Hidden Savings Opportunity: The Merchandise Processing Fee
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Valuable savings opportunities await importers using a Foreign Trade Zone such as JAXPORT’s FTZ No. 64.
Consolidating multiple shipments into one weekly Customs entry through an FTZ allows importers to potentially reduce their Merchandise Processing Fee (MPF). This is the administrative fee U.S. Customs & Border Protection (CBP) charges on imports. Outside of an FTZ, this fee is due immediately upon the imported cargo arriving at the U.S. port of entry, airport or seaport in order to obtain Customs clearance in addition to any customs duties.
The MPF charge is assessed at 0.3464 percent of the commercial value for inbound foreign cargo.
The maximum MPF is $519.76 per entry. There is no maximum number of entries, so a high-volume importer that is not using an FTZ can end up paying the fee multiple times per week. Using an FTZ allows the importer to combine multiple outbound shipments into one single entry meaning the company only has to pay one fee, one time, each week. This benefit not only delays the payment of the MPF fee, it also provides a significant cost savings to the company.
MULTIPLE BENEFITS
FTZ No. 64 provides duty deferrals/exemptions/reductions and streamlined logistics, among other benefits according to JAXPORT’s FTZ expert Aisha Eccleston.
In addition, there are three primary MPF savings opportunities available to importers switching to an FTZ:
Because an FTZ is not in U.S. Customs territory, if a company imports through an FTZ, the MPF only applies when the merchandise leaves the FTZ.
No entry fee is paid on imports into the FTZ. Payment of the MPF is delayed until the retailer moves the cargo out, and then it is charged weekly that is, for a consecutive seven-day period (instead of one entry filed for each shipment). That means the maximum fee is $519.76 per week.
There is a reduction in human resource time spent submitting the MPF. Fewer entry filings can also lower brokerage fees
MPF SAVINGS IN ACTION
Rhonda Overton-Reilly is with Mazda North America Operations (MNAO), one of JAXPORT’s largest FTZ users. She said that, even with consolidating bills of lading by vessel, being an FTZ conveys important savings. The MPF savings allows the company to save approximately $100,000 annually.
5 Takeaways for importers
1. A reduction in your MPF payments and processing time is possible.
2. The cash flow savings are immediate, beginning in week one.
3. The MPF payment can be kept below $27,027.52 annually for any importer.
4. Annual MPF savings can exceed $243,000 for an importer with as few as ten moderately-valued shipments per week.
5. The weekly MPF is particularly attractive for high-volume shippers, but is also helpful for high-value shippers because the fee is based on the total estimated value of the cargo, so their cargo will “max out” quickly.
By: Lori Musser
Published in the Winter 2019 issue of JAXPORT Magazine
Updated May 2020
