{"id":10839,"date":"2022-10-26T15:10:48","date_gmt":"2022-10-26T22:10:48","guid":{"rendered":"https:\/\/www.qad.com\/blog\/?p=10839"},"modified":"2023-01-18T15:11:34","modified_gmt":"2023-01-18T23:11:34","slug":"assembling-savings-with-ftzs-key-benefits-for-manufacturers","status":"publish","type":"post","link":"https:\/\/www.qad.com\/blog\/2022\/10\/assembling-savings-with-ftzs-key-benefits-for-manufacturers","title":{"rendered":"Assembling Savings with FTZs: Key Benefits for Manufacturers"},"content":{"rendered":"

[vc_row][vc_column][vc_single_image image=”10840″ img_size=”full”][vc_column_text]Global supply chains are facing the greatest strains seen in recent history. Shipping containers are grinding busy ports to a standstill, labor strikes in Europe are causing backlogs and production slow downs in China are all having an impact on <\/span>global supply chains<\/span><\/a>.\u00a0 while consumer demand has resulted in higher prices and spiking product shortages.<\/span> Experts believe that supply chain issues will continue well into 2023.<\/span><\/p>\n

There has been <\/span>some relief in US port congestion in the past year<\/span><\/a>. Some experts reckon the worst of the crisis has passed, but warn that a <\/span>number of issues remain.<\/span><\/a> Many manufacturing businesses have borne the brunt of these issues. Shortages of goods critical key parts (such as microchips for vehicles) have hampered supply lines even further, many of which were strained<\/span> prior to the pandemic<\/span><\/a>.<\/span><\/p>\n

Preparing for Today\u2019s Disruptions\u2026and Tomorrow\u2019s<\/span><\/h2>\n

US based manufacturers are working to recover in any way they can. As a result, many are considering operational changes to ensure that mission critical imports are always available.\u00a0<\/span><\/p>\n

Often, manufacturers will turn to global trade management solutions to help navigate these costs and complex regulations. Tariffs, taxes, and customs regulations can be difficult to navigate for any product shipped into the US from overseas. What\u2019s more, mistakes made during entry through US Customs and Border Protection(CBP) can be extremely costly.<\/span><\/p>\n

Tariffs can also be unfavorable depending on where companies source critical parts. This can impact the competitiveness of US manufacturers. This is especially the case if the manufacturer is assembling goods in the US and shipping the final product overseas. US-based manufacturers that supply both the domestic and international market should seriously consider leveraging the US Foreign-Trade Zones program to cut their tariff burden.<\/span><\/p>\n

A <\/span>Foreign-Trade Zone<\/b><\/a> (FTZ) reduces the import costs and duties associated with shipping products from foreign sources. CBP considers FTZs as outside of the country for tax and duty purposes.<\/span><\/p>\n

FTZs provide manufacturers three key benefits<\/span> that can help reduce operating costs as supply lines struggle to recover from the pandemic. We discuss these below.<\/span><\/p>\n

Greater Duty Savings<\/span><\/h2>\n

CBP monitors FTZs, but they are largely operated by whoever manages them. Manufacturers can assemble individual parts within the FTZ into a new product. After that, manufacturers either send the final products out of the zone into US commerce, or ship these abroad to different countries. This can offer reduced tariffs and savings on duties, particularly during the process of importing goods into the zone.<\/span><\/p>\n

REDUCED TARIFFS<\/span><\/h3>\n

A company using an FTZ can reduce tariffs on \u201cinputs\u201d brought into the zone. The company only pays duty on the finished product once assembled, and entered into the domestic market for sale. In some cases, the tariff on a finished product might be lower duty rate \u2014 or even zero \u2014 when it enters the US market.\u00a0<\/span><\/p>\n

Without an FTZ, the manufacturer would be liable to pay duties on all the multiple imported components that make up the product. This can result in huge savings for manufacturers when they import large quantities of \u201cinputs\u201d to be assembled and then sold to US customers.<\/span><\/p>\n

