Benefits of a Foreign Trade Zone
Foreign Trade Zones (FTZ) Benefits Summary
- Approved companies within the FTZ can defer, reduce, or eliminate custom duties (tariffs) on imported material materials and products.
- Approved companies can also reduce merchandising and processing (broker) fees.
- Distribution/e-commerce fulfillment centers can defer the payment of duties until the goods leave the FTZ.
- Businesses in the FTZ are also eligible to receive direct delivery, so that containers are brought directly to the company’s distribution center in the FTZ, rather than being held at the port.
- All inspections of containers are done in the FTZ instead of at the port, which can save on rental fees at the port.
Specific Cost Benefits of a Foreign Trade Zone (FTZ)
Merchandise Processing Fees
Each time there is a container brought to the U.S. a Merchandising Fee is paid based on the value of goods in the container with a cap of $634/container. In a FTZ the merchandising fee is a flat $634/week. The table below provides a sample of Annual merchandising processing fee savings in an FTZ.
Non-FTZ
FTZ
FTZ Savings
200 Containers/yr.
$126,800*
$32,968
$93,832/yr.
500 Containers/yr.
$317,000*
$32,968
$284,032/yr.
1,000 Containers/yr.
$634,000*
$32,968
$601,032/yr.
*Assumes Container Value of $140,000
Processing/Broker Fees
In addition to Merchandising Fees, all companies importing containers must pay a processing fee typically $85-$100 per container. Companies operating in an FTZ are allowed to file “weekly entry” procedures allowing an importer to file a consolidated weekly fee to the US customs vs a fee per container (bill of lading) that normally occurs in shipping. The table below provides an example of processing fee savings in an FTZ.
Non-FTZ
FTZ
FTZ Savings
200 Containers/yr.
$20,000*
$5,200
$14,800/yr.
500 Containers/yr.
$50,000*
$5,200
$44,800/yr.
1,000 Containers/yr.
$100,000*
$5,200
$94,800/yr.
*Assumes Container Value of $140,000
Shipping Time Savings in a Foreign Trade Zone
Direct Delivery
This procedure is only allowed in an FTZ. This allows companies operating in an FTZ the ability to sign for U.S. customs upon receipt of goods at the warehouse rather than having the goods go through another location before being delivered to the distribution center. Direct delivery saves 1-2 days of inbound time.
Benefits of the Hub @ Ontario - Foreign Trade Zone 50
The Hub @ Ontario is located in the California Commerce Center a “predesignated” FTZ or Magnet Site known as U.S Foreign Trade Zone No. 50, Site 2. While buildings outside of an FTZ can establish a Foreign Trade Zone, there are benefits to locating within a “ pre-designated” Foreign Trade Zone such as FTZ No. 50, Site 2. Some of those benefits are:
- Zero FTZ application fees
- Zero FTZ activation fees
- Low annual fees
- Significantly quicker time to set up and activate an operation with US customs, saving 3 to 5 months compared with locations outside a predesignated FTZ.
Start Up Costs
- Cursory Review and Operational Cost Benefit Analysis - Free
- Preliminary Feasibility Study - Free using our in-house FTZ Resource (IMS Worldwide Inc.)
- Grantee (Port of Long Beach) Annual Fees - $7,750 per building, and a manufacturing fee of $3,500
- Activation and Operator Training Consulting - $75,000 (using our in-house FTZ consultant)
