Warehouse logistics

Bonded warehouse and electronic commerce

In recent years, e-commerce has become a huge part of consumers’ lives. More and more people are looking for bargains on the Internet. No matter if you’re on a retailer’s website, Amazon or any other site, it’s becoming increasingly easy to find anything you want from the comfort of your own home.

Companies selling their products online or through Amazon are constantly on the lookout for new ways to reduce their costs and become more competitive. How do you lower transportation costs and customs fees, especially the Chinese surtax imposed by the Trump administration in the United States? Even today under the Biden government, products originating from China may be subject to a 25% surcharge imposed on top of the customs duties and MPF (Merchandise Processing Fee).

How to avoid all these fees

To overcome this obstacle, some companies have opted for a bonded warehouse, which allows them to defer the payment of duties and taxes for a maximum period of four (4) years. They are managed by private firms but under the control of the Canada Border Services Agency (CBSA). Certain conditions must be respected to manage this type of warehouse. While some activities are permitted, the basic nature of the product cannot be transformed (i.e. it must stay the same).

As such, the importer can bring goods into Canada and not pay duties and taxes until the goods are resold in Canada. The applicable duties will be calculated based on when the goods leave the warehouse. For example, if the duty on the imported goods is 6.5% in 2022, but 4.5% when they leave the warehouse in 2025, the latter rate shall apply.

And that’s not all!

Another advantage is that if the goods are exported, the duties and taxes in Canada will not have to be paid. Moreover, if the goods are exported to the U.S. and are not controlled by another government agency such as the FDA, and the value of the shipment is less than $800 US, no American customs declaration is required and no duties and taxes are payable, not even the surtax on Chinese products. All the carrier must do is declare the package under Section 321.

This represents a cost savings and benefit for e-commerce companies that ship their packages directly to the consumer. Given the vast size of the American market, this option is definitely an asset, which is why some companies that import their products into Canada use a bonded warehouse to avoid paying duties and taxes – not to mention the surtax in the United States.

W2C’s experts can help you obtain a license for a bonded warehouse or find an existing one. W2C also offers a user-friendly platform that provides you with more than competitive rates from courier services. You can manage this platform, grant access to a specific number of people in your company and enter the destination address. What’s more, the system will show you the applicable rates for each available courier service. You will then be able to select the service of your choice depending on the cost and delivery time desired.

Don’t hesitate to contact us for more information. We will be pleased to assist you!


Please note that all information on this blog is subject to change. All blog articles are for information purposes only. We are always available to answer in detail any questions our clients may have regarding the information in this blog.

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About the author
With over 35 years of experience in the customs field, Yves Lacelle has a very thorough understanding of everything related to this environment. His meetings with companies from all over the world have allowed him to acquire an extensive knowledge of international trade. He has given several seminars and customs training courses to companies and has found solutions for clients having problems with customs authorities. Guiding a team to provide the best customer service bears no secrets for Yves. His ability to communicate and educate his business partners makes him a golden ally for those who aspire to comply with customs regulations.