An FTZ allows shippers to defer tariffs or other taxes on shipments as the locations are “generally considered outside of the United States for customs purposes,” DHL explained in its release. DHL is not the only carrier expanding this offering, either. Last year, UPS announced it had converted four airport gateways to FTZs.
The locations allow companies to reduce the cost associated with tariffs on imported goods or component parts. And some logistics companies have used the ongoing trade war between U.S. and China — which has increased tariffs by as much as 25% on some items — to highlight their FTZ offerings.
“Using the current tariff situation as an example, let’s say that ABC Company imports 5,000 pallets’ worth of products into the U.S. from China to get ahead of the newest tariff rule,” Kanban Logistics said on its website last year. “However, it only needs to distribute about 1,000 pallets’ worth of product within the U.S. in Q4. It would pay taxes and duties for the 1,000 pallets’ worth of product when it leaves the FTZ and pay nothing on the remaining 4,000 pallets’ worth of product.”
In 2018, the latest numbers available from the Commerce Department’s Foreign Trade Zones Board, $793 billion in goods flowed into FTZs, and $112 billion in goods were exported from them. The report from the Commerce Department said 3,300 companies used FTZs that year.
Large users of the zones include Exxon, GE, Honeywell, Marathon Petroleum, Mercedes-Benz and Tesla. Texas is the top state for overall FTZ activity on the import and export side followed by Louisiana.
California had the most warehousing and distribution-related FTZ activity on the import side, according to the Commerce Department.
“An FTZ is a vital resource for customers that want to compete in international trade,” Marc Gephart, the director of U.S. Customs Product Development and FTZ for DHL Global Forwarding, said in a statement.
The trade environment has been anything but consistent under the Trump administration. A trade deal initially brought some calm and avoided additional duties. But many of the tariffs are still in place, and tensions are escalating slightly as the countries order the closure of consulates.
DHL said FTZs can help “customers in mitigating the effects of fluctuating trade scenarios facing companies with operations in the United States.”
Post time: Oct-26-2021