how ftzs offer savings in your supply chain€¦ · • an ftz is a designated geographical area,...
TRANSCRIPT
How FTZs Offer Savings in Your Supply ChainHosted by United States Fashion Industry Association (USFIA) and Integration Point
January 25, 20182:00 P.M. Eastern/11:00 A.M. Pacific
At any time during the presentation, you may enter your questions here:
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Presented by: Liz Connell VP - Product Management Integration Point
January 25, 2018
How FTZs Offer Savings in Your Supply Chain
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Agenda
• Overview of FTZs• FTZ Program Participation Drivers• Impact of becoming an FTZ on a business• Evaluating the zones program for your company
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Overview of FTZ’s
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Duty Deferral Programs
• Tax Reduction and Tax Avoidance• Level the Playing Field in a Free Trade World• Encourage Domestic Production• Retain/Expand Domestic Job Opportunities• Examples of Duty Deferral Programs
– United States – Foreign Trade Zones– Mexico – Maquiladoras, IMMEX– United Kingdom – Inward Processing (IPR)– China – Processing Trade Regimes– India – Special Economic Zones– Costa Rica – Free Trade Zones
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What is a Foreign Trade Zone?
• Created by the Foreign-Trade Zones Act of 1934 to "expedite and encourage foreign commerce" in the United States
• An FTZ is a designated geographical area, in or adjacent to a Customs Port of Entry, where commercial merchandise receives the same Customs treatment it would if it were outside the commerce of the United States
• Merchandise of every description, not prohibited by law, may be held in the Zone without being subject to Customs duties and other ad valorem taxes
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FTZ Fun FactsAccording to the 2016 FTZ Board Report
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Demographics of FTZ ProgramAccording to the 2016 FTZ Board Report
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FTZ Program Participation Drivers
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FTZ Program Participation Drivers
Zone Savings – Initial Investment and Ongoing
Increase compliance
Supply Chain Responsiveness
Competition and Supply Chain Partners
Operational and Inventory Control Impact
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Zone Savings
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Inverted Duty Savings
Entry of manufactured product into U.S. Commerce at a lower finished good duty rate instead of the higher component duty rate
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Example of Inverted Duty Savings
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Weekly Entry Savings
Merchandise Processing Fees (MPF) are capped at $497.99 weekly for each zone entry
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Duty and Tax Exemption
No duties are paid on product exported from the FTZ– Eliminate the need for a drawback program
No duties are paid on merchandise that is destroyed Some fees (ie Cotton Fees) not paid on product
exported or destroyed No duties paid on merchandise transferred to another
FTZ Property tax relief in some states
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Duty and Tax Deferral
Customs duties are deferred until imported into the Commerce of the United States
Some fees associated with imports can be deferred– Examples:
• HMF is only paid quarterly• Cotton fees deferred until entry
Year one - One time cash benefit as inventory turns Allows money to be reinvested in other areas
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Increased Compliance
Increase automation causes increase visibility– All import information in a single location matching
against actual receipts into inventory – Single version of truth for imports/inventory/accounting
Streamline import process Simplify entry and brokerage process – 52 entries a year
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Supply Chain Responsiveness
Streamlined customs procedures– Direct Delivery– Weekly Entry
Better traceability– Forces all data to be a central location to report on
and have visibility to Integration of your entire supply chain
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Competition and Supply Chain Partners
82% of companies are considering nearshoring or reshoring solutions, such as FTZ’s to reduce duties and expedite delivery – Aberdeen Group
Supply chain partners using an FTZ
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Operational and Inventory Control Impact
Lower insurance premiums Enhanced security Indefinite storage Enhanced traceability and accountability across the
company
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Impact of becoming an FTZ on a business
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FTZ RequirementsWhat needs to be captured and reported in an FTZ
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What can you do in an FTZ?
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Corporate ImpactOpportunity to have a single source of truth for global trade information
Human Resources
Supply Chain –Customer Logistics Planning Warehouse Operations
Trade ComplianceMaterials Management / Procurement Information Technology
ACG / Tax
Facilities ManagementLegal / Contract Management
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Evaluating the zones program for your company
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Questions to ask….
Do you manufacture, assemble, kit, or process with imports?
Do you regularly pay more than $497.99 per week in merchandise processing fees across all entries?
Do you scrap, reject, destroy, waste, or return some of your imports?
Do you export previously imported materials? Do you wait long periods of time for your containers to
get through U.S. Customs (or the PGA’s) at the ports?
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Questions to ask…
Do you sell your imported products to companies that reside in FTZs?– Note: If you’re unsure if your customers leverage FTZs,
you can find out on the FTZ Board website Do you have a high volume of entries into the U.S.? Do you have large customs duty payments? Do your products have a high duty rate? Do you intend to build a new distribution center or
manufacturing plant in the next year or so?
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Typical Timeline and Resources
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Project Planning / Estimated Timelines
Timelines may vary based on Customs ports of entry, government response times, and changes in project scope.
FTZ DesignationFTZ Board
30 DAYS (ASF)90-150 Days (Traditional)
FTZ Production Authority
FTZ BoardProduction Notification
120 DAYSProduction Application,
if required10-12 MONTHS
FTZ ActivationUS Customs and Border
Protection90-120 DAYS
FTZ ICRS SystemsSetup and Testing
4-6 MONTHS
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FTZ Resources
FTZ Board– https://enforcement.trade.gov/ftzpage/
National Association of Foreign Trade Zones (NAFTZ)– https://www.naftz.org/
US Customs and Border Protection FTZ information– https://www.cbp.gov/border-security/ports-entry/cargo-
security/cargo-control/foreign-trade-zones/about Integration Point FTZ Resource Page
– https://www.integrationpoint.com/en/ftzresources
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Liz ConnellVice President – Product Management
Integration Point
(704)576-3678 [email protected]
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Thank you for attending!
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