative option for organizations looking to store inventory overseas.

It can either be operated by the state itself or by the privately-owned enterprise. In both cases, a bonded warehouse must be registered with the federal government. However, it is important to remember that even if bonded warehouse services are offered and managed by the state, these activities are not deemed as tax deductions. This means that a bonded warehouse does not enjoy the tax benefits that non-bonded warehouses enjoy under income tax laws. IAP offers verified and reliable Custom bonded warehouse services in Jeddah, where we can meet your cargo storage requirements quickly as well as store the surplus securely.

The security measures implemented in a bonded warehouse are primarily of two types: physical and electronic. Physical security includes physical aspects like locking and other mechanisms that ensure the safekeeping of goods. Electronic security measures include usage of technology such as identification systems and scanners that can track the movement of goods inside the warehouse. Both physical and electronic security are highly effective and can ensure the safekeeping of goods. However, it is often seen that in certain isolated cases, physical security is unable to prevent illegal entry into the bonded warehouse. Also, in many cases, where goods have been stolen from the bonded warehouse, the legal procedures related to the levy of taxes on stolen goods cannot be conducted in such controlled environments.

To overcome these challenges, bonded warehouse services companies provide the following services to their customers:

  • bonded warehouses that are fully operational, supervised, and insured
  • bonded warehouses that are located at convenient locations, allowing for the quick shipment of goods to their customers
  • bonded warehouses that offer storage at affordable rates
  • bonded warehouses that provide storage and packaging services, as well as warehousing services. Depending on the requirements of the customer, these services can also include customized solutions such as insurance coverage and customized labeling. The LCL & FCL Cargo consolidation services in Jeddah provided by IAP bonded warehouses can help to improve the overall efficiency and effectiveness of warehousing at all the warehouses across the country.

Warehousing departments face a number of challenges that are unique to their field. They need the resources of a bonded warehouse to help them provide a balanced system that incorporates security, productivity, cost-effectiveness and environmental considerations. A bonded warehouse has to ensure a high level of productivity and efficiency so that they are able to sustain their business and meet their financial obligations. They also have to maintain the integrity of the supply chain and environmental compliance.

A bonded warehouse can use a variety of strategies to ensure the protection of its warehouse space and products. Security is an essential component of warehousing and the safety and security of products is what a bonded warehouse's main aim is. Warehouse security includes various measures such as inspecting products before they reach the warehouse to prevent the movement of prohibited products and ensuring that goods reach their destination. Warehouse scanning devices can also detect illegal products to prevent the entry of prohibited items into the warehouse.

A bonded warehouse must ensure that it has the latest systems in place to manage the environment of a facility. These systems should include comprehensive pest and water control systems, controlled spill response systems, and waste and recycling systems to manage the handling, storage and disposal of waste products. The systems should also include CCTV and DMS to detect, record and monitor activity within and outside of the warehouse to prevent the inappropriate use of products and the misuse of goods by workers. It is important to conduct annual or semi-annual inspection programmes to check that these systems are still up to date.

A fully automated warehousing facility will always have the latest systems and technologies. Automated systems can be very complex and sophisticated. Many suppliers and manufacturers of products that are processed at bonded warehouses offer software programs that are designed to meet the specific requirements of bonded warehouses. These systems are designed to make the warehouse an integrated, productive, cost-effective, and environmentally sound operation. IAP is one of the top international freight forwarding companies in Jeddah offering freight tracking, freight forwarding negotiations, customs documentation, freight consolidation, and other tasks.

In order for bonded warehouses to succeed they need to have the right people and the right structures in place. Having a properly structured business model is essential to a successful bonded warehouse operation. The correct policies and procedures must be implemented and monitored by the company providing the bonded warehouse services. It is important that bonded warehouses offer excellent customer service and have a competitive edge over other warehouse operations.

IAP is the top freight forwarder, a logistics company in Saudi Arabia, and supports business logistics, warehousing, and consolidation needs, with state-of- the-art warehousing solutions in and around Jeddah.

For reliable and comprehensive custom bonded warehousing and wider logistics services, get in touch with us!