Established in the 1930s, foreign-trade zones are locations in the U.S. that allow businesses to streamline incoming product without the hassle and costs of typical customs duties. Think of this as a zone where product isn’t considered foreign or domestic, so it’s under a different set of rules and can generally be processed faster. The government created the foreign-trade zones to help alleviate the cost of international trade for U.S. companies, hoping this would increase commerce.
The good news: it worked. Now businesses can get approval to be dubbed FTZs, which makes processing merchandise—or manufacturing, storing, testing—much more feasible and efficient.
What Are the Benefits of an FTZ?
While the main perk of FTZs is deferring duties and taxes, the other benefits include the capability to process merchandise in a flexible manner. For distribution and logistic providers like MKM, the designation of being an FTZ allows them to work with clients to process merchandise faster, if needed, or storing merchandise long enough for the client to determine how and where they want it delivered.
Generally, when foreign product has to be stored and distributed, the penalties can be severe and you’re required to pay duties on labor, overhead, and/or profit. The product is sitting—waiting for clearance and inspection—and that becomes costly. The product can’t be processed or sold. With an FTZ, you gain the capability of taking as much time for assembly, repair, or repackaging without paying more. And you can get product off the shelves and into action.
This keeps your start-up costs down, makes processing product more efficient, gets freight in and out quicker, and you don’t have to worry about inspection from customs.
MKM’s Indianapolis Hub—FTZ Approved
As an approved foreign-trade zone, MKM’s location in Indianapolis is remarkable in that it’s centrally located in the country. So, foreign product can be stored and distributed in an area where you aren’t paying extra on duties, and you save on shipping costs. This, paired with MKM’s facilities and experience with custom projects—be it assembly or container unloading—makes it ideal for companies working with foreign merchandise.
With staff that are experts at producing results in logistics—any project of any scope—their identity as an FTZ in a centrally located area means reduced costs on every level.