4 Advantages of FTZ vs. Customs Bonded Warehouse
When it comes to storing and handling goods, there are a few different options available. One option is a free trade zone (FTZ), and another is a customs bonded warehouse. Both have their own unique benefits, but which one is right for your business? Many businesses wonder whether the benefits of a foreign trade zone (FTZ) can be equally realized by using a bonded warehouse. While different businesses have different needs, an FTZ often provides greater advantages. Let’s take a look at the four advantages of FTZs over customs bonded warehouses.
Foreign Trade Zones
Foreign Trade Zones or FTZs have been around since the 1930s. FTZs are secure areas under U.S. Customs and Border Protection (CBP) supervision that are generally considered outside U.S. customs territory.
Because of this, certain goods can move through an FTZ without first having to travel through formal customs entry procedures, including import duties.
The purpose of these zones is to increase trade and competitiveness of U.S. companies. By utilizing an FTZ, businesses can defer, reduce or eliminate Customs duties, improve cash flow, reduce production costs and increase overall profit margins.
Customs Bonded Warehouses
Since the 1800s, Customs bonded warehouses have provided secure storage for dutiable goods to be stored, manipulated, or manufactured without payment of duty.
The purpose of bonded warehouse facilities is to provide government oversight and security for goods before payment of duty. The duty is then due upon transferring the goods from the warehouse for consumption.
4 Advantages of Foreign Trade Zone (FTZ)
- An FTZ is considered to be outside of U.S. customs territory, unlike bonded warehouses. While customs entry is typically made at the time goods enter a bonded warehouse, this is not the case in a foreign trade zone. This means duty payment in a bonded warehouse cannot be delayed, reduced, or eliminated.
- Certain activities are restricted in bonded warehouses. For instance, manipulation of a product is only permitted in a Class 8 bonded warehouse and manufacturing may only occur in a Class 6 (and only for export). The bonded warehouse option also includes the cost of a bond when merchandise is admitted to the warehouse.
- Only dutiable products are permitted in a bonded warehouse, unlike FTZs where all non-prohibited merchandise may be admitted. That merchandise is allowed to remain in the FTZ indefinitely, whereas bonded warehouses are limited to five years.
- Goods may be exported from the zone free of duty and excise tax.
Trust NOTS Logistics For All Your FTZ Warehouse Needs
At NOTS Logistics, we have over 40 years of experience helping our partners find the warehouse solution that best fits their needs. As a provider within FTZ 31, NOTS Logistics is positioned to give our customers who import goods a competitive edge over the competition.