Foreign Trade Zones
Posted: Mon Oct 26, 2015 11:53 am
[quote=http://www.reuters.com/article/2015/10/ ... T220151026]In applications to create so-called foreign trade zones (FTZs) submitted to U.S. regulators and seen by Reuters, the company said it intends to use four coffee warehouses in ports in Seattle, Virginia and New Jersey for storing and distributing green coffee beans.
The applications were approved by the various ports earlier this year, though they have not yet been activated by Customs and Border Protection, a process that can take several months
The "red tape" and costs associated with establishing FTZs can be substantial, meaning setting them up is generally worth it only if a company can see a return of 100 percent to 200 percent, according to a Congressional Research Service report.
Keurig is the first U.S. coffee company to register a FTZ, which allows companies to import goods into a country without paying duties or passing through customs until the items leave the zone, often after being manufactured into finished goods with lower tariffs than the raw material.
While coffee does not incur any tariffs or import duties, Keurig expects to benefit from another perk of FTZs: the ability to pay customs processing fees once per week, rather than on every shipment, a spokeswoman said. Keurig also expects to save on payments to customs brokers.
She said the FTZs are a "strategic investment that will lower product cost as well as generate additional savings through increased logistical efficiencies."[/quote]
The applications were approved by the various ports earlier this year, though they have not yet been activated by Customs and Border Protection, a process that can take several months
The "red tape" and costs associated with establishing FTZs can be substantial, meaning setting them up is generally worth it only if a company can see a return of 100 percent to 200 percent, according to a Congressional Research Service report.
Keurig is the first U.S. coffee company to register a FTZ, which allows companies to import goods into a country without paying duties or passing through customs until the items leave the zone, often after being manufactured into finished goods with lower tariffs than the raw material.
While coffee does not incur any tariffs or import duties, Keurig expects to benefit from another perk of FTZs: the ability to pay customs processing fees once per week, rather than on every shipment, a spokeswoman said. Keurig also expects to save on payments to customs brokers.
She said the FTZs are a "strategic investment that will lower product cost as well as generate additional savings through increased logistical efficiencies."[/quote]