The Bonded Warehouse Service Provider in Vietnam

Benefits of Using Bonded Warehouse

A bonded warehouse (sometimes called customs warehouse) is a secure storage space where goods liable to certain taxes like Goods and Services Tax (VAT) and import duty are stored. The VAT and duty payments are withheld until the goods are removed (exported) from the bonded warehouse or sold. Bonded warehouses can be owned either by governments or by the private companies, depending on local regulations in each country. Each country also has different rules regarding how bonded warehouses should operate. This article will reveal to you the benefits of using bonded warehouses.

Deferred VAT and Duty Payments

As stated earlier, duty payments and VAT on various goods are withheld while in a bonded warehouse until they are sold or removed from the warehouse. For example, Vietnam Duties is charged at different rates for different product types. The bonded warehouse manager provides you a bond over the duration your goods or products are stored in the warehouse. This bond is a guarantee that customs will be paid and there will be no loss of revenue if the goods are released from the bonded warehouse. This duty deferment can help you to save on the upfront expenses on imported goods. Our facilities at Mekongzon are fully licensed to provide bonded warehousing services.

Special Packages Offered

Most bonded warehouses have special packages for most producing companies. If you are using a customs warehouse as your “all in one” warehousing and logistics partner, you can be sure to receive more affordable packages that fit your needs. In most cases, the bonded warehouse manager will evaluate your company’s warehousing needs before customizing a package that fulfills your requirements. At Mekongzon we can meet your company’s needs by providing other services like local and international delivery and pick and pack services.

Security and safety

Both safety and inventory management are usually on a higher level when compared to regular warehouses because government control is much tighter for bonded warehouses. Security people monitor most bonded warehouses on a 24-hour basis to ensure ultimate safety and tight security. Special monitoring for delicate and refrigerated items are given priority. Furthermore, efficient and updated security systems, bar coding systems and WMS systems are used to make sure that all goods are stored correctly and documented.

Choosing the right provider for bonded warehouse services is essential if you’re in the import, export or production industry. Bonded warehouse services are critical to managing cash flow by delaying custom taxes and VAT. Also, our personnel can give you priceless advice about how to deal with customs and taxes more efficiently.

For more information, please contact us

Alibaba Belongs to The 10 Best Supply Chain Companies of 2021

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Amid severe and ongoing disruption, organizations capable of juggling conflicting priorities to operate agile, robust, transparent, and ethical supply chains are impressive, to say the least.

Gartner’s Supply Chain Top 25 for 2021 celebrates companies whose supply chain strategies have shown them to be purpose-driven, disruptive, and early adopters of innovative technologies.

To recognize the most sustained examples of supply chain excellence, Gartner lists Apple, Amazon, McDonald’s, P&G, and Unilever as Supply Chain Masters — an accolade earned as a result of having attained top-five composite scores in the Gartner Supply Chain Top 25 for at least seven out of the past 10 years.

These five aside, here are the top 10 supply chain companies of 2021.

1. Cisco Systems

For the second year running, telecommunications technology conglomerate Cisco Systems tops Gartner’s Supply Chain Top 25.

Thanks to its commitment to creating a dynamic, distributed supply chain, focussing on dual sourcing to build resiliency, and fostering meaningful relationships with its suppliers, Cisco has continued to thrive despite the disruptions of the past 18 months.

The company has also made a concerted effort to integrate sustainability initiatives with its supply chain business. Cisco has pledged to reduce its greenhouse gas (GHG) emissions by 30%, while 80% of its component, manufacturing, and logistics suppliers will have a GHG emissions reduction target.

2. Colgate-Palmolive

Colgate-Palmolive, which provides household and consumer products to millions of households around the world, has demonstrated agility, resilience, and commitment to supply chain sustainability.

Earlier this year, Colgate-Palmolive featured on Fast Company’s 2021 list of the World’s Most Innovative Companies. This was thanks to its development of a first-of-its-kind recyclable plastic tube, a technology it has also shared with third parties.

Colgate-Palmolive has consistently invested in new digital capabilities, including factory automation and advanced network modeling. For example, in a bid to connect manufacturing operations to its supply chain and boost supply chain reliability, the company is moving toward a predictive maintenance model. Wireless sensors and AI-powered data analytics will enable Colgate-Palmolive to monitor equipment health 24/7 and optimize its performance.

3. Johnson & Johnson

Johnson & Johnson has proven itself to be an MVP since the outbreak of COVID-19. In March 2020, the Johnson & Johnson Family of Companies and the Johnson & Johnson Foundation pledged $50 million to support frontline health workers with meals, personal protective equipment, training, and mental health support.

