Duty is the biggest cost you can move, and Baltimore gives you two ways to move it
Foreign Trade Zone 74 covers Baltimore City plus Anne Arundel, Baltimore, Cecil, Harford, Howard and Queen Anne’s counties. It is administered by the Baltimore Development Corporation. All of Tradepoint Atlantic, the private port and logistics park at Sparrows Point, sits inside it, and named port-adjacent buildings such as Prologis Port Baltimore carry FTZ 74 status. Howard County joined the zone in 2019.
That is a wide service area. The question importers ask the desk is not “can we”, it is “should we, or is a bonded warehouse enough”. This article answers it with arithmetic.
The problem: duty paid too early, too often, on goods you have not sold
When a container clears at the pier under a normal consumption entry, the duty is due then. The goods may sit in a warehouse for three months before a customer pays you. In a high-tariff year that gap is real money.
Two tools push the payment back. A bonded warehouse holds imported goods under customs bond, and duty is paid when goods are withdrawn for US consumption. A foreign trade zone treats goods as if they are outside US customs territory while they are inside the zone, and duty is paid when they leave the zone for the US market. Both defer. They are not the same tool.
The guide pages at /port/ftz-74-guide/ and /port/import-duty-deferral/ cover the rules. This article covers the money.
How each one works
Bonded warehouse
- Goods enter under a warehouse entry and sit under bond at a partner warehouse approved for bonded storage.
- Duty is paid on each withdrawal for consumption. Each withdrawal is a customs transaction.
- Goods exported from bond leave without US duty.
- Storage is for a limited period set by regulation. The licensed customs broker partner confirms the current term for your goods.
- The warehouse is for storage. Rework, kitting, relabelling and assembly are limited or not allowed.
Foreign trade zone
- The partner warehouse space is activated with the grantee, the Baltimore Development Corporation, and with US Customs and Border Protection. Activation takes an application, an inventory control system that tracks every item by status, and a security review.
- Goods are admitted to the zone. No duty is due on admission.
- Duty is paid when goods leave the zone for US consumption. Under weekly entry, one customs entry covers everything that left the zone that week, no matter how many shipments.
- Goods exported from the zone never pay US duty.
- There is no fixed time limit on how long goods can stay in the zone.
- Kitting, labelling, testing, repair and assembly can take place in the zone. Scrap and waste from that work do not attract duty.
The practical summary: a bonded warehouse is a deferral tool. A zone is a deferral tool plus an entry-consolidation tool plus a value-added platform.
Worked example: a $2M container program
Every number below is an assumption chosen to show the method. The duty rate is a variable. Your licensed customs broker partner confirms the real rate for your tariff classification, the fee caps and the entry rules before anyone acts on this.
Assumptions
| Input | Assumed value |
|---|---|
| Annual declared value | $2,000,000 |
| Containers per year | 20, at $100,000 each, arriving about evenly |
| Duty rate | Assume 25 percent |
| Annual duty at that rate | $500,000 |
| Average days from arrival to sale | Assume 90 days |
| Cost of capital | Assume 8 percent a year |
| Outbound shipments per year | Assume 300, because goods leave in small lots as customers order |
| Share of goods re-exported | Assume 10 percent |
| Share of goods reworked or kitted before sale | Assume 15 percent |
| Broker charge per customs entry | Assume $75 |
| FTZ setup and first-year compliance | Assume $25,000 |
| FTZ compliance, each later year | Assume $10,000 |
Scenario A: pay at the pier
Duty on each container is paid on arrival, about 90 days before the cash comes back. The financing cost of carrying $500,000 of duty for 90 days at 8 percent is about $9,860 a year. The 10 percent that is re-exported has already paid duty and must go through a refund claim to get it back.
Scenario B: bonded warehouse
Duty is paid on withdrawal, so it lines up with sales. The $9,860 financing cost falls to about zero. The re-exported 10 percent leaves bond without duty, which keeps $50,000 of duty from ever being paid. The cost side is the entries. Assume each of the 300 outbound shipments needs its own withdrawal, at the assumed $75 each: $22,500. Kitting the 15 percent share has to happen somewhere else, so those goods are withdrawn, duty paid, and moved.
Net versus Scenario A at these assumptions: saves about $9,860 in financing and $50,000 in re-export duty, costs about $22,500 in entries. About $37,000 better than paying at the pier, before the value of avoiding refund claims.
