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FTZs Reduce Total Landed Costs

for Global Supply Chains

FTZs Reduce Total Landed Costs for Global Supply Chains

What is an FTZ?
In the United States, FTZ stands for Foreign-Trade Zone
It is a designated area in the physical US territory that is considered to be outside of US
commerce for Customs purposes
It can be
A warehouse
A manufacturing plant
A small area within a warehouse/plant
Several warehouses/plants within the same port area
Any area designated and activated for use as a FTZ by US Customs
It is
An opportunity for substantial import/export duty and fee
savings, increased supply chain efficiencies, and trade
compliance improvements
Highly regulated by Customs

FTZs Reduce Total Landed Costs for Global Supply Chains

FTZs Reduce Total Landed Costs

Duty Deferral
Duty is deferred until goods are removed FROM the zone to US commerce
Duty Reduction
Lock in preferential duty rates at time of zone admission
Inverted Tariff duty reduction on goods produced in a zone (use the lower of finished good or
component duty rate)
Duty Elimination
No duty paid for goods admitted, then exported from the US
No duty paid for scrapped and destroyed goods
Drawback
Move goods to a zone and become eligible for drawback
Fee Reduction
Through the weekly entry process, FTZ
operators can significantly reduce the
total number of import entries filed

INFOGRAPHIC
Reduce Total Landed Costs with Foreign-Trade Zones

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FTZs Reduce Total Landed Costs for Global Supply Chains

FTZs Drive Significant Merchandise Processing Fee (MPF) Savings

2000 Entries per year
(typical Import process)

x $485 max MPF per entry

= $970,000 per year

with Zone Processing

52 Weekly Entries

x $485 max MPF per entry

= $25,220 per year,

Saving $944,780 per year

FTZs Reduce Total Landed Costs for Global Supply Chains

FTZs Deliver Global Supply Chain Improvements

Time at the dock reduced
Entry Selectivity circumvented
Direct Delivery allowance
Temporary Deposit allowed
Products can be admitted to the zone on a temporary basis

Goods arrive in US port of

unlading and held at a CFS

Goods move from CFS to

FTZ via bonded carrier

Goods admitted to FTZ

on CBPF 214

FTZs Reduce Total Landed Costs for Global Supply Chains

Reliance on International Supply Chains Continues to Increase

48% of companies now do business in more than 50 countries, and 32% do business in
more than 100 countries
41% of companies now import over half of their products / materials from foreign suppliers

Source: Managing Global Trade Rising Importance But Lagging Execution, SCM World, July 2013

FTZs Reduce Total Landed Costs for Global Supply Chains

Significant Trends
Exports from FTZs have more than doubled since 2009 to $79.5 billion in 2013
Imports from FTZs now account for 12.5% of total imports
The FTZ program continues to attract major manufacturing operations and encourages onshoring for US companies
Automation has streamlined processes that are
traditionally manually intensive and time consuming
FTZ Imports Triple as Share of U.S. Imports Since 1994
Other Merchandise
Petroleum
14%
12%

58% of companies agree that their inability to

take advantage of preferential duty programs
is costing them a material amount today and
unless corrected will only increase.

10%
8%
6%

Source: SCM World, September 2013

Managing Global Trade: Rising Importance but Lagging Execution

4%
2%
0%
1990

1992
1996
2000
2004
2008
2012
1994
1998
2002
2006
2010

Sources: FTZ Board Annual Reports, U.S. Census Bureau.

FTZs Reduce Total Landed Costs for Global Supply Chains

Many Industries Are Seeing Significant Benefits from FTZs

Apparel
De-consolidation and distribution of imports
High volume retailers may see significant fee reduction and are under-utilized
Merchandise Processing Fee (MPF) reduction
Oil
Top FTZ users by dollar amount
Automotive
Many manufacturers are pushing vendors to operate FTZs for
end-to-end duty savings
Manufacturing
Many see substantial inverted tariff savings

FTZs Reduce Total Landed Costs for Global Supply Chains

The Benefits are Real

A multi-billion copier
manufacturer is reducing its
total landed cost by operating
FTZs at seven facilities.1

57% of companies reported

a decrease in import fees
since more effectively using
FTZs. These companies also
experienced more optimal
total landed costs per unit.2