A partnership with not-for-profit company Prisma Health saw Johnson & Johnson won Gartner’s Power of the Profession Award for Customer or Patient Innovation of the Year. The pair developed a 3D-printable device, which allowed for a single ventilator to be fitted for use by two patients.

Part of the company’s Healthy Lives Mission includes a commitment to using 100% recyclable, reusable, or compostable plastic, recycled paper, and pulp-based packaging by 2025.

4. Schneider Electric

Schneider Electric, a global specialist in energy management and automation, operates a diverse supply chain in more than 100 countries.

Driving sustainability throughout the supply chain is a top priority for Schneider Electric, which includes embracing an approach known as “embedded sustainability,” to ensure that integrating environmental, health, and social value with core business activities does not impact price or quality.

At present, more than 73% of the company’s investments are being directed toward developing new and even more sustainable solutions.

In addition, Schneider Electric’s EcoStruxure platform is helping the company build a coalition of partners committed to driving innovation in the energy management industry.

5. Nestlé

For the second year running, Nestlé scored a perfect ESG score in the Gartner Supply Chain Top 25.

Its efforts include the development of simplified packaging and biodegradable and compostable materials and upping its use of recycled content. In addition, Nestlé launched an interactive video platform Beneath the Surface last month, which aims to raise awareness among consumers about the complex sustainability issues associated with the palm oil supply chain.

The company is also expanding its e-commerce business and developing new direct-to-consumer (DTC) capabilities across its entire supply chain, such as customized products and packaging, and fulfillment services.

6. Intel

Amid a worldwide chip shortage, Intel announced in March 2012 that it would be spending $20 billion to build two new chip plants in Arizona. This signaled the company’s continued focus on manufacturing and demonstrated its ability to deliver innovative supply chain solutions under difficult circumstances.

Intel’s RISE (responsible, inclusive, sustainable, enabling) strategy includes the goal of developing “the most sustainable and energy-efficient PC in the world, eliminating carbon, water and waste in its design and use.”

In its 2020-21 Corporate Responsibility Report, Intel reports is has increased its use of renewable energy from 71% to 81%, conserving 7.1 billion gallons of water in the process.

To drive sustainability throughout its supply chain, Intel requires its 9000+ tier 1 suppliers, to comply with the Intel Code of Conduct, the Responsible Business Alliance (RBA) Code of Conduct, and develop their own corporate responsibility strategies, policies and processes.

7. PepsiCo

One of PepsiCo’s top priorities is investing in digital tools and advanced technologies to create a more efficient, streamlined supply chain. Focuses include data integration to help the company better meet consumer demands and sophisticated data analytics to drive a more streamlined and cost-efficient chain.

Following the outbreak of COVID-19, PepsiCo showcased its agile supply chain by quickly launching two direct-to-consumer (DTC) offerings. and enable customers to customize a range of its products.

The company is also committed to driving sustainability through its supply chain. Last month, for example, PepsiCo revealed its plans to become net water positive, or replenish more water than it uses, by 2030. If successful, the company will be among the most water-efficient food or beverage manufacturers operating in high-risk watersheds.

8. Walmart

Walmart’s supply chain is often touted as one of the most effective in the world. In the past two years alone, Walmart has invested $11 billion in e-commerce, supply chain, and technology.

The company launched Walmart+, which rivals Amazon Prime, implemented a range of new fufilment options — such as curbside pickups — and is upgrading its warehouse management system (WMS) to drive efficiency through its supply chain.

The company has also committed to achieving zero emissions by 2040.

9. L’Oréal

L’Oréal has made it into the top 10 of the Gartner Supply Chain Top 25 for the first time thanks to its agile, customer-centric, and ethical supply chain practices.

“Digital Beauty” is a key focus of the company’s supply chain strategy. This includes a shift towards technology-augmented logistics and increased use of data to accommodate the rise of e-commerce.

L’Oréal also has a fantastic track record for CSR. Not only is it the only company to rate Triple-A in the client data protection (CDP) ratings for four years in a row, but it was also featured in Ethisphere Institute’s 2021 list of the World’s Most Ethical Companies. In addition, the L’Oréal for the Future program includes the goal of reducing the greenhouse gas emissions linked to the transport of its products by 50% between 2016 and 2030.

10. Alibaba

Alibaba features in the Gartner Supply Chain Top 25 top 10 for the second year running having significantly expanded its supply chain offerings to deliver manufacturing efficiencies.

For example, the company launched Freight in 2020. This is a supply chain-as-a-service initiative allowing SMEs to compare, book, manage, and track bulk ocean and air freight in real-time.

