Foreign-Trade Zones (FTZs) provide special customs procedures that help companies that conduct international business-related operations better compete with foreign plants. An FTZ also facilitates and attracts offshore activity and encourages retention of domestic activity, helping to create employment opportunities.

When you operate under FTZ procedures, your company is treated like it is located outside the United States for purposes of customs duties. That means that U.S. import duties don’t have to be paid on imported components entering your factory.

If your finished product is ultimately shipped to the U.S. market, you may have the option to pay the finished-product duty rate rather than the component duty rate — and many finished products have lower duty rates than their components or are duty-free. And if you re-export the finished product, you don’t pay duties on the component materials.

Other potential savings include avoiding duties on imported materials that become scrap as well as possible administrative savings and efficiencies.

We have dedicated 400,000 square feet of warehouse space and an additional 110,000 square feet of outside yard storage* at SKU Distribution for FTZ-related commerce. At SKU, we are dedicated to solving the primary challenges retailers and e-commerce businesses face. Our comprehensive suite of services includes efficient inventory management, precise order fulfillment, and cost-effective warehousing solutions. With a focus on scalability, technology integration, and exceptional customer service, we enable businesses to thrive in the ever-evolving world of e-commerce.

* block fence, gated access under 24-hour surveillance.

SKU Distribution recognizes the pivotal role that Foreign-Trade Zones (FTZs) play in optimizing our customers’ supply chain solutions. Leveraging FTZs offers numerous advantages for businesses engaged in international trade, enhancing efficiency and reducing costs throughout the supply chain.

When merchandise is shipped from foreign countries from FTZs, it enjoys exemption from duty payments. This is particularly advantageous for SKU Distribution’s clients who import components to manufacture finished products destined for commerce in the United States. The elimination of duty payments contributes to significant cost savings, bolstering the competitiveness of our customers in the global market.

Furthermore, both foreign and domestic merchandise stored in FTZs may be exempt from state and local taxes. This tax exemption feature allows our clients to minimize costs while their products are in transit or awaiting shipment, with no time constraints on goods stored within the FTZ.

In certain cases, quota restrictions are waived for items entering an FTZ, although these restrictions may apply if the items are later introduced into the U.S. market. This flexibility provides SKU Distribution’s clients with strategic options for managing their inventory and complying with trade regulations.

Utilizing a Foreign-Trade Zone opens up a spectrum of activities that can be conducted seamlessly. These activities include assembling, packaging, destroying, storing, cleaning, exhibiting, repacking, distributing, sorting, grading, testing, labeling, repairing, processing, and combining foreign and domestic content. SKU Distribution empowers its clients with a versatile platform to streamline various operations within the FTZ, enhancing overall supply chain efficiency.

The financial benefits of utilizing FTZs are substantial. By operating outside U.S. Customs territory, merchandise stored in the FTZ is not subject to customs tariffs until it formally leaves the zone and enters U.S. Customs territory. This results in a reduction in Merchandise Processing Fees (MPF) as the transition from individual customs entries for each shipment to a weekly entry eliminates processing for individual entries.

Moreover, FTZs provide the opportunity for duty elimination or inverted tariffs. This involves reducing tariffs within the FTZ by manufacturing finished products with lower tariffs or duty-free status from materials with higher tariffs, subject to substantial transformation during the manufacturing process. These finished products are not subject to duty on FTZ costs, which include labor, overhead, profit, and more.