by Dean Gionis
Importers are increasingly turning to Foreign Trade Zones (FTZs) because of the many advantages they offer. One immediate benefit is the ability to file a weekly consolidated entry rather than daily or multiple entries each week.
This provision is good news for importers because weekly filings translate to lower Merchandise Processing Fees (MPFs) paid to U.S. Customs and Border Protection (CBP), thus decreasing the cost of importing goods. Operating an FTZ also delays many duty payments until the time that the goods leave the FTZ, enhancing corporate cash flow during the period from admission to withdrawal. Further, using an FTZ actually lowers the duty owed on re-exported goods, merchandise returns and waste material (in manufacturing).
The reasons behind the growing popularity of FTZs among importers are clear.
On the other side of the FTZ equation are brokers. Fewer filings translate to fewer fees which, in turn, means lost revenue. So, what is a broker to do when a client talks about moving to an FTZ business model? How does the broker change the equation and blunt the revenue loss?
The first advice is: Don’t panic. The move to an FTZ – and a weekly consolidated entry – does not necessarily mean all is lost. Yes, there will be lower broker fees for entry filings, but there will still be income associated with the consolidated filing. And, while daily entries will be a thing of the past, there will still be plenty of “customs activity” occurring in the FTZ that must be reported. For example, transactions in (e214) and out of the zone must be reported daily, along with a weekly estimate and eventual consumption entry. While perhaps not as lucrative, such reporting can be a revenue source.
The more important piece of advice is: Be proactive. Consider creating a new business line that goes beyond entry filings and transaction reporting. Offer FTZ management services. Sound difficult? It’s not as hard as you may think. Once you have devised the initial service offering for one customer, it will be easy to scale that service for others.
First, familiarize yourself with the CBP regulations governing FTZ operations. They are complex and, for this and other reasons, importers generally don’t want the headache of running the FTZ in house. While compliant operations are very important to them, many will gladly place the FTZ management responsibilities in the hands of a trusted organization. You have a history with the firm, so you have the home field advantage. Plus, you are a master of CBP regulations anyway, so it is a natural transition within familiar territory. Become an expert.
Next, acquire software to help you manage the FTZs in your new practice area. Here, QuestaWeb can be of assistance. We offer specialized software for FTZ operations (FTZQW ) that is modern, technologically advanced and web-native. And, we offer it as a stand-alone system. Thus, you are purchasing just the software you need to manage both manufacturing and distribution FTZs. So, our price point makes entry into this new business line feasible.
What’s more, our FTZ solution is comprehensive. It can handle all aspects of managing an FTZ including admissions into the zone, shipments out of the zone, inventory functions and automatic generation and electronic transmission of all CBP-mandated reporting including weekly estimates, reconciliations, consolidated entries and more.
Our software enables you to manage multiple FTZs on a single platform, which makes it perfect for creating and operating an FTZ consultancy. Whether it is one company operating separate zones in different locales or multiple companies operating a single FTZ, our software is infinitely scalable and can concurrently manage them all accurately, compliantly and securely.
Best of all, FTZQW is easy to use and allows you to work from any locale with internet access.
Adaptation to changing environmental conditions is a basic principle of business survival. Brokers faced with the prospect of lost revenue as customers move to FTZs now have a viable strategy that will serve them well going forward.