Warehousing is the action or process of storing goods in a warehouse and a warehouse is a building for storing goods. Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc.
Warehousing
Importance of warehousing
– Stores raw materials
– Stores goods in transit
– Stocks finished goods
– Clears factory for further production
– Keeps machinery and other equipment for production
– Enables retailers to buy a variety of goods under one roof from wholesalers
– Stores seasonal goods e.g. raincoats and jerseys
– Evens the supply of goods
– Reduces price fluctuation
– Enables blending, bottling, grading, packaging and branding
– Provides a place for display of goods: goods are viewed and examined by potential buyers
– Contributes to foreign trade as imports and exports are stored at ports ready for distribution to destinations
Manufacturers’ warehouses
– Store raw materials and finished goods.
– Keeps spare parts.
– Goods are graded, packaged, blended and branded.
Wholesalers’ warehouses
– Store raw materials and finished varieties of goods.
– Store a variety of goods from different producers.
– Goods are graded, blended, branded, bottled and packaged.
Large retailers’ warehouses
– Store bulk from producers.
– Package and brand goods in the warehouse.
– Distribute to their chains.
– Store perishables.
Bonded warehouses
– The Government monitors them through the Customs Authorities.
– Customs Authorities check on entry of dutiable goods in the country.
– The bonded warehouses can be located at airports, seaports, railway stations, city centres and border posts.
– Store dutiable goods on which duty has not been paid.
– Dutiable goods are released upon payment of duty or without any payment if the goods are to be re-exported.
– If the goods on which duty has been paid are re-exported, the duty will be refunded by Customs Authorities.
– The refund is a customs drawback.
– While in the bond, the goods can be blended, sorted, graded and bottled.
– Wine can mature while in bond.
Importance of bonded warehouses
To the trader
– Has access to goods to perform operations like blending, bottling and grading.
– Can remove small units and sell.
– Can pay duty on released units only.
– Can use working capital on other business aspect.
– Can sell goods while in bond.
– Can store goods for re-export while arranging carriage to importers.
To the State
– Enables orderly collection of duty.
– Prevents evasion of customs duties.
– Gives statistics on dutiable imports and exports.
– Gives the State control on exports and imports.
Distinction between bonded and ordinary warehouses
| Bonded | Ordinary |
| – near ports of country entry and city centres | – anywhere in the country |
| – controlled and supervised by the State | – owner controls and supervises |
| – store dutiable goods whose duty has not been paid | – store a variety of goods |
| – goods removable on payment of duty | – free entry and exit of goods |
| – store goods in transit for re-export | – store locally produced items |
Multiple choice questions
- A bonded warehouse
- stores varieties of goods.
- is controlled by the government
- ensures duty is charged on exports.
- stores and releases imports to Customs Authorities.
- A warehouse
(i) steadies price of goods. (ii) stores seasonal goods.
(iii) evens out the supply of goods.
- (i) and (ii) B. (i) and (iii)
- (ii) and (iii) D. (i), (ii) and (iii)
- Bonded goods cannot be
- packaged. B. blended.
- bottled. D. manufactured.
- In bonded warehouses, a retailer
- can store any goods.
- can sell the goods.
- has control over the dutiable goods.
- may make the items from raw materials.
Essay questions
- Why is warehousing important to consumers?
- Show how warehousing is connected with trade and transport.
- Explain the importance of bonded warehouses.
- Why is warehousing important to those engaged in trade?
- Distinguish between bonded warehouses and ordinary warehouses.
