FTZ vs Bonded Warehouses: which one is the best for you?


For some businesses, it is better to store the merchandise in an FTZ while others will benefit from a bonded warehouse. Even though these facilities are similar, they have differences, such as the purpose of each warehouse, what you can do with the goods and limitations on storage. So, there are a few key points to consider before making your decision, as below:

Foreign Trade Zone (FTZ)

A foreign trade zone is an area located in or near US ports of entry. FTZ is considered to be outside the customs territory of the US for the purposes of duty assessment and entry.

These areas are excluded from paying duties when the shipment arrives. Furthermore, there are also no duties payable on re-exported products. Manufacturing is also authorised within an FTZ with no immediate duties or taxes payable. Payment of duties is only due when the merchandise enters into US territory.


The benefits of using FTZs are:


  • Merchandise is not subject to U.S. duty or excise tax, they are paid when the goods are transferred from the zone for consumption.
  • There is an unlimited amount of time that the goods can be warehoused in a foreign trade zone, whether or not subject to duty.
  • Some tangible personal property is generally exempt from state and local ad valorem taxes.
  • Goods may be exported from the FTZ free of duty and excise tax.
  • CBP security requirements provide protection against theft.


bonded warehouse Work photo created by freepik – www.freepik.com If you are storing foreign goods for export, Customs bonded warehouses could be the best choice.

Bonded Warehouses

Bonded warehouses are a building or other secured area in which imported dutiable merchandise may be stored under the direct control and supervision of the US customs officials. As with a FTZ, duties are not charged until the goods are removed for consumption and the export of the items is also duty-free.

Bonded warehouses are only allowed to hold foreign goods and manufacturing is not allowed. Under this kind of program, each product must have a customs entry filed and duties and tariffs are assessed upon entry. Moreover, customs maintains primary control of all products and determines where, when, and how they can be moved. Unlike FTZ, there is a five-year limit on products being stored in this kind of warehouse.

There are 11 different types of bonded warehouses, as well as premises that are owned or leased by the government; private warehouses for the storage of imports; and public-bonded warehouses for the storage of imported products.


The benefits of using a Customs Bonded Warehouse are:


  • Goods stored there can be transferred between other bonded warehouses.
  • In the U.S. imported goods are permitted to be stored for up to five years. This creates a chance to delay the introduction of a product to market until there is greater demand.
  • Importers have greater control over their finances because no duty is collected until the product is withdrawn for consumption. If an importer is unable to find a buyer in the U.S., the products can be exported without paying duty.
  • Duties owed on products that have been manipulated are decided at the time of withdrawal from the bonded warehouse.

Which one is the best for you?


The difference between bonded warehouses and FTZ warehouses essentially is based on how much control you want over the customs process and your products.

Bonded warehouses may look like with too many restrictions, but importers who want to sell goods domestically won’t benefit much from using FTZs.The advantages of FTZs mainly apply to shipments that will ultimately end up back overseas for sale. Shippers who depend on the domestic marketplace for retail will need to study the pros and cons of bonded warehouses.

Also if you are storing foreign goods for export, Customs bonded warehouses could be the best choice. In CARGO CARE SERVICES we count with Bonded Warehouses overall the US, contact us and we will let you know our best rates available.