- Global Trade
What is the difference between bounded warehouse and consignment warehouse?
Bounded warehouse is the one where the owner of goods, i.e., importer has full control over all operations throughout the warehousing cycle while consignment warehouse does not give exclusive rights to store owners.
Bounded vs Consignment:
A consignment warehouse is a place for storage and distribution under a consignor's (the owner of goods) supervision, but not ownership. On the contrary, in a "bounded" warehouse, or "exclusive" warehousing arrangement, the merchandise is usually owned by one company but kept on premises occupied by another company which acts as agent for its owner. The first party will normally be an independent operator who specializes in storing and handling general commodities. The second party will either be a general goods carrier, an independent trucker or a wholesaler.
The following are some of the differences between Bounded warehouse and Consignment warehouse.
1) In terms of possession, consignment warehousing is where importer has no control throughout the cycle of his product but in bounded warehousing importer holds the control over its products throughout the cycle.
2) There are different parties involved in case of consignments while there is only one party involved i.e., owner company itself in bounded warehousing arrangement.
3) The main reason for involving third party is insurance which will be provided by owner i.e., importer himself in case of bounded warehousing .
4) Storage costs are generally higher in case of consignment warehouse than in case of bounded warehousing.
Hence, it can be said that there is no fixed difference between the two concepts but only the type of control which the importer wants to have over his products makes all the difference. It may happen that in some situations consignment warehousing will be preferable while in others bounded warehousing is more suitable. However, for most part, consignment warehouse has many advantages but still bounded warehousing has its own importance when an importer wants specific control over certain conditions related to his product storage and handling.