Find out more about the types of bonded warehouses, how it’s different from a free trade zone (FTZ) warehouse and its challenges. We also talk about how to optimise warehouse storage to better suit your supply chain.


There are 2 bonds for a bonded warehouse: wet and dry bonds. 

  • A wet bond stores items subjected to excise tax, such as tobacco, spirits, wines or beers. 
  • A dry bond is for the storage of all general goods other than alcohol and excise items. 

On top of this, there are also 2 primary categories for bonded warehouses. 


Public bonded warehouses are owned and operated by the state. They can be used by anyone who wishes to store items under customs supervision.

These warehouses are licensed by customs authorities to operate as custodians and escrow to keep bonded goods until importers pay the duty. 


A private bonded warehouse is a privately-owned warehouse that’s appointed by customs to store and secure bonded goods without the payment of duties or taxes.

There are 2 types of private bonded warehouses:

  1. While the warehouse belongs to the owner or administrator, these places can store imported goods from external clients or suppliers. 
  2. These warehouses cannot accept goods from external clients and are only reserved for the storage of items owned by the owner or administrator.


Goods allowed for storageLocally made and imported goodsMostly stores imported goods
Tax benefitsDeferred payment of customs clearance taxes and duties
Transferring of goods between bonded and FTZ warehouses will not incur any additional duties or GST
RegulationsOnly able to operate within the FTZControlled by Singapore Customs offices or private companies
Storage time limitIndefinite storage time in Singapore (bonded warehouses in other countries may have a time limit)
Best suited forFor companies with customers mostly based in SingaporeFor companies with a regional customer base or businesses that use Singapore as a transshipment hub

Deciding between a bonded or FTZ warehouse to store your goods will depend on what you’re using it for and the location of your customer base. You may even choose to contract both types of warehouses to optimise your supply chain. 

Unsure of what kind of warehouse is more suitable for your goods or business? Contact us today for more information.


Improved cash flow

Duties are only paid for during customs clearance when the goods leave the warehouse. As such, importers can focus their expenditure and efforts on essential or additional pre-sale operations, including legal work needed to import their goods over. 

According to recent studies, bonded warehouses have shown to save about 25-30% of costs due to deferred taxes. 

Long term storage

Bonded warehouses offer indefinite storage so you are provided with a secured space to store your imported goods. 

The indefinite storage time also means you won’t have to risk shipping your entire inventory out to different warehouses when the storage time runs out.  

Safe and secured storage

Bonded warehouses are equipped with facilities to store any type of product for long periods of time while maintaining their quality. You can rest assured that your valuable goods will be well taken care of.

On top of that, goods are also fully documented and protected. Bonded warehouses come with advanced security features such as CCTV cameras and fire-fighting systems to ensure safe storage. 

Proximity to ports

These warehouses are often located near major airports and ports, allowing businesses to keep the goods at the port of entry until they are prepared for distribution. 

This optimises the entire supply chain by reducing lead times and costs for additional transport. Furthermore, the risk of potential damages during transportation to the port is also diminished.


Risk of product removal

While storage time may be indefinite*, customs authorities may resort to auctioning the product if the importer fails to pay duties within a stipulated or specified time to recover the duties. 

*The storage period doesn’t have to be specified. However, if a duration is agreed upon with the warehouse, your goods will be subjected to the risk of removal if you don’t withdraw them by then.

Complicated clearing process

No products can be removed from the warehouse until the duties are paid for. The clearing process is also complicated and time consuming, as you’ll need to submit a request and the necessary documents, and have your goods inspected. 

As a result, it might be hard to promptly carry out an emergency clearance when necessary. 

Goods may accumulate

Bonded warehouses usually have an indefinite storage time. However, in the case where stored goods pile up and become unmanageable for the importer or warehouse, they may be disposed of. 

Most products also come with an expiry date and once that passes, the inventory will have to be scrapped, resulting in a loss of profits. 


Step 1: Attain license under the Licensed Warehouse (LW) Scheme

The LW scheme allows qualified companies to store imported dutiable goods in a designated warehouse or area approved by Singapore Customs for an indefinite period of time. 

There are 3 types of licenses under this scheme depending on the company’s required facilitation level, record-keeping criteria and internal control standards. 

