In a Climate Heavy with Tariffs, Ship Smarter with ShipNetwork’s FTZ-Enabled Facilities

Why Tariffs and Customs Duties Matter in 2025

Global tariffs continue to strain eCommerce margins, forcing brands to look for smarter ways to manage costs. In 2025, average duties on consumer goods have risen across multiple categories, tightening already slim profit margins. For many sellers, absorbing these costs isn’t sustainable. The solution lies in smarter logistics strategies that defer costs, improve cash flow, and preserve flexibility.

ShipNetwork is proud to offer Foreign-Trade Zone (FTZ) capabilities at our McCook, IL and Atlanta, GA fulfillment centers — giving our clients a powerful tool to navigate today’s trade environment. These FTZs are specifically designed to encourage foreign commerce by providing brands with customs advantages and duty reduction opportunities.

What is a Foreign Trade Zone (FTZ)?

A Foreign Trade Zone (FTZ) is a secure warehouse location in the U.S. that is treated as if it is outside U.S. customs territory. This means:

• Inventory imported into an FTZ does not incur U.S. customs duties or tariffs upon arrival.
• Tariffs are only paid when goods leave the FTZ and enter U.S. commerce.
• If items are stored, destroyed, or exported elsewhere, duties may never be paid at all.

Inventory held in an FTZ is considered zone merchandise, which can be classified as either domestic status (mainly U.S. origin or with all internal revenue taxes paid) or foreign status, depending on its origin and tax status.

A Foreign Trade Zone (FTZ) allows importers to defer or reduce duties by holding inventory in a customs-designated facility until goods enter U.S. commerce. The tariff classification of goods is determined when they leave the FTZ for U.S. commerce. This helps brands improve cash flow, preserve flexibility, and reduce exposure to tariff volatility.

Why Tariffs Hurt eCommerce in 2025

Rising tariffs impact more than just landed cost. They:

• Reduce cash flow by requiring upfront duty payments.
• Increase customer prices, leading to lower competitiveness.
• Add uncertainty for brands importing high-volume or seasonal goods.

As of 2025, nearly 49% of sellers operate on two or more non-Amazon channels. This makes channel-neutral strategies like Fulfillment by Merchant (FBM) or FTZ-enabled fulfillment even more critical.

How Big of a Deal is FTZ for 3PL's and Supply Chains?

The scale of FTZ operations underscores their significance in U.S. trade infrastructure. In 2023 alone, Foreign-Trade Zones processed nearly $949 billion in merchandise receipts and supported over 550,000 jobs across the country. Trade.gov

That magnitude isn’t just a number — it reflects how deeply FTZs are embedded in supply chains. As tariffs rise, producers and sellers leveraging FTZs can tap into the same infrastructure that powers billions in global trade, using duty deferral and processing flexibility to shield margins and enhance competitiveness. No better time to use a 3PL like ShipNetwork who has FTZ-enabled facilities to give sellers the tools to defer duties, improve cash flow, and protect margins.

How FTZ-Enabled Facilities Help Sellers

In a tariff-heavy climate, ShipNetwork’s FTZ-enabled facilities give brands a way to protect margins and stay competitive:

• Duty deferral and reduction: Pay tariffs only when goods ship into U.S. commerce.
• Improved cash flow: Hold inventory without immediate tariff burden.
• Operational flexibility: Relabel, kit, or assemble products inside the zone—a wide range of zone activity is permitted, including assembly, kitting, and relabeling.
• Global expansion: Pair with SmartFreight and optimized shipping for efficient cross-border logistics.

As a zone user, your business can leverage FTZ-enabled distribution facilities to streamline logistics and reduce costs.

In a tariff-heavy climate, FTZ-enabled facilities allow brands to defer duties, improve cash flow, and gain flexibility in how inventory is handled — protecting profitability while maintaining fulfillment speed.

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Challenges of Establishing Your Own FTZ: Access and Onboarding

Getting started with a Foreign Trade Zone (FTZ) is easier than you think—especially when ShipNetwork handles the heavy lifting for you. We simplify the complexities of the Foreign Trade Zones program so you can focus on growing your business while we manage the details that directly impact your bottom line.

ShipNetwork works closely with the Foreign Trade Zones Board—powered by the Secretary of Commerce and the Secretary of the Treasury—to navigate the approval process for establishing, operating, and maintaining FTZs. Our expertise ensures your application is thorough, accurate, and tailored to meet eligibility requirements, so you avoid common pitfalls and delays.

You don’t have to worry about mapping out your company’s operations, merchandise types, or zone site targeting—we guide you through every step, preparing a detailed, bulletproof application that acts as your business blueprint and unlocks the full benefits of FTZ participation.

Once the FTZ Board grants approval, ShipNetwork coordinates with U.S. Customs and Border Protection (CBP) to activate your zone, ensuring your facility meets all customs security and operational standards before launching FTZ activities. We also help you leverage the Alternative Site Framework (ASF) for faster, more agile FTZ designation when applicable, making it simple to adapt to evolving business needs and market demands.