The Chinese retailer has also collaborated with Unilever on The Waste Free World Initiative to accelerates the process of returning high-grade plastic back into a closed-loop recycling system within China.

Source: Thomas Insights.

What is a Customs Bonded Warehouse and When Do You Need One?

A customs bonded warehouse is a facility that holds imported, duty-payable goods in storage for processing before they are delivered to their final destination.

These facilities, which can be government or privately-owned, are a useful option for organizations looking to store inventory overseas.

The distinguishing feature of a customs bonded warehouse is that the payment of duty tax can be deferred for up to five years from the importation date. During this time, up until the customs duty is paid, the goods must remain within the facility, but products can be manipulated and undergo manufacturing operations during this time.

The customs bonded warehouse proprietor is liable for the goods under a customs bond until they are exported, withdrawn for supplies to an aircraft or vessel, or removed for consumption within the U.S. after the duty has been paid. In the event that none of these criteria are met, the imported goods will be confiscated and handled as per the country’s laws. Typically this means that the shipment is disposed of.

Why are Customs Bonded Warehouses Especially Important Right Now?

One of the primary benefits of using a customs bonded warehouse is that imported goods are immune to disruptive geopolitical changes, effectively acting as protected custody.

Take COVID-19 as an example. For many organizations, the global pandemic has created supply chain bottlenecks, decreased global demand for certain items, and resulted in a build-up of inventory.

To maintain trade contracts with suppliers, many distributors and manufacturers are turning to customs bonded warehouses to save money in the short term.

Dutiable luxury goods such as perfume are in lower demand, which means the warehouses of distributors and retailers are filling up with an excess of product. Placing some or all of the excess stock in a customs bonded warehouse will temporarily relieve organizations of the products’ customs duty, which could be the difference between a company going broke or being able to continue trading post-coronavirus.

Importers also have the option of exporting their goods without paying duty if they are unable to sell them domestically.

Export Processing Zones (EPZ)

Another way to benefit from tax concessions and eliminate duty on imported goods is to open processing plants and manufacturing in an EPZ. In these zones, the import of materials and goods is duty-free, and they are usually located in close proximity to good shipping ports, roads, rail, and air transportation hubs.

Different Classes of Bonded Warehouses

Customs bonded warehouses fit into one of 11 different classes:

  1. Government-owned or leased premises. These are used to store goods that need to be examined by the Customs and Border Protection (CBP), have been seized by CBP, or are awaiting release from the custody of CBP.
  2. Privately owned importation warehouse. Goods contained within this type of facility must belong to or be consigned to the warehouse owner.
  3. Public bonded warehouses are used solely to store imported goods.
  4. Bonded yards or sheds are used to store bulky or heavy items, including tanks for large liquid imports, and stables, pens, etc. for imported animals.
  5. Bonded grain bins for grain storage.
  6. Exportation bonded warehouses are used for goods that are manufactured solely for exportation. This also covers the manufacture for exportation or domestic sale of cigars.
  7. Smelting and refining bonded warehouses for refining metals for export or domestic sale.
  8. Bonded warehouses for the sorting, repackaging, or cleaning of imported merchandise (with no manufacturing). This is supervised by the CBP at the owner’s expense.
  9. Bonded warehouses known as “duty-free stores,” for selling merchandise to be used or consumed overseas.
  10. Bonded warehouses that store items specifically designated for sale during international travel as duty-free merchandise onboard aircraft.
  11. Bonded warehouses to store General Order (GO) merchandise. GO merchandise refers to any goods that are not claimed within 15 days of arrival on US shores.

5 Benefits of Using a Bonded Warehouse

1. Deferred Duties

As mentioned, the main benefit of a customs bonded warehouse is that duty is not payable on the stored goods until they are removed for consumption or sale. This means that an importer or distributor can retain extra funds until the goods are withdrawn.

2. Convenient International Shipping

Organizations can hold their goods within the facility until demand increases. Once this happens, the duty will be paid and some (or all) of the goods can be delivered domestically.

If a domestic buyer is not found for the imported goods, or demand weakens, the importer can export the merchandise at no extra cost.

3. Storage of Restricted items

Regulated or restricted goods can be stored at a bonded warehouse, but need to be registered, and sometimes supervised, by CBP officials. In most cases, restricted goods can only be held within a warehouse for a very limited time period. Customs bonded warehouses are exempt from these time restrictions, which means organizations have five years to process the necessary paperwork.

4. Security

Using a customs bonded warehouse makes the process of importing goods significantly less stressful for manufacturers. Facilities are safe and secure with 24/7 surveillance and organizations won’t need to worry about inspections, spikes or dips in product demand, or deadlines for completing complex and time-consuming paperwork.