UPS announced the recent integration and expansion of Zone Solutions within its customs brokerage, warehousing, logistics and transportation business. The addition gives UPS a portfolio of Foreign Trade Zone (FTZ) consulting, management and fulfillment services.
UPS also converted four of its major U.S. international air freight (IAF) gateways into FTZs: Chicago (ORD), New York (JFK), Dallas (DFW), and Los Angeles (LAX). The expansion extends UPS’s FTZ-related capabilities beyond warehousing and distribution to create a comprehensive FTZ solution for helping clients manage the end-to-end process from dealing with customs to inventory control. Any of UPS Global Logistics 42 U.S. distribution centers can become FTZs.
The strategic utilization of the FTZ program provides opportunities for duty elimination on exports and scrap, as well as duty deferral on foreign status inventory in an activated FTZ.
According to the most recent data from the Census Bureau (2017), import duties totaled $33.1 billion – equal to 1.4% of the total value of all imported goods, and 4.7% of the value of all imports subject to duty. For businesses looking to grow and expand, proper management and payment of duties is critical.
Importers in industries such as consumer electronics, automotive, apparel, and footwear historically pay high duty rates when importing their products into the country. Foreign Trade Zones help reduce duties, import taxes and other fees by utilizing special regulations that provide potential cost-saving measures through duty deferral, duty elimination, tariff inversion, fee consolidation and streamlined U.S. Customs procedures.
Additional potential benefits of FTZs include:
- Duty deferral – store merchandise in an FTZ and delay paying duty until goods enter into U.S. commerce
- Duty elimination – pay no duty for goods not entered for consumption in the United States when exporting goods out of the zone or when destroying goods no longer needed
- Inverted tariff shift – the use of kitting or manufacturing techniques in the FTZ may result in a new tariff classification with a lower duty rate
- Fee consolidation – entries to U.S. Customs are consolidated into one weekly entry
- Time to market – goods that have not yet received FDA approval, or approval from another government agency, may potentially be housed in an FTZ in anticipation of approval, and ready for market
- Regulatory compliance – systematic monitoring of FTZ transactions helps drive consistent processes
UPS Global Customs Brokerage processes almost 25 million import clearances each year in the U.S. alone, making it one of the world’s largest customs brokers.In 2017, UPS acquired Zone Solutions, a 20-year leader in FTZ services, to bolster its global trade portfolio and provide a wide range of services for companies considering a FTZ program.