The Foreign-Trade Zone Advantage
The Foreign-Trade Zone Advantage

The Foreign-Trade Zone Advantage

May 23rd, 2016

Use of foreign-trade zones by global freight forwarders for the international transit and logistics of goods helps clients reduce time and money required by customs.

The spread of globalization has created surging trade activity for exporting companies, but also heightened pressure to boost the efficiency and cut costs of freight forwarding. To lower custom and logistics expenses, a rising number of businesses have begun using specially entitled warehousing and processing facilities known in U.S. terminology as foreign-trade zones (FTZ).

Though they go by different names in other nations allowing them, most global
FTZs operate on similar principles. They are designated areas inside countries that authorize companies to operate under special import and export protocols within these zones. They are treated as transport and logistic havens, where goods are exempted from import duties and certain regulatory structures unless they enter the host nation’s market for distribution.

In that manner, they allow companies to reduce respective taxes and duties, expedite customs clearance, and minimize administrative procedure.

Consequently, time and money demanded by customs-related requirements are greatly reduced for freight transiting FTZs to final destinations. Meanwhile, customs fees due on imports to the host market are deferred until they leave FTZ storage for local distribution.

The utility of FTZs is particularly evident in the U.S. -- a key gateway for cargo moving between Europe, North America and Latin America and Asia-Pacific.
They allow pharmaceuticals, cosmetics, mobile phones, TVs and other products to enter and be stored in U.S. FTZs tax-free, unless they’re released into the American market.

FTZs also allow for goods without U.S. distribution approval to be imported and stored in those American-located facilities awaiting their re-export abroad. During the storage time, the freight can be warehoused alongside U.S.-approved products destined for the American market.

The growing demand for an FTZ option led Bolloré Logistics to open its first U.S. foreign-trade zone in Florida last November. The 35,000 square-foot, state-of-the-art facility features over 2,000 pallets of standard and hazmat storage, and offers added warehousing services like pick and pack, kitting and labeling.

The center -- located near Miami’s port and airport -- was inaugurated after six months of preparation, and approval by U.S. Customs and Border Protection.

Bolloré Logistics’ decision arose from a request by a global cosmetics client to provide FTZ storage and re-export capacities for its products transiting the U.S. to final destinations in the Americas. In fulfilling that, Bolloré Logistics took the more ambitious solution of becoming an authorized FTZ operator, rather than the more common alternative of sub-letting that space as a tenant.

“Among other responsibilities, being an operator requires creating your own integrated link with U.S. customs, and maintain continual, real-time interfacing with authorities,” Aline Vidal, Bolloré Logistics USA National Logistics Manager, says of the decision.

“Being a tenant relying on an operator for those communication exchanges slows things down,” she notes. “Bolloré Logistics wanted to offer clients savings of both time and money with its own complete range of faster, efficient solutions.”

In doing so, Bolloré Logistics selected FTZ software QuestaWeb created by a U.S.-certified company based in New Jersey that has established itself over the past decade. The software operates in tandem with Bolloré Logistics’ own global WMoS (Warehouse Management for open System) branded SQUARE. The combination has further improved organization, speed, and tracing and tracking of clients’ cargo in and out of the Miami center.

That enhanced efficiency has also generated additional customer interest in Bolloré Logistics’ Florida FTZ, and may facilitate launching others elsewhere in the U.S.

“Generally speaking, if we were to open a second FTZ we would only have to deal with the operator status, which is linked to the site. All IT and system aspects are already done,” says Ms. Vidal.

“Customers want their goods moving forward, with as much time and expense lost to customs as possible removed,” she says. “FTZs are the best way of answering that demand. Gains made through improved lead-time from us being an FTZ operator also benefits clients.”

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    transported by the MSC Oscar, the largest container ship in the world

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