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US Importers Turn Trade Challenges Into Opportunities

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Businesses that import goods from around the world face a wide range of trade challenges, from navigating pandemic disruptions and capacity constraints to dealing with uncertainties about foreign policy and tariffs.

When looking to keep goods moving across borders while staying compliant, it’s worth considering the benefits of a Foreign Trade Zone (FTZ).

Importers that use an FTZ can gain a measure of control during market instability, address shifting consumer demand and buying patterns and roll with changes in trade policies.

Today, many multinational importers take advantage of FTZs. According to the National Association of Foreign-Trade Zones, U.S. FTZs are seeing double-digit growth in both imports and exports.

“Importers that use an FTZ can gain a measure of control during market instability, address shifting consumer demand and buying patterns and roll with changes in trade policies.”

Take a look at your supply chain strategy

So how do you know if establishing and running an FTZ is the best strategy for your company? Conducting a feasibility study will provide a cost benefit analysis.

Doing so also evaluates if a company has the proper security and inventory, as well as the expertise to manage and administer its own FTZ.

The process of setting up an FTZ within an organization can take six months or more when factoring in system integration.

The project touches IT systems, inventory, compliance and of course, requires approval from U.S. Customs and Border Protection. A 3PL with FTZ expertise can guide companies through this comprehensive process.

Putting an FTZ into practice

Whether you are a frequent shipper of high-value goods or import merchandise subject to high import fees, companies across a broad range of industries can benefit from an FTZ and are doing so today.

Let’s say a high-tech company imports computers for refurbishment and redistribution throughout North America. An FTZ program allows it to move goods in-bond — versus a consumption entry — to an FTZ warehouse.

This reduces fees and allows the company to examine the computers for refurbishment or destruction, all within the physical boundaries of the U.S. When the time is right, any units ready for sale are ready to be distributed.

“Some frequent, high-value importers could benefit from using a gateway FTZ. For example, an importer can leverage an FTZ within an air freight provider’s transportation network.”

The company can also defer duties, delaying payment until it withdraws the goods for ultimate consumption into the U.S. If the goods are destroyed or re-exported, the company does not have to pay duties on the goods at all.

In addition, the company could possibly benefit from the consolidation of the merchandise processing fee and import fees, all while increasing compliance. FTZs also offer merchandise accountability with enhanced inventory management.

Some frequent, high-value importers could benefit from using a gateway FTZ. For example, an importer can leverage an FTZ within an air freight provider’s transportation network. This model affords an opportunity to maintain time-in-transit commitments while leveraging both compliance and financial benefits without the back-end cost.

FTZs are particularly useful when it comes to COVID-19 and the healthcare industry. An FTZ can store products pending approvals from participating government agencies. Once provided the necessary approvals, the goods are already within the region for faster distribution.

“FTZs are particularly useful when it comes to COVID-19 and the healthcare industry. An FTZ can store products pending approvals from participating government agencies.”

Handling trade volatility

An end-to-end FTZ solution integrates with other offerings, including freight, warehousing and brokerage services.

Companies can leverage a turnkey solution using a UPS gateway, as well as its nationwide warehouses and staff.

The trade landscape and global markets are always changing. An FTZ creates consistencies in an era of trade volatility.

Nobody has a crystal ball to show exactly when and how global trade will shift. When you can’t make predictions, you can’t plan. And if you’re an importer, don’t overlook an FTZ program as a key component of your strategy.

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