How More U.S. Shippers Are Utilizing Foreign Trade Zones
The interest in FTZs, or foreign trade zones, has been growing more and more, according to recent reports.
A possible contributing factor to the rise of FTZs is the growing number of distributers that are opening up to the idea of using them.
DHL Global Forwarding (DGF), has grown into one of the largest FTZ operators in the U.S., and Atlanta is one of the 5 locations across the U.S. where DGF has general purpose sites. They just recently completed construction on their largest cargo facility in the U.S. at 491,000-square foot, and part of the facility has been designated as a FTZ.
According to Cindy Allen, DGF’s vice president who heads its customs brokerage, FTZ interest has been growing, and Bob Imbriani, executive vice president, International at forwarder Team Worldwide Production, agrees with her. “We have seen bigger interest,” he confirms. “We work with a lot of companies who look to go into foreign trade zones.”
Companies in the automotive industry are continuing to be among the leading users of FTZs, but companies specializing in pharmaceuticals and electronics have also embraced FTZs, Allen notes.
One major retailer, who is a client of DGF, uses the FTZ to consolidate imports from Europe with inventory that is produced at a manufacturing location in Mexico for distribution in the Americas. In partnership with sister company Excel, the logistics firm secures designation of a warehouse site from the FTZs Board, activates the site with U.S. Customs, and manages data flow to the agency.
Businesses that use FTZs to handle their manufacturing find more appeal in using them due to having the choice of paying duties either on the value of the imported components or of the finished product. Also, finished products that are re-exported from the zone won’t face any duties.
FTZs also allow companies to consolidate their merchandise-processing fee in one weekly batch, another key benefit for distributers.
The U.S. Foreign-Trade Zones Board has also been working to make the idea of using FTZs more appealing to distributors by simplifying the reporting process, and shortening the overall process from 8 months to about 30 days.
For those who want to be less involved, logistics providers are happy to step in. “We have customer-operated or customer-driven FTZs that DGF operates. We manage FTZs on behalf of clients, and we also operate FTZs directly at clients’ facilities,” says Allen.