FTZ automation leaders

are 3.3 times more likely to
qualify BOMs against multiple
free trade agreement rules
of origin. 2

WEBINAR
The Free Trade Zone Boom: Using Automation to
Power FTZ-Driven Savings
WATCH NOW

Strategic Inbound Optimization FTZs & Reshoring Increase, Aberdeen Group, October 2013

Advancing Global Trade: Foreign Trade Solutions Revealed, Aberdeen Group, April 2014

FTZs Reduce Total Landed Costs for Global Supply Chains

FTZ Complexity is Driven By Multiple Trading Partners and Compliance Requirements

Supplier

Freight
Forwarder

Goods
Ship

Goods
Arrive

Carrier
Files

Goods
Move to
FTZ

Goods
Admitted
to FTZ

Supplier
ships goods
via FF and
invoices
buyer

Freight
forwarder
(FF) books
goods on
MBOL/HBOL

Goods
shipped via
ocean, air,
rail, or truck

Goods arrive
in US port of
unlading and
held at a CFS

Carrier files
IT or ePTT to
clear freight

Goods move
from CFS
to FTZ via
bonded
carrier

Goods
admitted to
FTZ on CBPF
214

FTZs Reduce Total Landed Costs for Global Supply Chains

An FTZ Solution Can Help Overcome Challenges and Complexities, including:

Excessive delays with Customs processing
Rising inbound costs relative to total landed cost
Volatility of fuel costs and/or rising fuel surcharges
Rising transportation/carrier costs and services
Manually intensive FTZ processes

INDUSTRY REPORT
Advancing Global Trade:
Foreign-Trade Zone Solutions
Revealed

DOWNLOAD NOW

10

FTZs Reduce Total Landed Costs for Global Supply Chains

Addressing FTZ Challenges Requires a Comprehensive Set of Capabilities

Inventory
Management

Automated
Compliance

Accurately track goods received and shipped against inventory

Bill of Material and production notifications to manage manufacturing
and assembly
Validate product, partner and transactional data
Generate all required Customs documents to support zone admission
and zone withdrawal
Transactional reports: shipment/inventory discrepancies

Analytics &
Reporting

Customs reports: admissions, inventory, withdrawals

Metrics: financial reports, product history, duty liabilities

Pre-built
Connectivity

Seamless integration with existing IT systems

Comprehensive integration with suppliers, carriers, forwarders, brokers,
Customs, and other trading partners

11

FTZs Reduce Total Landed Costs for Global Supply Chains

Amber Road A Key Provider of FTZ Solutions

Benefits:
Reduce logistics costs, duties, fees and taxes
Improve supply chain visibility and inventory tracking
Proactively manage the FTZ process
Enhance performance metrics and savings reports analysis
Reduce manually intensive processes
Improve on-time delivery performance
Ensure adherence to compliance regulations

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About Amber Road

Amber Roads (NYSE: AMBR) mission is to improve the way companies manage their international
supply chains and conduct global trade. As a leading provider of cloud based global trade
management (GTM) solutions, we automate the global supply chain across sourcing, logistics,
cross-border trade, and regulatory compliance activities to dramatically improve operating
efficiencies and financial performance. This includes collaborating with suppliers on development,
sourcing and quality assurance; executing import and export compliance checks and generating
international shipping documentation; booking international carriers and tracking goods as
they move around the world; and minimizing the associated duties through preferential trade
agreements and foreign trade zones. Our solution combines enterprise-class software, trade
content sourced from government agencies and transportation providers in 145 countries, and
a global supply chain network connecting our customers with their trading partners, including
suppliers, testing/auditing firms, freight forwarders, customs brokers and transportation carriers.
We deliver our GTM solution using a Software-as-a-Service (SaaS) model and leverage a highly
flexible technology framework to quickly and efficiently meet our customers unique requirements
around the world.
For more information, please visit www.amberroad.com, email Solutions@AmberRoad.com
or call 201-935-8588.

One Meadowlands Plaza East Rutherford, NJ 07073 (T) 201 935 8588 (F) 201 935 5187 www.AmberRoad.com Solutions@AmberRoad.com
2015 Amber Road, Inc. All rights reserved.