Free Trade Zone (FTZ)

A Free Trade Zone (FTZ) — also called Free Zone, Foreign Trade Zone (US), or Special Economic Zone (SEZ) — is a designated geographic area within a country where goods may be imported, stored, processed, assembled, repackaged, or re-exported without being subject to the usual customs duties, taxes, and import controls.

FTZs are used to facilitate transhipment hubs, attract foreign direct investment, support export-oriented manufacturing, and enable inventory hubs near key markets without paying duty until goods enter the local economy. Major examples include Jebel Ali Free Zone (JAFZA, Dubai), Singapore Free Trade Zones, Shanghai Pilot FTZ, Colón Free Zone (Panama), and the US FTZ system covering 270+ zones.

For freight forwarders, FTZ operations require specialised customs workflows: goods enter under bond, internal movements are tracked, and duty becomes payable only on the portion that crosses into the domestic customs territory.