ZERO DUTIES ON EXPORTS<\/span><\/h3>\n

Since duty is not charged on anything that leaves the US, many manufacturers use FTZs to assemble and ship products to international locations without paying any duties on them at all. Any product that enters a FTZ that is either shipped to a new foreign location, or scrapped because of waste, is not subject to typical duties on imports.\u00a0<\/span><\/p>\n

This makes FTZs a perfect location to set up assembly operations for businesses that frequently send products abroad but want to keep their business in the US.<\/span><\/p>\n

Increased Cash Flow Flexibility<\/span><\/h2>\n

Since goods are only subject to duties once they leave the FTZ, the zone can act as a buffer and storage location depending on demand for products. As mentioned above, any product that doesn\u2019t enter the US is not subject to duties until it leaves the zone. This allows businesses to control the flow of capital surrounding their FTZs, only paying duties on products when they go to market.<\/span><\/p>\n

This can be of further benefit to industries like retail, or any business where entry is subject to quotas by CBP. Companies with higher capital costs can also see benefits, as they may need to delay paying duties on a particularly large shipment of goods.<\/span><\/p>\n

The Right FTZ Partner<\/span><\/h2>\n

Whether decreasing duties on crucial imports or increasing the flexibility of a supply chain operation, partnering with a global trade management provider that makes good use of these tactics sets manufacturing businesses up for success in an uncertain future.<\/span><\/p>\n

A good FTZ solution provider should be able to show cash flow benefits. There are costs to leveraging the FTZ program. Therefore, your provider should be able to break that down for you so that you have a clear understanding of both the savings and FTZ administration costs.\u00a0<\/span><\/p>\n

This should include not only duty savings, but also potential import costs savings due to the weekly entry program applicable to zone users. For high volume importers, a single weekly Merchandise Processing Fee (MPF) for Customs entries can yield as much, or more, in savings as lower duties.<\/span><\/p>\n

When looking for a good global trade management partner, be sure to ask about the cost benefits of using a FTZ, as well as their offerings for accurate product classification, improved compliance, and consolidated tracking. These benefits can help ensure that goods flow smoothly through shipping hubs, saving precious time and money in the process.<\/span><\/p>\n

To discuss how an FTZ could benefit your business, <\/span>reach out today<\/span><\/a>.<\/span>[\/vc_column_text][\/vc_column][\/vc_row]<\/p>\n","protected":false},"excerpt":{"rendered":"

[vc_row][vc_column][vc_single_image image=”10840″ img_size=”full”][vc_column_text]Global supply chains are facing the greatest strains seen in recent history. Shipping containers are grinding busy ports to a standstill, labor strikes in Europe are causing backlogs and production slow downs in China are all having an impact on global supply chains.\u00a0 while consumer demand has resulted in higher prices and spiking […]<\/p>\n","protected":false},"author":64,"featured_media":10840,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2045],"tags":[2575,2576,516,1830],"class_list":["post-10839","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-supply-chain-trends","tag-foreign-trade-zone","tag-ftz","tag-global-trade-management","tag-trade-optimization"],"yoast_head":"\nAssembling Savings with FTZs: Key Benefits for Manufacturers | QAD Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.qad.com\/blog\/2022\/10\/assembling-savings-with-ftzs-key-benefits-for-manufacturers\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Assembling Savings with FTZs: Key Benefits for Manufacturers | QAD Blog\" \/>\n<meta property=\"og:description\" content=\"[vc_row][vc_column][vc_single_image image=”10840″ img_size=”full”][vc_column_text]Global supply chains are facing the greatest strains seen in recent history. Shipping containers are grinding busy ports to a standstill, labor strikes in Europe are causing backlogs and production slow downs in China are all having an impact on global supply chains.\u00a0 while consumer demand has resulted in higher prices and spiking […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.qad.com\/blog\/2022\/10\/assembling-savings-with-ftzs-key-benefits-for-manufacturers\" \/>\n<meta property=\"og:site_name\" content=\"QAD Blog\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/QADerp\" \/>\n<meta property=\"article:published_time\" content=\"2022-10-26T22:10:48+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-01-18T23:11:34+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.qad.com\/blog\/wp-content\/uploads\/2023\/01\/Shanghai-port.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1220\" \/>\n\t<meta property=\"og:image:height\" content=\"648\" \/>\n\t<meta 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