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The Fees Associated with Foreign-Trade Zones

10/19/2006

By Greg Jones

FTZ Administration Fees Can Hinder or Encourage Zone Use


The fees associated with Foreign-Trade Zones use directly affect the ability of companies to benefit from the program. When the administration fees associated with Foreign-Trade Zones use are too high, they discourage companies from using the program. Yet those fees must cover the costs of making FTZ services available.

When a company decides to use the Foreign-Trade Zones Program to lower its Customs-related costs, it faces the imposition of direct and indirect fees that can add up to exceed possible FTZ savings. These fees are paid to:

Foreign-Trade Zones Board
-Application for Zone status

The Local FTZ Grantee
-Application review and facilitation fee
-Activation fee
-Annual user fee

FTZ Administration Fees
- In-house (if the company operates the Zone site)
- Zone administrator (3PL and/or other party)

FTZ Expertise Necessary to Obtain Zone Status
- In-house personnel or outside consultant      

FTZ Expertise Necessary to Activate the Facility with CBP
- In-house personnel or outside consultant

Implementation of a FTZ Inventory Control System
- In-house IT personnel to modify existing company system; or,
- Third-party FTZ software provider

It is can be financially burdensome enough just to obtain Zone status, activate, implement FTZ inventory control procedures, and administer a FTZ. But all of these fees are essentially first order, and accrue directly to the party providing the service. When a third party warehouse must collect fees sufficient to cover its own efforts plus the fee that it pays to a third party Zone administrator, maintain compliant operations, and make money for offering FTZ services to its clients, the fees can become quite high.

Often, these fees are too high to make it worthwhile for companies (even high-volume, multi-national companies) to use a FTZ. While the expertise required to run a FTZ operation sometimes requires third-party Zone administration, careful planning is required to ensure that third party warehouses can offer FTZ services at reasonable rates that encourage, not discourage, use of the FTZ Program.

The Foreign-Trade Zone Corporation (www.ftzcorp.com) provides comprehensive FTZ consulting services including Foreign-Trade Zone contract operation and administration, applications to the Foreign-Trade Zones Board, activation with Customs and Border Protection (CBP), implementation of FTZ inventory control procedures, and SmartZone® FTZ inventory control software (www.ftzsoftware.com).

    

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