Free Trade Zone Meaning in Logistics

A Free Trade Zone (FTZ) is a designated location where goods can be imported, stored, and processed without being subject to customs duties. Companies operating within an FTZ can manufacture, assemble, or process goods without paying the typical tariffs or taxes associated with importing them into the country. FTZs are typically located near transportation hubs, such as ports or airports, and often have access to distribution facilities, warehousing, and storage.

The World Bank reports that there are over 3,000 free trade zones around the world. These zones are Foreign-Trade Zones (FTZs) in the United States. FTZs are particularly attractive to companies that import and export goods, as they offer significant cost savings and can streamline the trade process. In addition to offering duty-free areas for manufacturing and processing, some FTZs also provide incentives such as tax breaks and streamlined customs procedures.