Study Guide
6. Depots and Warehouses
When cargo arrives in a country, there is often a need, due to limited space at gateway ports and airports, to move the goods to a depot or warehouse before the import declaration is completed. This means goods can be moved beyond the border without having cleared customs, but they remain under customs control.
The final destination of many consignments is not known at the time of importation, or other relevant information is not yet available. Customs therefore allows the storage of goods, for logistical reasons, in temporary storage. Temporary storage also allows commercial interests to check whether the goods conform to contract conditions. An increasing percentage of world trade is made up of intra-company movements or transactions between related firms, and just-in-time delivery logistics managed by advanced automation and communication systems. As a result, the relative importance of temporary storage has decreased.
Three Types of Storage: A Comparison
Temporary storage, customs warehousing, and free zones are often confused, but they serve fundamentally different purposes:
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Temporary Storage |
Customs Warehouse |
Free Zone |
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Logistical Facilitates the physical movement of goods in the international supply chain while Customs processing is pending. |
Economic + Logistical Goods may be stored, processed, or manipulated for commercial purposes while duty and tax is suspended. |
Economic Designated area where normal Customs rules are suspended to promote trade, manufacturing, and distribution activity. |
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Key Characteristics |
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• Short-term, pending Customs clearance • Final destination may be unknown • No independent economic function • Declining in relative importance |
• Duty and tax suspended during storage • Goods may be processed or repackaged • Defined time limits apply • Important commercial function |
• Operates outside normal Customs territory • Supports manufacturing and re-export • Important economic development function • Independent of transport logistics |
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Note: The fundamental distinction Temporary storage is primarily intended to facilitate logistical requirements in moving goods internationally; it is essentially a holding arrangement pending Customs processing. Warehousing and storage in a free zone, by contrast, have an important economic function independent of transport. They serve commercial, manufacturing, or distribution purposes in their own right. |