Benefits
A Foreign Trade Zone (FTZ) is an area approved by the U.S. Department of Commerce and Customs & Border Protection to be considered outside of U.S. Customs Territory. As an FTZ, companies can import product directly into their facility deferring customs entry procedures or import duties. The main benefits of activating your facility as an FTZ are:
- Improved cash flow – align your payment of an import tariff with the timing of your product leaving your facility, rather than at the time of importing the product
- Cost reduction – potentially eliminate tariffs on re-exported imports (depends on whether goods have been manufactured, and the destination of the re-export)
- Reduced supply chain timeline – some FTZs experience a 3 – 5-day reduction in their supply chain timeline
- Reduced import fees – reduce your customs brokerage fees, merchandise processing fees, and harbor maintenance fees due to consolidation of customs entries into a single weekly-entry
- Risk reduction – as you manage your own customs entry process internally, you reduce risk of some externalities that could hold up your import process
- Improved inventory control – as you implement an FTZ, you invest in improved inventory control procedures that elevate a company’s operating efficiencies
Click here to try the FTZ Benefits Calculator to input your data and test different scenarios to calculate the potential financial benefits of activating your facility as an FTZ.
Costs
Activating your facility as an FTZ also has costs. There are start-up costs, set annual fees, and ongoing variable costs. Some costs can be clearly defined early, other costs cannot be quoted up front – they depend on how you want to organize your zone program, what potential security upgrades may be needed, and fees of third-party consultants you hire.
You can also download a copy of the FTZ #176 Tariff that describes the grantee fees of FTZ #176.
