Cargo handled for import and export is bonded before it is loaded on a ship or plane and after it arrives at the importing country. What exactly is bonded cargo? For those who are new to trade and international logistics, this bonded status may be difficult to understand. In this post I will explain the basics of bonded, bonded areas, the importance of bonded in trade and bonded transportation.
What is the flow of the export and import?
The export process is as follows：
- Pick up the cargo from the shipper
- Bring cargo into the terminal or shed (bonded area)
- Declare exports at customs
- Load cargo on a ship or airplane as foreign cargo
- Transport to overseas
The import process is as follows:
- Unload foreign cargo from ships or airplanes
- Deliver to terminals or shed (bonded areas)
- Declare imports at customs
- Deliver to the destination as domestic cargo
How to define domestic or foreign Cargo?
The key point at this time is that when customs clearance is completed, the subject cargo will be：
- in the case of export treated as a foreign cargo from domestic cargo
- in the case of imports treate as domestic cargo from foreign cargo
For example, let’s say you are transporting goods from China to the USA by sea, and you need to clear export customs at the port. After export customs clearance, the cargo is treated as being in a foreign country even though it is physically in China. Of course, it is treated as foreign cargo during sea transportation. It is also treated as foreign cargo while it is temporarily stored at the port after arriving in the USA until it is cleared for import. Once the import customs clearance is completed, the cargo will be treated as domestic cargo of Japan.
What is bonded cargo and a bonded area?
The state in which goods are in country, but are treated as foreign goods is called ‘bonded’. The cargo itself does not change in any way but it will be called and treated differently when customs clearance for import and export is completed. This means that customs clearance is the turning point in the bonded process.
By changing the state from domestic cargo to foreign cargo, it becomes bonded, which means that foreign cargo can be brought in and stored in country. The area where can store such cargo is called bonded area.
In principle, foreign cargo cannot be placed outside of bonded areas. Therefore, items that are treated as foreign cargos at the time of import and export must be placed in a bonded area. In the international logistics process, cargo is sure to be in bonded status.
In trade, there are a variety of manufacturers and services that take advantage of this bonded status. In order to do this, you need to understand and make good use of bonded areas and bonded transportation.