To qualify for this scheme, a company must:

  • Be GST-registered with the Inland Revenue Authority of Singapore 
  • Validate a Singapore Customs account
  • Ensure that storage premises are licensed with proper security measures
  • Possess good compliance records with Singapore Customs
  • Hold responsibility for the security, accountability and control of imported goods
  • Get the minimum band from the TradeFIRST assessment to qualify for the selected license type

Step 2: Pay the license fee

Once the license has been issued, an annual licence fee must be paid for. This is based on either:

  • the projected potential duty which is total duties calculated from the projected maximum quantity of goods in the proposed licensed premises or 
  • average monthly duty which refers to the average of the total duties of all goods stored in the intended licensed premises on the 1st of each month during the period of 12 months

Step 3: Apply for Customs Supervision (if necessary)

If a container is affixed with a Customs red seal, you must obtain an application to unstuff these goods. This application must be e-filed to the Company Compliance branch 1 working day before unstuffing. 

Unstuffing these goods without a permit may result in a penalisation. Goods that are deemed not suitable for human consumption under Customs Supervision may be destroyed. 

Step 4: Import goods to a selected bonded warehouse

Once you have acquired all the necessary documents, you may proceed to import your dutiable goods into a selected public or private bonded warehouse! 

Take note that you will need to maintain accountability for your goods to Singapore Customs and any other relevant authorities. This is done through the compliance to regulations, proper inventory control and ensuring physical security. 


1. Calculate your warehouse space utilisation

Step 1: Calculate the total warehouse storage area

Obtain the total area of your selected warehouse in square feet minus the spaces that aren’t used for storage, which includes offices and restrooms. Multiply the remaining area with the warehouse’s height.

Step 2: Calculate the maximum storage capacity

Multiply the length and width of the external dimensions for each pallet rack. Proceed to multiply this number with the total amount of pallet racks in the warehouse.

Step 3: Determine the potential storage capacity

Divide the maximum storage capacity by the total storage area then multiply by 100. Ideally, you should receive a result of 22% – 27% which shows that there’s enough room for warehouse workers to move around.

Results below 22% may indicate that there’s a lot of wasted space. Anything higher than 27% means that warehouse staff won’t have enough room to work in which may lead to lower productivity. 

A good utilisation percentage will typically be about 25%. This result should help you determine if you want to engage the warehouse for storage of your goods.

Step 4: Calculate your final storage space

Calculate the total volume of all your products and divide it by the maximum storage capacity. Multiply the figure by 100. 

You’ll be able to get a proximate figure of how much warehouse space you will need for your goods. This ensures that you’re being efficient with the usage of the space and less likely to spend costs on wasted storage space.

2. Use containers that suit the size of your goods

The usage of the wrong container size can result in a waste of valuable warehouse space. Ensure that you store small items in small bins and larger items in bigger containers.

3. Engage additional logistics services

3PL (third-party logistics) service provider is externally commissioned by a business to handle their supply chain. This includes activities such as receiving, item storage, inventory management, sorting, packing and shipping.

If you engage a competent and reliable logistics provider for your bonded warehouse, your goods will be kept in optimal condition before they are delivered to their final destination. 

Furthermore, it also optimises the business’s supply chain as the preparation and last mile delivery of goods to customers are taken care of. 

4. Constantly check on your key performance indicators (KPIs)

It’s important to measure and stay on top of your KPIs through the flow of your goods in the warehouse. This ensures that your business is performing and also gives you insights on what to improve on.

Here are some metrics which you can use:

  • Inventory turnover: This tells you how fast your goods are passing through the warehouse. It measures the number of times an inventory was sold and replaced, and the time taken for this.
  • Inventory-to-sales ratio: This metric measures the amount of inventory compared to the fulfilment of sales orders. This helps you see how well your goods are selling and whether you should continue to import a certain item.

M&P provides a full suite of services to suit your business needs including warehouse storage solutions and logistics services!


A bonded warehouse is a great place to store imported goods while deferring taxes until they are removed for local consumption. It’s a great asset for the operation of an international business with its cost saving features and secure storage. 

Contact us today to find out more about bonded warehouses and how it can benefit your business!