We know the words foreign, trade, and zone in one sentence doesn’t necessarily stop you in your tracks from excitement, but if you own or work for a business that does a lot of international imports and exports, you should perk up right about now.
What is a Foreign Trade Zone?
A Foreign Trade Zone (FTZ) is like a “duty-free” zone for businesses. FTZs are designated sites licensed by the Foreign Trade Zones Board that encompass a geographical area at or near a U.S. Port of Entry where commercial merchandise is treated by U.S. Customs as if it were “outside the commerce of the United States.”
These zones allow importers and exporters to reduce, eliminate, or defer duty payments on manufactured or stored goods prior to releasing them into domestic commerce or exporting them out of the U.S. With 276 authorized FTZs across the country, Salt Lake City’s FTZ #30 is strategically located at 1105 S. 4800 W. on 55 acres adjacent to the Union Pacific Intermodal Terminal and in close proximity to the city’s international airport and major interstate highways.
Advantages of Salt Lake City’s FTZ #30
By bringing your international shipments into the Salt Lake City FTZ, you may be able to defer any applicable customs duty and federal excise taxes until the merchandise leaves the zone to be consumed in the U.S. This is an excellent way to lower the cost of holding inventory until you’re ready to ship to market.
FTZ benefits include:
- No time contraints on storage
- Satisfy exportation requirements
- Increase security and lower insurance costs
- Potentially avoid supply chain delays
- Reduce dutiable tariff on imported parts when assembled in finished products.
- Consolidate customs reporting
- Reduce fees with direct delivery and weekly entry
Salt Lake City is known as the “Crossroads of the West,” equidistant from all major western U.S. markets. We have a hardworking, linguistically diverse, internationally experienced workforce. With its competitive business costs, Utah is also poised to lead the nation in export growth with state and local incentives available for qualifying companies.
FTZ in Action
Red Wing Shoes has been shipping products out of its Salt Lake City distribution warehouse for 65 years. The shoes go to 110 companies around the world. Since joining the FTZ they have enjoyed significant savings on duty fees. “It allows us to be much more efficient and timely in picking, packing and shipping orders to all of our customers,” said Dewey Rothering, Director of Logistics Operations. It is also a great tool to help businesses save money and possibly expand, and bring more employees in the future.
How Much Money Could Your Company Save?
Let’s say “ABC Company” is a manufacturer in the Salt Lake area considering assembling in the Salt Lake City FTZ.
- Pays annual duty of $1,600,000 (before becoming part of the Salt Lake City FTZ)
- Currently imports $40,000,000 in components
- Averages 40 days of turnover time
- Exports 3% of its imports and destroys 1% due to waste during production
- Averages 4% duty on its imported parts, compared to an import duty rate of 2.5% on its finished product
“ABC Company” saves an estimated $168,329 due to duty delay (first year savings only), $11,783 in interest savings on the unpaid duty (future year savings), $64,000 because it no longer pays duty on its export or waste in production, and $576,000 by paying the finished product duty rate on its imported components. “ABC Company’s” total benefit is $808,329 the first year and $651,783 in future years. This does not include potential savings from weekly entry procedures.
To see how the savings may apply to your business, use this FTZ Savings Calculator (http://ftz.rockefellergroup.com/foreign-trade-zones/rockefeller-calculator2/) hosted by the Rockefeller Group that can provide a general, high-level assessment of potential FTZ savings.
Does your Business Location Qualify?
To take advantage of the Salt Lake City Foreign Trade Zone, your business must submit an application and qualify for membership. Your business may either locate to the physical location of Salt Lake City FTZ #30 or be located within a 60 mile radius. Businesses not located within the physical location of FTZ #30 must submit a special subzone application.
For more information on starting the application process or on how your business can benefit from being located in FTZ #30 or as an FTZ Subzone, contact Ben Kolendar | (801) 535-6647 | email@example.com.