Foreign trade zones (FTZ) are famously known throughout many domestic industries dealing with foreign product – and for very good reason. Providing near immediate return on investment, the supply chain benefits are too great to pass up. As a shipper’s overall transportation expenses undergo massive cost savings, foreign trade zones influence business growth and a positive outlook on a flourishing bottom line. To further expand upon the exclusive perks shippers can receive, here’s why your logistics plan should incorporate a foreign trade zone as soon as possible.

What is a Foreign Trade Zone?

Before jumping into the benefits of a foreign trade zone, it’s important to reinforce the basics of an FTZ and why they exist. In short, these designated locations are highly guarded areas that neighbor entry ports of the United States. Typically bordering ports used for air or sea travel, this convenience allows foreign goods to be immediately unloaded and reconsolidated onto outbound transports with freedom from customs and import tax. These facilities function to encourage trade by providing an incentive for domestic companies to do business. Also referred to as free trade zones, they essentially aid in bolstering the United States’ economy with a way around paying out traditional dues and tariffs in order to facilitate international commerce.

The Benefits of a Foreign Trade Zone

Amplified productivity, flexibility and revolutionary speed to market are just some of the beneficial traits one can receive from an FTZ, but what exactly makes this location so lucrative? Below briefly discusses the notable benefits you can receive by utilizing a foreign trade zone.

Tariff Payout Relief

Arguably the most popular aspect of doing business through an FTZ is the benefit of paying the lowest tariff rate available. It’s common to see that many raw materials or individual parts that make a larger product have a higher rate tagged to them. The domestic manufacturer only pays the lowest of either the import or final manufacturing duties. A foreign trade zone is the only way to experience inverted tariffs as it poses a huge benefit to those on the receiving.

Expunging Duties

FTZs have a unique Customs program that again, is unavailable in any other setting. They allow deferrals and reductions on necessary duties or sometimes may eliminate them altogether if possible. Similar to deferring a bank loan, foreign trade zones push back your payment to a later date and may also free your product from inventory tax.

Domestic Product, Foreign Material

A large influential buying factor of the American consumer is seeing an American-made product. Anything marked with “Made in U.S.A” is attractive and is more likely to be purchased. Foreign trade zones can assist here as well. Many FTZs in the U.S. have manufacturing plants on location. This rewards a company with the ability to advertise American-made products even though most, if not all, of the component items are from overseas.

Savings on Customs Entry Charges

To keep up with market demand, many shippers are receiving product almost every day. Foreign trade zones provide the benefit of avoiding these daily filings altogether. Now, only one weekly entry is needed to conduct the receiving process of a shipment. This lowers costs for the importing business, cuts down on time and eliminates the need to store more information than necessary.

Gain Access to 3PL Warehousing in Foreign Trade Zones

Foreign trade zones provide a Midas touch to a supply chain by raising expectations for those utilizing the service. National Retail Systems, Inc. is proud to utilize one of the nation’s largest FTZs in Savannah, Georgia. A major US foreign trade zone, our Savannah warehouse allows us to uphold our commitment to a lean logistics model and continue being a reliable 3PL provider to shippers in need of quality supply chain management. With warehousing opportunities in a foreign trade zone, organizing international shipments has never been easier. Explore the customized 3PL solutions with National Retail Systems, Inc. and feel free to contact us today for more information!