BY TOBY GOOLEY, SENIOR EDITOR
GLOBAL LOGISTICS – AMERICAS
strategicinsight
when it decided to improvise.
Yamaha’s “hybrid” approach
to foreign trade zones
The musical instruments maker wanted to import
through an FTZ, but neither of the traditional
approaches seemed a good fit. That’s
PHOTO COURTES Y OF YAMAHA CORP.
AS ANY IMPORTER WILL TELL YOU, BRINGing goods into the country is a complex process
that’s subject to many laws and regulations. It
can be costly, too. A host of fees, duties, and
taxes come with the territory. On top of that, if
an importer fails to adhere to the regulations,
the U.S. Bureau of Customs and Border
Protection (CBP) can assess fines that will make
any CFO sit up and take notice.
The challenge for many importers, then, is to
comply with customs regulations while reducing
the cost of bringing goods into the United States.
That’s a challenge Yamaha Corporation of
America (YCA) has successfully met. The
importer of musical instruments and audio-visual equipment found it could achieve both of
those objectives by importing through foreign
trade zones (FTZs).
Foreign trade zones are government-approved facilities
within the United States where foreign and domestic merchandise is considered to be outside of U.S. customs territory. FTZs help importers compete with low-cost goods
entering the U.S. market by allowing them to defer, reduce,
or avoid duty payments as well as some taxes and fees. For
example, importers don’t pay duties on merchandise until it
leaves the zone for U.S. consumption. If the goods never
enter U.S. commerce—if they are subsequently exported,
for instance—then the importer pays no duties on those
items. (For more about the benefits of foreign trade zones,
see sidebar.)
YCA knew that
using FTZs would significantly reduce its costs. Before it
could go ahead and do that, however, the importer had to decide which
of the two conventional operating
models to follow: outsource the entire process, or handle
everything—including setting up and operating warehouses—itself.
Neither was the right fit. Instead, YCA, making use of specialized software, chose a “hybrid” approach combining the
two models. Here’s a look at what the importer is doing and
why that strategy has proved successful.
