Atlanta, GA — UPS announced it has converted four of its major U.S. international air freight (IAF) gateways into Foreign Trade Zones (FTZs): Chicago (ORD), New York (JFK), Dallas (DFW), and Los Angeles (LAX).
UPS also announced the recent integration and expansion of Zone Solutions within its customs brokerage, warehousing, logistics and transportation business.
“UPS is constantly searching for ways to add value while decreasing the cost and complexity of our customers’ supply chains,” said Jeff McCorstin, president of UPS Global Brokerage and Customs. “Adding FTZs enables customers to streamline compliance validations to mitigate risk and promote savings on their IAF shipments by leveraging FTZ-designated gateway facilities.”
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.
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.
According to the company, 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
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.
“This acquisition was in direct response to our customers’ growing needs,” McCorstin added. “Zone Solutions’ talent and expertise means UPS now provides leading FTZ solutions offerings.”