O Level Revision : Commerce - Warehousing
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.