Scenario C: FTZ 74
The deferral is the same as bonded: financing cost near zero. The re-exported 10 percent leaves with no duty, same $50,000. Now the entry side changes. Weekly entry means one entry per week of activity. Assume 52 entries at the assumed $75: $3,900, against $22,500 in the bonded case. The 15 percent that needs kitting is done inside the zone, so no duty is paid on it until the finished kit leaves, and none at all on the scrap.
The cost side is activation and compliance: $25,000 in year one and $10,000 a year after at these assumptions.
Side by side
| Line (annual, assumed) | Pay at pier | Bonded | FTZ 74 |
|---|---|---|---|
| Financing cost of early duty | about $9,860 | about $0 | about $0 |
| Duty on re-exported share | $50,000 paid up front, refund claim needed | $0 | $0 |
| Entry charges | 20 entries, $1,500 | 300 withdrawals, $22,500 | 52 weekly entries, $3,900 |
| Program setup and compliance | $0 | $0 | $25,000 year one, $10,000 after |
| Total beyond duty, year one | about $11,360, plus $50,000 tied up until refunded | about $22,500 | about $28,900 |
| Total beyond duty, year two | about $11,360, plus $50,000 tied up until refunded | about $22,500 | about $13,900 |
The pattern is the point. At these assumptions, both tools beat paying at the pier once you count the $50,000 that sits in a refund queue instead of your bank account. In year one the bonded warehouse is cheaper than the zone, because activation costs money. From year two the zone is cheaper by about $8,600 a year, and the gap grows with every extra outbound shipment and every kit built inside the zone.
Change the duty rate and watch the lines move
The entry charges do not depend on the rate. The financing line and the re-export line do.
| Assumed duty rate | Annual duty | Financing cost of 90 days early | Duty avoided on 10 percent re-export |
|---|---|---|---|
| 10 percent | $200,000 | about $3,950 | $20,000 |
| 25 percent | $500,000 | about $9,860 | $50,000 |
| 50 percent | $1,000,000 | about $19,700 | $100,000 |
At a low rate the deferral is small money and the decision turns on entry count and value-added work. At a high rate the deferral and the re-export line dominate, and the choice between bonded and zone matters less than the choice to use either one.
When a bonded warehouse is enough
- Few outbound shipments. If goods leave in 20 full-container lots, not 300 small ones, weekly entry buys you little.
- No kitting, labelling or rework before sale.
- Goods turn fast and never approach the bonded storage time limit.
- The program is small, so the activation cost is a large share of the saving.
When FTZ 74 is the right answer
- Many small outbound shipments, such as e-commerce or dealer replenishment.
- Value-added work before sale, which our partners handle under /services/kitting-value-added/.
- Slow-turning inventory, spares or seasonal stock that may sit longer than a bonded term.
- A program that will grow. The activation cost is fixed, and the saving scales with volume.
- A site already inside the zone footprint. Tradepoint Atlantic is entirely inside FTZ 74, which is one reason the east-side parks draw import programs. See /locations/sparrows-point/.
What to do now
- Count last year’s outbound shipments from your import inventory. That number decides more than the duty rate does.
- Write down the duty rate per tariff line and the share you re-export or rework. Your broker partner can confirm the classifications.
- Run the three scenarios with your numbers in the table above. Keep the duty rate as a variable and test it at the current rate and at a higher one.
- If the zone wins, start activation now. The timeline runs through the grantee and Customs, and the clock does not start until the application is complete.
- If bonded wins, pick a partner warehouse already approved for bonded storage and inside the seven-county area, so a later move to zone status does not mean a change of building.
Baltimore 3PL does not own the warehouse and is not a customs broker. The desk places your program with a partner warehouse that holds the right status, coordinates customs clearance and entries through our licensed customs broker partners, and reports the duty timing to you in plain numbers. The service page is at /services/ftz-bonded-warehouse/ and the clearance coordination page is at /services/customs-brokerage/. Tariff changes that affect the arithmetic are tracked at /port/tariff-updates/.
What to send for a quote
- Annual declared value and number of containers, with the expected arrival pattern
- Tariff classifications and the duty rate you pay today on each major line
- Number of outbound shipments per year and the typical lot size
- Share of goods re-exported, and to which countries
- Any kitting, labelling, testing or rework done before sale
- Average days from arrival to sale, by product group
- Preferred warehouse area, for example Sparrows Point, Jessup or Harford County, if you have one
- Whether you already hold a bonded or zone arrangement elsewhere that the program must match