The US Foreign-Trade Zones program enables manufacturers and distributors to obtain significant cost reductions. In this QAD Precision Report, we explain how companies can reduce import fees with Weekly Entries.
The Foreign-Trade Zone program provides numerous advantages to zone users. While most manufacturers and distributors understand that leveraging an FTZ allows you to defer customs duty payments, reducing import fees with Weekly Entries is a benefit that is often overlooked.
When a company imports goods from a foreign country into the United States they must pay import charges, known as a Merchandise Processing Fee (MPF). Therefore, if you receive five imports in a week, you pay five MPFs.
The MPF is a charge based on 0.3464 percent of the value of the goods being entered. Customs authorities change the MPF irrespective of the shipment’s tariff rates and HS codes. Nor does the MPF include freight, and insurance charges. From October 1st, 2021 the MPF is a minimum of $27.75 and a maximum of $538.40, depending on the goods imported.
Enterprises using a foreign-trade zone can use Weekly Entries as their goods enter the United States. Under Weekly Entry procedures, the importer files only one Customs entry per week, instead of filing one per shipment. As a result, the zone user is liable for only one MPF per week. This benefit was available only to FTZ manufacturing operations until 2000.
Many importers can realize substantial savings from the reduction of MPF under FTZ weekly entry procedures.
An importer receives 10 shipments per week.
Each shipment has a value of $200,000.
Without an FTZ, the importer pays the maximum MPF of $538.40 on each of the 10 shipments. This results in a total MPF cost of $5,384 for that week ($538.40 x 10).
However, importers leveraging an FTZ can use Weekly Entry procedures. In this case, the importer only needs a single entry per week. The importer pays a single MPF capped at $538.40.
The importer pays an MPF of $27,996.80 ($538.40 x 52 weeks) per year, rather than the much higher amount of MPF if a zone was not utilized.
This example results in weekly savings of $4,845.60 and yearly savings of $251,971.20.
The Foreign-Trade Zones program offers significant cost reductions. QAD Precision’s Foreign-Trade Zone software is a recognized leader in FTZ solutions. Our FTZ experts can assist your organization in a number of ways.
Firstly, we can help you with a cost-benefit analysis. This analysis assesses the cost savings enterprises can obtain by leveraging the FTZ program.
In addition, we will work with you to ensure that your application to receive zone status is approved by the FTZ Board.
Furthermore, our FTZ solution offers a best-in-class advanced Inventory Control Recordkeeping (ICRS) solution. Designed by FTZ practitioners and zone users, our solution simplifies compliance and recordkeeping.
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WHAT IS A FOREIGN-TRADE ZONE (FTZ)?
ELIMINATING AND REDUCING DUTIES WITH FTZS
ASSEMBLING SAVINGS WITH FTZS: KEY BENEFITS FOR MANUFACTURERS