Should You Use Foreign Trade Zone Services?

You are probably familiar with federal trade zone (FTZ) services. In fact, you are likely considering whether the employment of such services would benefit your company. Enhance your decision-making process by learning all the positives about federal trade zone utilization.

What Are They?

ftz warehouse

Foreign trade zones exemplify the broadening horizons of the global marketplace. Regions that have historically lacked in mercantile participation become viable hosts for new factories and other manufacturing distribution outlets. The U.S. Customs Border and Protection (CBP) protects these segments of the market with the goal of creating viable national competitors for international trade.

This may seem confusing, but the explanation is simple. A primary benefit of outsourcing manufacturing is to avoid tariffs that boost production costs. Companies put facilities in FTZs to negate potential taxes on incoming international goods. The items can even leave the area without extra fees as long as they enter in an FTZ. This makes employing an FTZ warehouse service an economical solution for members of the apparel industry.

Benefits for Shoe Businesses

An advantage to FTZ is that a company can store inventory at such a facility for an indefinite period. There is no time limit for the movement of property. An industry that is not tied to seasonal fluctuations in product demand, such as shoe manufacturers, can take advantage of the rules for FTZs.

While the past two decades are a transformative time for shoes, especially sneakers, many products feature little alteration over an extended period. Basic products like loafers, shoes designed for kids, and work boots are all generally time-proof. You can buy a high volume of products, then store your inventory in an FTZ warehouse without any further financial obligations until you are ready to sell them domestically.

Benefits for Seasonal Clothing

This is the inverse of the above. You can maximize industry behavior to your benefit. Seasonal clothing is cheaper immediately after the season ends. Clever retailers can buy timeless apparel when it is discounted, then leave it in an FTZ warehouse until the following year. It’s an easy way to buy low and sell high.

Benefits for Lingerie Retailers

One of the costliest expenses in the lingerie industry is pre-sale returns. Due to the flimsy nature of the designs, goods are easily damaged enough to render them unsellable. If you use a foreign manufacturer, you ordinarily must pay twice for the same item on your returns. By using an FTZ warehouse, however, you only pay the duties once the items leave the FTZ. Damaged items returned to foreign countries do not impact your bottom line.

Benefits for High-End Apparel Dealers

If your business sells expensive items, theft represents a significant issue. The loss of products such as tuxedos, wedding dresses, suits, and evening gowns can destroy your profit margin. Since United States Customs regulates and certifies FTZs, these warehouses are safer. Laws require them to implement strong security measures. The added benefit is that due to the known benefits of security, your insurance premiums are cheaper when you use an FTZ warehouse.

There are innumerable benefits to employing a FTZ warehouse such as The Apparel Logistics Group. No matter your apparel industry, you should investigate the various benefits due to the potential financial benefits. To explore the unique benefits for your apparel business, request a free consultation from a logistics expert today.

Posted: 5/4/2015 3:59:57 PM by Global Administrator | with 0 comments

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