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If there are savings on both 3PL and bonded facilities, is the latter worth the extra investment? It depends on a brand’s needs – and where they want to put their money. Bonded warehouses come at a higher cost than non-bonded facilities. But the costs of either pale in comparison to the actual tariffs, Siebrecht flags. “Storing product [at bonded warehouses] is around 1 per cent of revenue or even lower for premium luxury goods, while tariffs are 10 to 50 times this, depending on the country of origin,” he says. The price of bonded warehouses may rise as heightened interest clashes with limited space. But it’s still a small fraction of tariff costs. “If bonded facilities can help brands be more agile in responding to changing conditions and high uncertainty, then the ROI is very compelling,” Siebrecht says. That said, making a high fixed investment a brand wasn’t otherwise planning for is risky, experts say. There’s a lot of red tape that’s hard to navigate, McDonald has found. Moving goods between bonded and non-bonded zones can also be tricky, Barnett adds, as it activates customs, financial, and compliance obligations. As soon as goods exit the facility, the brand must pay the deferred duties immediately (with all of the necessary documents and proof of valuations); movement to a non-bonded facility triggers a formal customs entry (not an internal transfer, so goods may be checked by customs); and bonded warehouses face intensive regulatory oversight. Plus, for brands that operate seasonally (or faster), it won’t be much help. “Because you can park inventory in them for years, that could be less than ideal for trend-driven SKUs with six-week shelf lives,” Barnett flags.Officials Angel Deer Hey Bro Were Accepting The Things We Cant Change If You Wanna Pull Up Shirt
The same goes for brands with smaller amounts of inventory. Knix has decided to open a 3PL US distribution centre, but is still tossing up whether to take the extra step to invest in a bonded warehouse. “While there are potential financial benefits, it depends on how much inventory we are carrying and holding in the US to determine whether the benefit is significant enough to justify the extra investment,” Tapscott says. This is why With Jéan didn’t opt for a bonded warehouse. The brand is direct-to-consumer, and only fulfills its US orders from the States, so there isn’t a need, Titilas says. (The rest of With Jéan’s orders are still sent from its Australian distribution point.) Lisa Yang’s Stenberg sees no need to seek out a bonded warehouse option. “We have strong finances and are able to handle a more strained cashflow short term if this means we can secure a sustainable business in the long run,” he says, noting that the brand is entering this next phase with healthy finances and no debts. “To have a bonded warehouse is not a necessity.”
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