Side by side comparison of FTZs and bonded warehouses
PortMiami created this simple side-by-side comparison highlighting the differences between a Foreign Trade Zone and a bonded warehouse. It is worth noting that while the comparison is biased towards FTZs, it is still a great resource for quickly comparing the two options.
Foreign-Trade Zones and Bonded Warehouses
Foreign-trade zones and bonded warehouses are two of the most effective tools for manufacturers and importers to avoid, reduce or defer duties.
10 Reasons for Warehouses to Use FTZs
- Imports may be admitted and held in a foreign-trade zone without paying U.S. Customs duties.
- Distribution FTZs can file a “weekly entry” instead of an entry for each Bill of Lading. Because a week’s worth of transactions can become one entry, supply chain velocity is increase and Customs and brokerage fees are reduced.
- Duties are never paid on merchandise exported from a zone.
- Duties are reduced or eliminated on materials that are defective, damaged, or obsolete.
- Spare parts may be stored, returned, or destroyed without duty payment.
- Delays in Customs clearances and duty drawback are eliminated.
- Quality control inspections can identify sub-standard goods to be destroyed or returned without duty payment.
- U.S. Quota restrictions are different for merchandise admitted to FTZs. Although quotas will apply when the merchandise is entered into U.S. commerce, quota merchandise may be stored in a FTZ so that when the quota opens, the merchandise may be immediately shipped to the U.S. customers.
- No duty is owed on in-bond, zone-to-zone transfer of merchandise. An increasing number of firms are making use of the ability to transfer merchandise from one zone to another. Because the goods are transported in-bond, duty is deferred until the goods are removed from the final zone for entry into the U.S.
- Merchandise may be stored in a FTZ for an indefinite period of time. The storage time limits imposed on bonded warehouses are not applicable to FTZs.
A bonded warehouse is a secured warehouse facility that is covered by customs rules. Companies that export products, materials and items abroad commonly use bonded warehousing facilities to store their products. Using this kind of warehousing facility is an optional service but businesses that would like to ensure that their products are safely and legally delivered to their customers avail of bonded warehousing services. There are more reasons to use bonded warehousing, as a smart business owner you should check out the following benefits:
- In a bonded facility for storage the payment of duty and taxes on various goods are deferred until goods have been removed. The time your products or goods are stored in a bonded warehouse, the warehouse manager will provide you a bond. This bond guarantees that there is no loss of revenue supposing these are released from the bonded warehouse.
- Most warehouses will agree to hold goods and items for a period of 4 or more years and these facilities also have equipment and storage systems that can help preserve the quality of products and goods. There are dry containers, deep-freeze systems or bulk storage facilities that will certainly suit any kind of business from any kind of industry.
- Traders will save money in the long run since taxes are deferred; if the products are meant for re-export, duty is not expected to be paid. Business owners and traders report savings between 25% to 30% since VAT will only be imposed when you are to sell your goods.
- Bonded warehouses are also safe and secure. Security personnel monitor goods 24 hours a day with special monitoring for refrigerated items too. There is also the use of updated and efficient security systems like security cameras, bar coding systems and inventory systems to ensure that all goods stored are well documented and preserved.
- Bonded warehouses accommodate all types of products, goods and materials. No matter how small or how big, how irregularly shaped or whether you are storing perishable items, these warehousing facilities will keep your goods safe and sound.
- Most bonded warehouses are affiliated with freight forwarding companies and therefore deliveries, logistics, distribution and warehousing are rest assured. Therefore if you would like a total logistics and warehousing solution for your goods, you should look for companies that offer an all in one logistics solution for their customers.
- Bonded warehouses have special packages for customers and if you are using an all in one logistics and warehousing partner then expect more efficient and more affordable packages. Usually it starts with a complete evaluation of your warehousing needs as a business and the rest follows. You will have a suitable and customized solution for your needs in no time at all.