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How An FTZ Can Save You Money

By Leslie Sullivan
Marketing Coordinator
Evans Distribution Systems

As global trade grows, it stands to reason that the need for Foreign Trade Zones (FTZs) should grow as well. The global economy has greatly shifted the production of goods, and it’s no longer simple: parts are no longer simply made in an individual country and sold there – they might be put together in a second country, and sold in a third. An FTZ can help to prepare goods for import into the U.S. or transition to another country, without formally entering US commerce.

A Foreign Trade Zone refers to a physical zone where commercial merchandise, national and overseas, has the same type of customs treatment as if it were outside of the United States market. Goods will enter an FTZ as an import from another country, or transfer from another FTZ, under the jurisdiction of U.S. Customs and Border Protection (CBP). This means that those goods have not yet formally entered the US for commerce.

FTZs can benefit your business in a number of ways, including cash flow. FTZs allow for duty deferral and duty reduction. Duties can be paid on a finished product rather than each specific part, and value-added services can be executed before payment of duties is required. Foreign and domestic goods can be combined. Repackaging and manipulation of goods are allowed in the FTZ. This changes the essential “character” of the product, where tariffs may not apply.

The merchandise processing fee can also be reduced by entering goods into an FTZ. Destruction of goods while in the FTZ can save on duty and taxes as well. Storage of goods in an FTZ do not have the same time limits as Warehouse Bonded Entry. The typical merchandise processing fee is 2.677% of the value of the good. For example, let’s say there are three containers entering an FTZ, at $10,000 each. A non-FTZ warehouse would accept the containers at a rate of 2.677%, or $267.70 apiece. This would bring the total merchant processing fee to $803.10. However, if these containers were to be processed in an FTZ, the flat maximum rate would be $497.99 for all three containers, a substantial savings, especially when taking into consideration the potential for much larger containers.

FTZs are very secure. Operators must comply with a higher standard of security established by (CBP) and Federal law. Fewer customs entries can be filed; even just one per week. Several containers can be received under one FTZ entry reducing broker fees. Merchandise can also stay stored in an FTZ as long as possible.

FTZs also benefit the American population in a number of ways: they produce employment opportunities, and improve and grow security. This increases international trade, and improves the health of global trade. Most countries in the world now depend on other countries for the supply of goods, materials, and services, and the existence of FTZs allows for an easier flow of goods, and greater savings overall.

Leslie Sullivan is the Marketing Coordinator at Evans Distribution Systems, a 3rd party logistics company located in Melvindale, MI. Evans Distribution Systems works in transportation, warehousing, fulfillment, value added, and staffing. As a leader in the supply chain world, Evans has been in operation since 1929, and throughout almost 90 years, Evans has offered customers a flexible solution for distribution, quality inspection, eCommerce, transportation, and many other logistics-related services. Evans has a foreign trade zone (FTZ) on its premises, and is continually broadening opportunities in that space to assist customers in new and innovative ways. We’re always expanding, and providing new solutions to customers. For more information on how an FTZ can work for you, reach out to Leslie at

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