Fremont bonded warehouse to expand amid tariff-driven business surge
Business is booming for a Bay Area company after the Trump Administration hiked tariffs across the board last month and escalated the trade war with China.
One part of the supply chain that typically goes unnoticed has suddenly become extremely valuable in a very different economic climate.
Francisco Garcia is the founder of Lynx Logistics, a high-tech security warehouse in Fremont.
This fenced-off section, a U.S. Customs and Border Protection Bonded Warehouse, where goods can be stored without paying tariffs until they're taken out, is a hot commodity.
"The demand is so high, we just keep expanding," said Garcia.
As containers from around the world make their way to ports along the West Coast and are eventually trucked to warehouses, Garcia is in a position to expand its already existing bonded warehouse.
"By this time next week, this will be filled to the rim," said Garcia.
Forklift operators are quickly moving inventory to make more space for the expansion.
Lynx says it has been approved by U.S. customs to triple its bonded space to 15,000 square feet.
"We're installing new racks. We're going to quadruple-stack U.S. Customs bonded pallets," said Garcia.
Importers typically use bonded warehouses to bring in goods from one country before shipping them to another country, without paying tariffs.
But the current trade environment is changing the way these spaces are now being used.
Shane Salazar is CEO of Lynx Logistics
"This is allowing companies to stretch their cash in terms of not paying for the entire shipment at entry to U.S. Customs and pay as they touch it down to take a carton or a pallet," said Salazar.
Industrial property broker Danny Reaume of JLL, a commercial real estate and investment management company, says inquiries for bonded spaces went from 1-to-2 calls in a typical 30-day period, to well over 100 after Trump's so-called Liberation Day tariff announcement.
"Everybody across the supply chain is trying to get their inventory here, into the United States, into the West Coast market, and shield them from these tariffs, in the anticipation that in the next 30 to 90 days, this will get figured out," said Reaume.
Until that happens, Garcia and his team are hard at work.
"It's busy times on the phone and email. It's very little sleep lately," said Garcia.
It's an unanticipated business opportunity for an expanding company like his.
Bonded facilities have to meet specific security requirements of U.S. Customs and Border Protection.
Costs to operate are higher, including paying customs bond premiums.
Reaume says the market for non-bonded warehouse space is extremely quiet as shipments to U.S. ports have dramatically decreased.
But companies that need inventory close by are pouncing at any bonded space that's available.
