Foreign Trade Zone

Apparel logistics

The Apparel Logistics Group provides the expertise necessary for success and a solid track record assisting companies through the application process, activation period, and continuing Foreign Trade Zone (FTZ) operations. Contact us at your convenience for a presentation, including a savings analysis specific to your company.

By deferring, reducing, or eliminating customs duties, qualified companies can improve cash flow, lower inventory cost, and improve their bottom lines. By speeding the movement of merchandise via FTZ procedures, including direct delivery, weekly entry/export, and zone-to-zone transfers, companies can be more competitive, removing critical hours or days from their delivery cycle. FTZ usage also enables companies to reduce inventory levels and to consolidate transaction reporting and costs.

Implementing foreign trade zone benefits starts with a successful federal application but doesn’t end with an approval. FTZ activation and operation are fundamentals to success, requiring in-depth knowledge of inventory control. Selection and implementation of inventory control methodology are essential to the optimization of FTZ benefits.

Why Companies use Foreign-Trade Zones:
  • Relief from property tax on inventory— The federal law that established the U.S. Foreign-Trade Zones Program allows companies to obtain exemptions from inventory taxes. Certain tangible personal property is generally exempt from state and local ad valorem taxes. A small number of states assess local taxes on business inventories. The Foreign-Trade Zones Act exempts most merchandise from such taxes in Foreign-Trade Zones.
  • Duty exemption on re-exports—Without a zone, if a manufacturer or importer brings apparel merchandise into the United States, it is required to pay the import tax (duty) at the time the component enters the country. However, an FTZ is considered to be outside the commerce of the United States and the U.S. Customs territory. So, when foreign merchandise is brought into an FTZ, no Customs duty is owed until the merchandise leaves the zone and enters the commerce of the United States. Only then is the merchandise considered imported and the duty paid. If the imported merchandise is exported back out of the country, no Customs duty is ever due.
  • Duty elimination on waste, scrap, and yield loss—Without an FTZ, an importer pays the Customs duty owed as material is brought into the United States. This is because the material is considered imported at this point. If the processor or manufacturer is conducting its operations within a zone environment, the merchandise is not considered imported, and therefore no duty is owed until it leaves the zone for shipment into the United States.
  • Weekly Entry Savings—Weekly Entry (allowed only to FTZ users) provides economies for both Customs and FTZ users. Under Weekly Entry procedures, the zone user files only one Customs Entry per week, rather than filing one Customs Entry per shipment. Customs no longer has to process an entry for each and every shipment being imported into the zone, and the FTZ community no longer has to pay for the processing of each and every entry.
  • Duty Deferral—Since FTZ are outside the Customs territory of the United States, goods are not imported until they leave the zone. Therefore, Customs duty is deferred until merchandise is imported from a FTZ into the United States. This is a significant cash flow savings. Instead of companies having substantial monies tied up in Customs duties on their inventory, they have use of that money for other purposes.