How can a Free-Trade Zone benefit your business?

Also known as a ‘Foreign-Trade Zone’ in the US, a Free-Trade Zone (FTZ) is a designated area that is considered outside customs territory. In an FTZ, domestic and foreign goods can be moved, handled and assembled without paying the duties and taxes normally required by customs and border protection.

An FTZ offers a unique opportunity to defer, reduce or eliminate customs duties on your products, which can result in significant cost savings.

Customs duties only come into effect when your products leave the FTZ and enter the local market. If a product is re-exported, no duties are due.

While import duty outside the FTZ is applied to each unit, as well as the parts associated with it, only one duty charge applies upon export for units that are fully assembled within an FTZ.

In addition, if the zone is located in a country where local taxes are imposed on inventory, storing products in a FTZ may provide additional savings.

Typically, an FTZ is found in or near a port, however, inland FTZs, such as the ones at our equipment processing centres in Pooler, Georgia and League City, Texas in the US, offer even more benefits.

“Our inland FTZs give our customers another storage option one that is often closer to their dealer networks and includes financial and administrative savings as part of their logistics strategy,” explains Doug Peterson, senior manager, business development, WW Solutions. “Inland FTZs have the advantage of more available land versus on-terminal sites. In addition, if there is a need to be close to a customer’s inland factory, an inland FTZ site might be advantageous for sub-assembling components into a larger component that could then be assembled into a machine or vehicle at the factory.”

Beyond these benefits, inland FTZs offer additional services, such as inspection, inventory management and technical services, which help to boost velocity in the overall supply chain and deliver cost savings.

While different from an FTZ, a customs bonded warehouse does offer some of the same benefits, namely tariff and duty deferment. Our VPC and EPC at Zeebrugge, MIRRAT terminal, Brisbane EPC, Port Kembla EPC, Melbourne EPC and Freemantle EPC all contain or are registered as customs bonded warehouses, which allows customers to benefit from these cost savings.