We’re seeing an
increase in interest
in foreign trade
zones
Rebecca Gammon, Manager,
M-PACT Solutions FOREIGN TRADE
ZONES
by the type of a company’s
activities. For manufacturers, it
works best to stay where they
are located, as long as the cargo
can be moved in bond.
Wide-bodies on the rise
For manufacturing, Texas is
head and shoulders above the
other US states in terms of FTZ
use, followed by Louisiana;
while South Carolina leads
when it comes to warehousing
activities under an FTZ
umbrella. Overall, logistics
is a major factor in location
selection. “We see a push near
airports, customs ports for entry
– the typical freight hubs,”
Gammon reports.
Rickenbacker boasts a heavy
concentration of companies in
the textile and footwear sectors
(which have been the main
drivers of the airport’s steady
rise in international wide-body
freighter services from the likes
of Cathay Pacifi c, Cargolux
and AirBridgeCargo). That said,
there are also tenants in the
automotive, food packaging,
pharmaceutical and other
industries in the area.
Moreover, 3PLs are also
showing interest, reports
Griffi n. “They see it as a benefi t
to help their partners. They can
umbrella their customers into
the FTZ to help them.”
Activities in Montreal and
Edmonton notwithstanding,
Canadian airports have not
displayed much drive to play
the FTZ card, remarks Wraight.
Mexico has established a
new FTZ area along the US
border, which includes most
of the Baja Peninsula. Mexican
airports, however, have not
shown signs of going down
the FTZ route. Mark Diamond,
an independent aviation
consultant, who recently
worked with a group of 12
Mexican airports on an air
Canadian
airports have not
displayed much
drive to play the
FTZ card
Stan Wraight, President and CEO,
Strategic Aviation Solutions Intl
cargo development strategy, says that the discussions touched on
the FTZ theme, but that it was not a major part of the project.
“The FTZ concept hasn’t gone as far in Mexico as in other
countries. There is one in San Luis Potosi, which has a lot of
tenants in the automotive industry, but Guadalajara does not have
one,” he points out.
Overall, FTZs have lost much of their lustre over the years in
North America since the concept was introduced during the Great
Depression. Many airports have the designation, but it amounts
to little more than just checking the box, says Webber. “There’s
been a substantial erosion of the benefi ts with all the free trade
agreements. The value proposition had tilted downward.”
Asia-Pacifi c progress
In Asia, the picture is strikingly different, perhaps nowhere more so
than in Zhengzhou, where a 415 square kilometre area around the
airport has been transformed into the Zhengzhou Airport Economy
Zone, which boasted a gross industry output value of ¥312bn
(US$45bn) in 2018. The most illustrious tenant is Foxconn, which
produces over 100m iPhones a year on the site, fl anked by some 60
other cell phone manufacturers who are producing another 110m
units, predominantly for the domestic market. Trade clusters for
biomedical and e-commerce activities are also in the making.
“One in seven smartphones comes out of this zone,” reveals
Ram Menen, the retired former Head of Cargo of Emirates
Airlines. “The FTZ is a catalyst for growth. It’s one element, a
bonus. A lot of industries in the ZAEZ are producing only for the
domestic market.”
Webber remarks that FTZs in Asia differ substantially from their
namesakes in North America. “In Asia they view them holistically
as part of an airport with a city around it. It’s not comparing apples
to apples,” he says.
In conclusion
Even though the approach in North America is different, setting
up shop in an FTZ is not a step to be taken lightly, Gammon
warns. “It’s a long-term commitment,” she stresses. She advises
fi rms to do a thorough cost benefi t analysis and look at the cost
of duties before and after China tariffs.
“You need excellent inventory controls, because you have to
watch your inventory balances very closely,” she stresses. “And
you have to make sure you have bonded carriers to move your
products to and from the FTZ.”
30 December 2019 www.airlogisticsinternational.com
/www.airlogisticsinternational.com