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Author's profile photo Trond Rovang

Why You Should Utilize US FTZ (Foreign-Trade Zone) in SAP Global Trade Services, edition for SAP HANA

A Foreign-trade zone (FTZ) of the United States is a geographical area in or around a United States Port of Entry where domestic and foreign commercial merchandise receives the same customs treatment it would if it were outside the commerce of the United States.

Operating in an FTZ can provide your business with several tangible benefits:

Customs Clearance – Simpler and FasterĀ 

  • Customs Clearance can be performed inland instead of at the gateway port (goods can move directly to FTZ).
  • Consignment can stay without time limitations in the FTZ.
  • Quotas can be managed through postponement.
  • Consignee gets further advance notice that the shipment is ready.

Exemptions and Deferrals of Duties and Fees

  • Duties and fees are not paid until the consignment is released and moved out of the FTZ storage.
  • Duties are not paid if the merchandise is exported, re-exported or scrapped.
  • Duties are deferred if goods move to another FTZ.

Value Added Services and Tariff Inversion

  • If products are transformed in the FTZ, HS Classification may change in a favourable direction, so-called tariff inversion.
  • Added value activities executed in the FTZ are not subject to customs duties.

Improved Security

  • FTZs are areas with higher security standards, potentially leading to lower insurance premiums.


The business value provided through FTZ

Unlike a customs warehouse that puts certain limitations on activities, an FTZ provides increased flexibility since products in FTZ can be:

  • Stored
  • Sampled
  • Salvaged
  • Repackaged
  • Processed
  • Displayed
  • Repaired
  • Destroyed
  • Manipulated
  • Assembled
  • Manufactured
  • Repaired
  • Destroyed
  • Manipulated
  • Assembled
  • Manufactured

How SAP Global Trade Services, edition for SAP HANA helps:

  • Supports the operation of a U.S. foreign-trade zone.
  • Automates management of zone admissions.
  • Tracks and reports zone inventories, including zone manufacturing, accurately.
  • Manages zone withdrawals, including entry for consumption or export.
  • Creates and delivers zone reports and filings.
  • Enable greater accuracy in tracking and reporting inventories.
  • Provides current and accurate bill-of-materials data that properly reflects inventory consumption.


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      Author's profile photo GTS Team Collins Aerospace
      GTS Team Collins Aerospace

      All great reasons to implement an FTZ. We have implemented FTZ and it is an elegant solution for very straight forward scenarios. However, there is very little grace for any deviation in the supply chain (clean up options for orphaned transactions or to clear out test data due to the inability to process from the zone without processing all old docs, nested products/semi finished goods and using STOs to transfer the components, SFG or FG, moving goods in/out of the zone, ability to fix a waybill after admission created, etc. While we have realized significant cost savings, the headcount required to manage the zone is very high. Would love to see some improvements on that front so more companies can take advantage of this functionality.