The Logistics & Distribution Center of the Americas

The Logistics and Distribution Center of the Americas

Overview

Puerto Rico Trade Company (Compañía de Comercio y Exportación de Puerto Rico) offers the services of Foreign Trade Zone # 61 (FTZ 61) as part of its commercial-support offering. FTZ 61 is located within the International Trade Center (ITC) which is situated within the municipality of Guaynabo, in the San Juan metropolitan area. The real estate division of Puerto Rico Trade and Export Company administers FTZ 61. In today’s international marketplace, FTZ 61 plays a vital role within the economic development initiatives of the Commonwealth and particularly in ventures seeking to expand international trade and commercial relations. The foreign trade zone is an integral part of the ITC, which includes 6 modern warehousing structures (approximately 632,751 square feet) distributed across 203 acres of space.
FTZ 61 warehousing space offers all of the necessary elements to facilitate just-in-time transport, distribution, logistics, storage, re-exportation and other value-added activities. These aspects are reinforced by the following characteristics of FTZ 61:
• Adjacent to the San Juan port zone (the busiest seaport in the Caribbean region)
• Adjacent to De Diego Expressway (one of the principle transport arteries in the island)
• Located only 11 miles from the Luis Munoz Marin International Airport (21st in US cargo-supporting airports)

Background

On October 28, 1980 the Foreign Trade Zone Board of the U.S. Department of Commerce - through Order No. 165 - authorized the Commercial Development Company (predecessor to the Puerto Rico Trade Company) to operate a general-purpose zone within the premises of the ITC. The foreign trade zone – Foreign Trade Zone # 61 - was inaugurated in 1986 and began operating under the supervision of the US Customs Service (now the US and Border Protection Agency). FTZ 61, as part of its incentive programs, eliminates and/or defers custom duties and excise taxes on merchandise, depending on its final destinations. During fiscal year 2003-04, FTZ 61 held a 100% occupancy rate.

Improvement and Expansion Plans

As part of initiatives to improve and expand FTZ 61 service offerings, Puerto Rico Trade Company has sought to install a new inventory control system for the ITC complex. During the early part of 2004, Puerto Rico Trade and Export Company installed a new inventory control system known as “Smart Zone”. “Smart Zone” offers inventory and record keeping features. This software will improve overall operational efficiency for the complex, as well as, improve overall record keeping and data management for its users. Likewise, “Smart Zone” will ensure compliance with US Customs and Border Protection Agency operations requirements – the overseeing entity that regulates overall compliance with the Foreign Trade Zones Program. In line with such improvements, the Puerto Rico Trade and Export Company will be submitting expansion requests to the Foreign Trade Zone Board in order to be able to maximize all of the agency’s additional warehousing and parcel space towards these purposes. This is expected to alleviate the great demand for FTZ space, which continues to afford logistics advantages to participating businesses in the form of incentives that ultimately translate into operational cost-savings; hence, making participants more competitive in both the national and international markets.

What is a General Purpose Zone?

A general-purpose zone is a designated location or site, situated next to a customs port-of-entry, which offers access that is restricted to participating businesses, so that they may carry out pre-defined commercial related activities. A general-purpose foreign trade zone is structured to work outside the purview of normal customs rules and regulations in order to afford duty-free treatment as related to custom duties and tariffs. This is structured such that the general-purpose zone is considered to be outside the purview of U.S. Customs Territory for purposes of customs duty payment. Therefore, goods entering the foreign trade zone are not subject to customs tariffs until the goods leave the zone and are formally entered into the U.S. Customs Territory. In short, a general-purpose trade zone allows for special customs treatment on the handling, admission and/or manipulation of merchandise en-route to its final market. Such treatment allows for the following on-site activities without duty or tariff penalties:

Storage, exhibition, distributorship and sales; Disassembly, repackaging, assembly, sorting, cleaning or treating; Mixing, or manufacturing; Decommissioning, exporting or movement within other foreign trade zones It should be noted that the FTZ 61 could also be used to conduct quality control procedures prior to importation.

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