Consumer Electronics FTZ – MD Logistics
MD Logistics has partnered with a leading global supplier of mobile and consumer electronics products since 2007, when a newly acquired product line prompted the company to seek third-party logistics (3PL) services.
A majority of their products originate overseas and therefore require numerous customs filings as well as costly annual duty and brokerage fees. When exported goods require drawbacks, the cumbersome process could take up to nine months.
MD Logistics, along with their customer, realized that a Foreign Trade Zone (FTZ) would streamline the thousands of cartons of product that MD Logistics handles every month. An FTZ allows goods to be imported and warehoused duty-free until they are consumed or re-exported, and also allows for duty-free transferring to other FTZs in the United States, Canada and Mexico. By expanding its FTZ distribution network to the Midwest, their customer could realize a significant cost savings and increase the ease by which their goods flow to market.
MD Logistics embraced the chance to provide enhanced services to their customers and immediately reached out to the local FTZ Authority.
Becoming an FTZ grantee would be a complex process, requiring start-up and operating costs as well as regulatory and administrative requirements. MD Logistics retained a well-respected expert to ensure the project was accurately completed under a strict timeline.
MD Logistics navigated the application process to become a general-purpose zone operator. Formal applications had to be submitted in Washington, D.C., bonds needed to be put in place and site inspections by U.S. Customs and Border Protection had to be passed.
Everything went according to plan. Upon approval, MD Logistics entered into a contract with the Indianapolis Airport Authority as an FTZ grantee.
MD Logistics also incorporated an FTZ systems integration project. The company procured the most effective FTZ-compliant software available, deployed it within the existing warehouse management systems and completed full integration into customers’ software systems.
This ensured that all data required for FTZ compliance was transferable and able to be reported in a timely manner to U.S. Customs and Border Protection.