The Difference Between a Sufferance Warehouse and a Bonded Warehouse

While storage in sufferance warehouses is mandatory for goods not immediately released into Canada, bonded warehouses are an option for businesses that want to store their goods long-term and defer duties and taxes.

When goods enter Canada, they don’t always go straight to market.

Instead, they may first enter a specialized customs warehouse authorized by the Canada Border Services Agency (CBSA).

Two of the most common types are sufferance warehouses and bonded warehouses.

Both are used to hold imported goods, but they serve very different purposes.

Sufferance warehouses are used to temporarily store shipments while they wait for CBSA clearance, unless they are cleared immediately upon entry.

Bonded warehouses, on the other hand, can be used to extend storage time and defer payments until goods are released into the Canadian market.

Read on to learn about the use of customs warehouses for goods shipped to Canada. 

What is a sufferance warehouse?

A customs sufferance warehouse is a privately owned and operated facility that is licensed by CBSA to hold imported goods that are yet to be released.

In this case, the goods are kept in a warehouse for CBSA control, short-term storage, and possible examination—until they are either cleared for entry into Canada or exported.

The maximum time limit for storing goods in a sufferance warehouse is 40 days, with the following exceptions:

• Perishables: 4 days
• Prescribed substances: 14 days
• Firearms, prohibited ammunition, devices, prohibited and restricted weapons, tobacco products: 14 days
• Spirits: 21 days

A full list of exceptions to the 40-day limit is outlined in Schedule I of D4-1-7.

Types of sufferance warehouses

Sufferance warehouses are divided into five main categories:

Type A

Operated by carriers (airline, marine, or railway) for storing imports moving within their own systems.

Type B

Used for imported goods arriving in a commercial vehicle by highway.

Type C

Designated for consolidated shipments that are to be stored, deconsolidated, and sorted in these facilities before formal entry.

Type S

Dedicated to specific goods arriving by any mode of transportation, like fresh produce, meats, flowers, household goods, liquor, or other licensed commodities.

Type PS

Railway sidings owned or operated by an importer, where carloads of imported goods are held pending CBSA release.

Each type of sufferance warehouse is designated for goods associated with a specific transportation mode and certain commodities.

For example, a warehouse licensed for household goods cannot store other types of cargo.

Similarly, a facility authorized for air cargo cannot be used for imports arriving through a different mode of transport.

What is a bonded warehouse?

A customs bonded warehouse (CBW), referred to as a bonded warehouse, is a facility licensed and regulated by CBSA but operated by the private sector.

Goods stored here are considered imported into Canada but remain under the control of CBSA until they are either released for consumption or exported.

The main benefit of a bonded warehouse is the deferral of costs.

With a few exceptions, duties, excise taxes, antidumping or countervailing duties, and even GST/HST are deferred until the goods leave the warehouse for sale.

If the goods are exported instead, no duties or taxes are paid.

Most goods can remain in a bonded warehouse for up to four years, but some products, including beer and wine, may be stored for up to five years. 

In some cases, spare parts and specialized equipment can be stored for up to 15 years.

A full list of exceptions to the four-year limit is outlined in Schedule II of D4-1-7.

Types of bonded warehouses

A bonded warehouse can either be private or public.

A private bonded warehouse is operated by a company to store only its own imported goods. These are best for importers who prefer direct control over storage and duty deferral.

A public bonded warehouse is operated by a third-party provider and is open to multiple importers. This is often a good choice for importers who want to benefit from duty deferral without the cost of managing their own facility.

Allowed activities in bonded warehouses

When stored in a bonded warehouse, some activities are permitted, as long as they don’t change the essential nature of the goods.

While further manufacturing is not allowed, goods may still be handled in certain ways, including:

• Disassembling or reassembling goods for packing, handling, or transportation
• Storing, displaying, inspecting, or testing
• Marking, labelling, tagging, or ticketing
• Packing, unpacking, packaging, or repackaging
• Removing small samples for the sole purpose of soliciting orders
• Other activities that don’t materially alter the characteristics of the goods, such as:
  • Cleaning, diluting, or preserving
  • Normal maintenance and servicing
  • Sorting or grading
  • Trimming, filing, slitting, or cutting
  • Separating defective goods from prime goods
  • Complying with applicable Canadian or provincial laws

Transferring goods between warehouses

Goods can be transferred from a sufferance warehouse to a bonded warehouse before their release if longer storage or duty deferral is required.

During a transfer, goods remain in-bond, which means they are still under CBSA control and are not yet considered released into the Canadian market.

Transfers must be authorized by CBSA and documented using either a CAD or a CCD.

A transfer is documented on a Commercial Accounting Declaration (CAD) if goods move:

• From a sufferance warehouse into a private bonded warehouse within the same CBSA office jurisdiction, or
• Between private bonded warehouses within the jurisdiction of one CBSA office.

On the other hand, a transfer is documented on a cargo control document (CCD) if goods move:

• From or into a public bonded warehouse, or
• Into the jurisdiction of another CBSA office.

Exceeding storage time limits

If goods remain in a sufferance warehouse beyond the maximum storage time, CBSA will issue a Form E44 (Notice — Unclaimed Goods).

In this case, you will have 30 days to release or export your goods. If no action is taken, the goods are forfeited and may be disposed of.

Perishable and prescribed goods may be moved to a place of safekeeping. These unclaimed goods must be released and accounted for within 24 hours, or they will be forfeited.

Bonded warehouses have much longer storage limits, but once those limits are reached, the goods must either be released for consumption or exported. 

How Cole International can help

At Cole International, we provide freight forwarding solutions to help businesses like yours navigate the entire shipping journey.

Here’s how we can help:

• Prepare and submit all required documentation for the quick release of your shipment from a sufferance warehouse
• Transfer your goods into a bonded warehouse when long-term storage or duty deferral is required
• Track timelines to prevent storage penalties or forfeiture
• Ensure your full compliance with CBSA requirements

Our goal is to help you ship your goods smarter and faster.

If you want to clear your shipment from a sufferance warehouse or transfer your goods to a bonded warehouse, please reach out to one of our trade professionals to discuss how we can help.