You’ve purchased your goods from overseas for a project you’re working on here in Australia. Your goods have now arrived at a port onshore – it might be at Port Botany, the Port of Brisbane or some other terminal across the country. After your cargo has been unloaded from the vessel, and once it’s cleared customs, you’ll be able to collect your goods.
But what happens if your project has been delayed and you’re unable to collect the goods just yet?
This is a situation many Australian businesses have found themselves in, especially since the COVID-19 pandemic continues to delay projects in 2022. According to research released earlier in the year, around nine in ten large-scale construction projects are delivered late, with approximately two-thirds of them being by at least two months.
Thankfully, there are a few options available if you find your cargo stranded at a port, and you’re unable to pick it up due to project delays. We’ll go through some of these options below.
What happens after your container is removed from the vessel?
After your container has been discharged off its ship, it will be moved to the container yard. Once customs procedures are completed, and your cargo has been cleared, you’ll be able to directly move your container from the container yard.
But what if – for one reason or another – you don’t collect it?
You may be unable to collect it due to:
- Document issues
- Financial issues
- Contractual issues
- Scheduling issues
It may be that because your project is delayed, it makes no commercial or practical sense for you to go and collect your cargo now.
If this happens, unfortunately, you can incur storage charges, demurrage or detention charges. These are charges that you’ll be required to pay by the relevant port authorities. You can view our article on the hidden costs of shipping to understand these costs.
What can I do with cargo that I can’t pick up?
If your cargo has arrived at the port and you can’t pick it up, there are two main things you can do. You can either leave it stored at the port (and incur huge storage fees), or leave it at a bonded warehouse.
When your cargo arrives at the port (whether it be a wharf or an airport), it will be held on-site for usually around 3 days at no cost to you. But after that, storage can become incredibly expensive.
You should avoid this outcome if you can, as storing cargo at ports for a long period of time can significantly hurt your business’ bottom line.
Warehousing (if you haven’t yet paid your customs duty)
The container with your goods may be moved out of the port area into a private storage depot within the port free storage days. It may then be stored at the private depot till such time you are able to take delivery.
However, the private depot will need to be ‘customs bonded’ because the full container has still not been cleared with customs.
This brings us to the second (and more viable) option for you to store your cargo when you’re unable to pick it up – storing it at the bonded warehouse.
What is a bonded warehouse?
Bonded warehouses are those warehouses licensed by the government to accept imported goods for storage until the customs duty is paid.
There are various types of ‘bonded’ warehouses in Australia. These include private warehouses, general warehouses and excise and excise equivalent goods (EEGs) warehouses – these warehouses are used to store goods such as fuel, tobacco and alcohol. You can read more about the types of warehouses here.
Bonded warehouses are usually located right next to the port and are operated by government officials or people that are under the control of customs authorities. Any goods held in a bonded warehouse cannot be withdrawn unless the customs duty is paid, hence the name “bonded” warehouses.
Bonded warehouses are vital to people who import or export. For instance, if an importer is unable to pay the customs duty immediately after his or her goods arrive, these goods can be stored in a bonded warehouse. The goods can be removed as the customer pays the customs duty in instalments.
Why use a bonded warehouse?
There are many advantages to using bonded warehouses, especially for companies who are importing and exporting large amounts of goods.
They’re great for cash flow
Bonded are houses are great from a cash flow perspective. Customs duties on particular products can be very high, and it can significantly hurt cash flow if you pay it all at once.
However, by placing the products in bonded warehouses, you’re able to pay the relevant duties when each product is released and sold. This allows you to finance the customs payment with the income you earn from a sale.
The facilities are excellent to store goods
If you manage to get your hands on an excellent bonded storage provider, you can store goods pretty much for as long as you need to.
This is particularly useful if you’ve imported perishable goods. Bonded warehouses will typically contain freezers dry containers and other rooms featuring temperature controls.
They do more than just storage
Bonded warehouses do more than just store your goods. They often supply a broader range of logistics solutions because they are often affiliated with freight forwarding companies.
These companies specialise in handling all aspects of distribution, transportation and delivery.
What are the downsides to a bonded warehouse?
The advantages greatly outweigh the disadvantages, but there are some downsides you should be aware of before making a decision to use a bonded warehouse.
Costs can build up over time
This is especially so if you’re storing your goods in there for long periods. It’s therefore important to ensure your goods are cleared through customs and you pick up your goods as soon as you practically can.
Lack of control
Although you’re still the legal owner of the goods in a bonded warehouse, you typically have little say over how things are managed in the warehouse itself.
This may be concerning to you, especially if your cargo requires special needs or specific controls to be put in place. For example, your goods may be fragile or hazardous – so knowing what happens to your cargo will be critical for you.
Your goods may be seized and sold
Sometimes, if you fail to pay your duties or if you leave your cargo in bonded warehouses for too long, they may be seized by customs authorities. They can then sell your goods to recover the costs of the duties owed to them.
Who uses a bonded warehouse?
Bonded warehouses are normally used by both individuals and companies who sell products that attract customs duties. They are, however, mainly used by companies who are importing and exporting goods in large quantities.
This is because using a bonded warehouse carries a degree of administrative burden (obtaining licences and permissions). In Australia, companies that want to use a bonded warehouse must obtain a licence from the Australian Taxation Office.
However, once that legwork is out of the way, bounded warehouses can be very useful for the reasons we outlined above (especially cash flow).
Alternatives to a bonded warehouse
If the country you’re importing into has certain restrictions making it impracticable for you to use a bonded warehouse, you may have to consider using an alternative solution.
This solution may be a warehouse in a free port. For example, if you’re importing goods into Hong Kong, you would be importing your cargo into a free port – where warehouses are available to use.
What is a free port?
A free port is a warehouse that falls outside the authority of the relevant customs authority. While located geographically within a country, they essentially exist outside its borders for tax purposes. They are similar to a bonded warehouse because businesses can use them to store goods that have not quite attracted customs duties just yet. But they are not technically inside the customs area of a customs authority, unlike bonded warehouses.
Companies operating within free ports can benefit from deferring the payment of taxes until their products are moved elsewhere, or can avoid them altogether if they bring in goods to store or manufacture on site before exporting them again.
They were created in order to encourage economic activity, and so they are typically located in poorer regions.
Cargo held in free ports does not attract customs duties until they have moved to somewhere else within the country. They also don’t attract customs duties if they are transported back overseas.
How the team at ICE can help
The team at International Cargo Express can help facilitate the storage of your goods if you’ve found that your cargo has arrived at a time when it is not practical for you to go and collect it. We have bonded warehouses in Sydney and Melbourne and smaller general warehouses in Brisbane and Perth. We can help you safely store your goods by selecting and managing reliable bonded warehouses across Australia.
Our freight forwarders and customs brokers have had decades of combined experience facilitating the import and export of cargo to and from Australia, and are well-equipped to help you with any of your international shipments.
Get in touch with our team today on 1300 227 461 or leave a comment below.