How FTZs Offer Savings in Your Supply Chain€¦ · • An FTZ is a designated geographical area, in or adjacent to a ... Project Planning / Estimated Timelines. Timelines may vary

How FTZs Offer Savings in Your Supply ChainHosted by United States Fashion Industry Association (USFIA) and Integration Point

January 25, 20182:00 P.M. Eastern/11:00 A.M. Pacific

At any time during the presentation, you may enter your questions here:

© 2017 Integration Point | Proprietary & Confidential 3

Presented by: Liz Connell VP - Product Management Integration Point

January 25, 2018

How FTZs Offer Savings in Your Supply Chain

© 2017 Integration Point | Proprietary & Confidential 4© 2017 Integration Point | Proprietary & Confidential 4

Agenda

• Overview of FTZs• FTZ Program Participation Drivers• Impact of becoming an FTZ on a business• Evaluating the zones program for your company


Overview of FTZ’s


Duty Deferral Programs

• Tax Reduction and Tax Avoidance• Level the Playing Field in a Free Trade World• Encourage Domestic Production• Retain/Expand Domestic Job Opportunities• Examples of Duty Deferral Programs

– United States – Foreign Trade Zones– Mexico – Maquiladoras, IMMEX– United Kingdom – Inward Processing (IPR)– China – Processing Trade Regimes– India – Special Economic Zones– Costa Rica – Free Trade Zones


What is a Foreign Trade Zone?

• Created by the Foreign-Trade Zones Act of 1934 to "expedite and encourage foreign commerce" in the United States

• An FTZ is a designated geographical area, in or adjacent to a Customs Port of Entry, where commercial merchandise receives the same Customs treatment it would if it were outside the commerce of the United States

• Merchandise of every description, not prohibited by law, may be held in the Zone without being subject to Customs duties and other ad valorem taxes


FTZ Fun FactsAccording to the 2016 FTZ Board Report


Demographics of FTZ ProgramAccording to the 2016 FTZ Board Report


FTZ Program Participation Drivers


FTZ Program Participation Drivers

Zone Savings – Initial Investment and Ongoing

Increase compliance

Supply Chain Responsiveness

Competition and Supply Chain Partners

Operational and Inventory Control Impact


Zone Savings


Inverted Duty Savings

Entry of manufactured product into U.S. Commerce at a lower finished good duty rate instead of the higher component duty rate


Example of Inverted Duty Savings


Weekly Entry Savings

Merchandise Processing Fees (MPF) are capped at $497.99 weekly for each zone entry


Duty and Tax Exemption

No duties are paid on product exported from the FTZ– Eliminate the need for a drawback program

No duties are paid on merchandise that is destroyed Some fees (ie Cotton Fees) not paid on product

exported or destroyed No duties paid on merchandise transferred to another

FTZ Property tax relief in some states


Duty and Tax Deferral

Customs duties are deferred until imported into the Commerce of the United States

Some fees associated with imports can be deferred– Examples:

• HMF is only paid quarterly• Cotton fees deferred until entry

Year one - One time cash benefit as inventory turns Allows money to be reinvested in other areas


Increased Compliance

Increase automation causes increase visibility– All import information in a single location matching

against actual receipts into inventory – Single version of truth for imports/inventory/accounting

Streamline import process Simplify entry and brokerage process – 52 entries a year


Supply Chain Responsiveness

Streamlined customs procedures– Direct Delivery– Weekly Entry

Better traceability– Forces all data to be a central location to report on

and have visibility to Integration of your entire supply chain


Competition and Supply Chain Partners

82% of companies are considering nearshoring or reshoring solutions, such as FTZ’s to reduce duties and expedite delivery – Aberdeen Group

Supply chain partners using an FTZ


Operational and Inventory Control Impact

Lower insurance premiums Enhanced security Indefinite storage Enhanced traceability and accountability across the

company


Impact of becoming an FTZ on a business


FTZ RequirementsWhat needs to be captured and reported in an FTZ


What can you do in an FTZ?


Corporate ImpactOpportunity to have a single source of truth for global trade information

Human Resources

Supply Chain –Customer Logistics Planning Warehouse Operations

Trade ComplianceMaterials Management / Procurement Information Technology

ACG / Tax

Facilities ManagementLegal / Contract Management


Evaluating the zones program for your company


Questions to ask….

Do you manufacture, assemble, kit, or process with imports?

Do you regularly pay more than $497.99 per week in merchandise processing fees across all entries?

Do you scrap, reject, destroy, waste, or return some of your imports?

Do you export previously imported materials? Do you wait long periods of time for your containers to

get through U.S. Customs (or the PGA’s) at the ports?


Questions to ask…

Do you sell your imported products to companies that reside in FTZs?– Note: If you’re unsure if your customers leverage FTZs,

you can find out on the FTZ Board website Do you have a high volume of entries into the U.S.? Do you have large customs duty payments? Do your products have a high duty rate? Do you intend to build a new distribution center or

manufacturing plant in the next year or so?


Typical Timeline and Resources


Project Planning / Estimated Timelines

Timelines may vary based on Customs ports of entry, government response times, and changes in project scope.

FTZ DesignationFTZ Board

30 DAYS (ASF)90-150 Days (Traditional)

FTZ Production Authority

FTZ BoardProduction Notification

120 DAYSProduction Application,

if required10-12 MONTHS

FTZ ActivationUS Customs and Border

Protection90-120 DAYS

FTZ ICRS SystemsSetup and Testing

4-6 MONTHS


FTZ Resources

FTZ Board– https://enforcement.trade.gov/ftzpage/

National Association of Foreign Trade Zones (NAFTZ)– https://www.naftz.org/

US Customs and Border Protection FTZ information– https://www.cbp.gov/border-security/ports-entry/cargo-

security/cargo-control/foreign-trade-zones/about Integration Point FTZ Resource Page

– https://www.integrationpoint.com/en/ftzresources

https://enforcement.trade.gov/ftzpage/

https://www.naftz.org/

https://www.cbp.gov/border-security/ports-entry/cargo-security/cargo-control/foreign-trade-zones/about

https://www.integrationpoint.com/en/ftzresources


Liz ConnellVice President – Product Management

Integration Point

(704)576-3678 [email protected]


One Trade Platform | Globally

www.IntegrationPoint.com

Thank you for attending!

For additional questions and information:

Email: [email protected]

Twitter: @usfashion

Phone: +1-202-419-0444

Documents

How FTZs Offer Savings in Your Supply Chain€¦ · • An FTZ is a designated geographical area, in or adjacent to a ... Project Planning / Estimated Timelines. Timelines may vary