Whether you’re joining established FTZ sites or designating a brand-new zone site, ShipNetwork’s expertise and hands-on support make mastering the application and activation process seamless—giving you direct access to the full power of the FTZ program without the hassle.

Zone Operations and Status: How FTZs Work Day-to-Day

Your business gains immediate operational advantages the moment it activates within a Foreign Trade Zone—here's exactly how CBP regulations and your merchandise's unique status drive performance. FTZs operate as secure, CBP-supervised territories strategically positioned outside standard U.S. customs boundaries for tariff and entry purposes. This powerful positioning unlocks comprehensive operational capabilities: storage, examination, sampling, assembly, and manufacturing of both foreign and domestic merchandise with precision-engineered flexibility.

Smart businesses master merchandise status classification—this single factor determines your duty obligations and competitive edge. Goods enter with domestic merchandise status or foreign status designations, with foreign status strategically segmented into privileged foreign, non-privileged foreign, and zone-restricted categories. Each classification directly impacts customs duties and taxes when goods transition into U.S. commerce. Privileged foreign status locks duty rates at admission—delivering cost predictability and financial control. Non-privileged foreign status provides dynamic duty assessment based on goods' condition at zone departure—maximizing flexibility for value-added operations.

FTZ operators achieve measurable competitive advantages through duty deferral, reduction, and elimination strategies, plus reduced merchandise processing fees that improve bottom-line performance. Foreign status merchandise destined for domestic consumption triggers formal customs entry procedures—ensuring full compliance while optimizing duty payments. Forward-thinking businesses leverage zone operation flexibility and master status merchandise nuances to transform supply chains and dominate international trade positioning.

Merchandise Entry and Exit: The Flow of Goods in FTZs

The movement of goods into and out of Foreign Trade Zones operates under CBP supervision → delivering companies significant flexibility and measurable cost savings. When foreign merchandise enters an FTZ, it does so without immediate customs entry or duty payment (a critical advantage for cash flow management). This powerful framework allows businesses to store, process, or assemble goods while deferring customs duties and federal excise tax until merchandise formally enters U.S. commerce for domestic consumption.

Companies must adhere to specific storage and handling requirements within the FTZ, and may need to obtain import licenses or permits depending on merchandise classification. One of the key strategic advantages of the FTZ program → the ability to export goods directly from the zone without incurring U.S. customs duties (making FTZs ideal for companies engaged in re-exports or international distribution). This creates powerful opportunities for businesses focused on:

• Re-export operations → Cost-effective international distribution
• Global supply chain optimization → Strategic inventory positioning
• Duty avoidance strategies → Direct export capabilities

Additionally, FTZs support substantial transformation of foreign articles → resulting in new customs classification or eligibility for different duty rates (often more favorable). When merchandise leaves the FTZ for the U.S. market, it faces customs classification, appraisement, and payment of applicable duties, plus compliance with federal excise tax, internal revenue tax, and any restrictions related to zone-restricted status merchandise. By managing goods flow strategically, companies can maximize FTZ participation benefits and streamline their international trade operations for powerful growth.

Compliance and Regulations: Staying Ahead of FTZ Requirements

Mastering compliance within a Foreign Trade Zone drives smooth operations and locks in continued access to FTZ benefits. Companies must nail every U.S. Customs and Border Protection (CBP) regulation—covering customs duties, federal excise tax, and merchandise processing fees. The FTZ Board partners directly with CBP to ensure all zone operations deliver flawless adherence to the Foreign Trade Zones Act and related regulations.

Beyond customs requirements, companies must also crush compliance standards set by other government agencies—covering environmental protection, labor standards, and product safety. Regular audits and compliance reviews are standard operating procedure for FTZ operations, empowering businesses to identify and eliminate potential issues before they become costly roadblocks.

Staying razor-sharp with changes in FTZ regulations—like updates to the Alternative Site Framework or zone designation procedures—maximizes every advantage of the foreign trade zones program. By proactively managing compliance and keeping pace with evolving requirements, companies safeguard their FTZ status, dodge penalties, and maintain a dominant position in international trade.

The FTZ Advantage vs Bonded Warehouses

With bonded warehouses at capacity nationwide, FTZs are becoming the smarter alternative.

Companies can often join an existing zone to access FTZ benefits without the need to establish a new zone from scratch.

FTZs offer more than bonded warehouses: extended storage timelines, operational flexibility, and the ability to defer duties while streamlining fulfillment. FTZs can also help businesses eliminate duty on goods that are re-exported or never enter U.S. commerce.

Minimal Cost, Major Gain: Enable FTZ Use with Lot Tracking

FTZ participation at ShipNetwork is highly accessible. The only additional client cost is enabling Lot Tracking, which supports customs-compliant inventory traceability.

