Federal tariffs and customs procedures can feel overwhelming, especially to small and medium-sized businesses. The INzone Foreign Trade Zone (FTZ) is designed to help companies of all sizes navigate international trade and associated costs. Lydia Chastain, Marketing Manager at INzone recently spoke at a New Castle Henry County Economic Development Corporation (EDC) board meeting. Chastain covered the purpose of an FTZ and the benefits available to companies in this region.
Chastain described an FTZ as a federal program that assists companies in reducing time and money associated with importing raw materials, parts, or finished goods into the United States. An FTZ is subject to local community endorsement and federal trade policy review, and program users are located in a Port of Entry for U.S. Customs and Border Protection.
Indiana is one of only five states with complete FTZ coverage (Indiana by far having more land mass than the other four states). Indiana’s four grantees cover six service areas which include the Indiana Airport Authority, which owns INzone; the City of Fort Wayne, which covers 12 counties near the city; St. Joseph County Airport Authority, which operates in cooperation with the South Bend/Elkhart Regional Partnership; and Ports of Indiana centered in Burns Harbor, Clark County, and Evansville.
INzone, a non-profit entity, serves as the FTZ marketing and operational administrator for 41 of Indiana’s 92 counties, including Henry County. INzone can save companies money in numerous ways, according to Chastain’s presentation, such as:
- Duty Deferral- Imports may be admitted and held in an FTZ indefinitely without paying U.S. customs duties. This deferral can give companies a large cash flow advantage.
- Duty Elimination- There is no need to pay duties on imported goods that are exported to another FTZ site or outside of the U.S.
- MPF Reduction- Maximum merchandise processing fee (MPF) needs to be only paid once per week for shipments, regardless of how many shipments are processed during the week.
- Duty Reduction- Taxes are not paid on individual parts, only when the product is whole. This is popular with sub-assembly and manufacturing operations.
INzone also aims to save companies time with direct delivery and weekly entry. Direct delivery allows foreign merchandise to be transported in-bound directly to the Zone user’s facility without customs clearance at the first port of unloading with Customs and Border Protection approval. Weekly entry allows Zone users to operate their business 24/7 and file one customs entry per week, rather than per shipment. This also can substantially reduce brokerage costs.
Chastain shared a practical example of the direct delivery versus weekly entry advantage, which provided the example company with $22,880 in savings every year. It can also speed up delivery by one to two days.
She also presented the advantages of a reduction in Merchandise Processing Fees (MPF). This streamlined system can save companies hundreds of thousands of dollars annually if they are importing multiple containers every week.
Companies interested in leveraging the FTZ are encouraged to contact a qualified FTZ consultant for a cost-benefit analysis. INzone will pay for the confidential analysis: up to $2,500 for distribution and $5,000 for manufacturing. Participants may choose their own qualified consultant or select one from a list available on the INzone website.
Business leaders who are interested in more information about INzone and funding for the confidential cost-benefit analysis are encouraged to contact Corey Murphy, EDC President, at cmurphy@growinhenry.com and Lydia Chastain of INzone at lchastain@inzone.org.
Source: INzone/Indianapolis Airport Authority: Connecting Indiana to the World presentation by Lydia Chastain to New Castle Henry County EDC on July 11.