Benefits of Foreign Trade Zones

Every supply chain executive has as a primary responsibility for the need to reduce risk and spend in the business models they operate in.

?Most governments around the world open the door to access what we here in the United States call … Foreign Trade Zone … globally … Free Trade Zones.

?FTZ’s provide an avenue to both lower risk and spend in the global supply chain and can assist with business processes, operational and administrative advantages for those responsible for international sales, customer service and logistics.

?The FTZ sits outside the U.S. economy, though physically located within our geographic limits. Basically, it affords an importer the ability to move goods into a warehousing/manufacturing/distribution facility here in the USA, without creating a customs clearance and defer paying any duties and taxes.

?Companies eligible for Foreign Trade Zone are:

?-????????Principal Importers and Exporters

-????????Service Providers

-????????3PL’s

-????????Warehouseman, Carriers and alike servicing the international trade

community

?The benefits of the FTZ are numerous and can be unique to certain supply chains:

?·???????Duty Exemption

·????????Duty Deferral

·????????Duty Reduction (Inverted Tariff)

·????????Reduction of Customs Clearance Costs

·????????Merchandise Processing Fee (MPF) Reduction

·????????Quota Avoidance

·????????Streamlined Logistics

·????????Other Cash Flow Benefits

·????????Potential access to state and local tax and grant considerations

There is a process to obtain a FTZ that exists with both commercial and government interface.

?Simply stated, the process is briefly outlined as follows:

?The FTZ board part of the Department of Commerce has national oversight. Enforcement is outsourced to CBP (Customs Border & Protection).

?Washington provides authorization to the various states who further work with chosen local agencies, such as but not limited to commercial parties, economic development agencies, world trade centers and other like organizations.

These agencies become local “grantees” and have local authority for FTZ Administration. The local CBP Office creates an activation process and manages all aspects of FTZ regulatory compliance.

If the FTZ includes manufacturing or assembly, The FTZ Board in Washington becomes very much more involved in FTZ authorization and enforcement.

The specific terminology is as follows: Foreign-trade zones are designated sites licensed by the Foreign-Trade Zones (FTZ) Board (Commerce Secretary is Chairperson) at which special customs procedures may be used. These procedures allow domestic activity involving foreign items to take place prior to formal customs entry. Duty-free treatment is accorded items that are re-exported, and duty payment is deferred on items sold in the U.S. market, thus offsetting customs advantages available to overseas producers who compete with producers located in the United States. Subzones/usage-driven sites are approved for a specific company/use. A site which has been granted zone status may not be used for zone activity until the site or a section thereof has been separately approved for FTZ activation by local U.S. Customs and Border Protection (CBP) officials, and the zone activity remains under the supervision of CBP. FTZ sites and facilities remain within the jurisdiction of local, state, or federal governments or agencies.?

?Manufacturing and assembly as compared to straight inventory and distribution creates additional challenges and government controls.

?Though the process can be daunting, if you utilize professional assistance, the process can be more easily managed. We work a specialized consulting company, Blue Tiger International (www.bluetigerintl.com), who works nationally to assist companies in navigating the challenges of FTZ Management.

We recommend that companies with global footprints consider FTZ’s as a means to lower landed costs and consider outsourcing the responsibility to a 3PL that specializes in FTZ Services, such as McLane Global Logistics.

?Companies that utilize FTZ’s will work in three primary areas of control: Compliance, Security and Product Accountability. McLane can provide capability in all three areas of regulatory adherence.

?We have three facilities that can provide various levels of warehousing, fulfilment, and distribution services. Houston, Salt Lake City and Riverside,

?Our Riverside, California facility is its entirety a Foreign Trade Zone, with space available. We provide a full range of warehousing, fulfillment, distribution, technology platform, only an hour away from the ports of LA and Long Beach.

?And 60 miles from Mexico and near all modes of transit … road, rail, air, ocean, and courier.

?Dedicated account teams and highly responsible customer service managers.

?We have the ability to assess the financial benefits and operating needs for your entry into the FTZ. We have the experience and knowledgeable personnel to support you in any FTZ initiative.

?As an FTZ, we can also handle domestic freight, competitively, comprehensively and working to assure you a better run supply chain.

Contact me to learn more!!

Nick Gibbons

McLane Global VP of Customer Experience and Sales

1902 Cypress Station Drive, Suite 200

Houston, Texas 77090

c:(832)454-9321

Nick.Gibbons@ Mclaneglobal.com

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