Lot Tracking Supports FTZ Compliance

1. Inbound shipments tagged by lot number (origin, product ID, import date).
2. WMS tracks each unit through storage, order pick, and outbound shipment.
3. When inventory exits the FTZ into U.S. commerce, tariff liability is triggered.
4. Reporting tools allow clients and customs brokers to reconcile duty payments efficiently.

For clients already leveraging ShipNetwork’s API or WMS integration, setup is lightweight — enabling access to FTZ savings at minimal cost.

FTZ Fulfillment Backed by a Nationwide Network

With FTZ functionality now live in McCook and Atlanta, clients can:

• Import inventory into the U.S. without immediate tariff burden. ShipNetwork’s FTZ-enabled facilities in these cities are designated locations and zone sites officially approved for FTZ operations, providing authorized, legally recognized areas for processing, manufacturing, or storing merchandise under FTZ regulations. These facilities are strategically located near major CBP ports to facilitate efficient customs processing and import/export activities.
• Store goods at ShipNetwork until orders are released for domestic sale.
• Pair FTZ savings with:
  • 1-Day Fulfillment Guarantee
  • 2-Day Ground Delivery to 98% of the U.S.
  • Xparcel & SmartFreight for optimized last-mile and global shipping
  • API-integrated order management

Who Benefits Most from FTZ Fulfillment for Zone Users?

• Brands with high-duty imports (e.g. apparel, electronics, auto parts).
• Sellers with variable U.S. demand and international supply chains.
• Subscription or seasonal businesses wanting to delay duty payments until inventory turns.

Standard Warehousing vs FTZ-Enabled Warehousing

Zone users benefit from the flexibility and cost savings of FTZ-enabled warehousing.

2025 Fulfillment Trend: Independence from Tariff Pressures

With global supply chains under pressure, brands are prioritizing partners that help them stay resilient. FTZ participation is one of the most effective tools available today.

As of 2025, the number of U.S. companies using FTZs for eCommerce fulfillment has increased year over year, reflecting the growing need to shield margins from tariffs. FTZ participation not only protects margins but also supports economic development by attracting investment and creating jobs, while facilitating international commerce by enabling the efficient movement of goods within the global trade system.

FAQ: FTZ Fulfillment with ShipNetwork

FTZs, also known as free trade zones, are designated areas within the U.S. where goods can be stored, processed, or manufactured under special customs procedures.

Q: How does an FTZ reduce tariff costs?
An FTZ allows importers to defer tariffs until goods enter U.S. commerce. In some cases, duties may never be paid if goods are re-exported. The tariff classification of merchandise in the FTZ determines the duty owed when goods are entered for U.S. consumption.

Q: Can any product be stored in an FTZ?
Most imported consumer goods qualify, but some regulated products require additional compliance steps. Such merchandise must comply with FTZ regulations regarding classification and handling. A foreign article admitted to the zone may be subject to special rules depending on its status.

Q: How does ShipNetwork support FTZ participation?
ShipNetwork enables FTZ use through Lot Tracking and API/WMS integration, making setup seamless for clients. ShipNetwork helps clients maintain proper zone status for all merchandise. Status merchandise is tracked and managed according to FTZ regulations.

Q: How do FTZs integrate with ShipNetwork services?
FTZ storage pairs with ShipNetwork’s nationwide fulfillment, SmartFreight for global expansion, and Xparcel for optimized shipping.

Q: What is granted zone status?
A site must receive granted zone status from the FTZ Board and U.S. Customs and Border Protection (CBP) before FTZ operations can begin.

Q: How do I obtain FTZ designation for my facility?
To obtain FTZ designation, you must apply to the FTZ Board, which reviews and approves applications. The Alternative Site Framework (ASF) can streamline the process for facilities seeking FTZ status.

Q: What activities are allowed in an FTZ?
Zone activity includes storage, assembly, processing, and other permitted operations. Zone activity remains under CBP supervision at all times to ensure compliance with customs regulations.

Q: Do FTZ facilities remain under government oversight?
Yes, facilities remain under the supervision of CBP and other government agencies after activation, ensuring ongoing regulatory oversight and control.

Q: Where can FTZs be located?
FTZs must be located within or adjacent to a CBP port of entry. The outer limits of the zone are defined by regulations, and proximity to CBP ports is required for activation and oversight.

Final Takeaway

In a tariff-heavy climate, predictable fulfillment matters more than ever. ShipNetwork’s FTZ-enabled facilities give sellers the tools to defer duties, improve cash flow, and protect margins — without sacrificing speed or accuracy. With locations in McCook and Atlanta, ShipNetwork combines tariff relief with nationwide reach, 100% order accuracy, and same-day fulfillment guarantees.

📩 Ready to cut costs, not corners? Contact us at GetStarted@ShipNetwork.com or call 866.983.7447 to discuss FTZ fulfillment today. Plus, understanding postal zones can further reduce your shipping expenses.