In the complex and costly world of pharmaceutical development, manufacturing, and commercial distribution, Foreign-Trade Zones (FTZs) offer pharmaceutical companies and their contract development manufacturing organization (CDMO) partners distinct economic and environmental benefits. FTZs (the U.S. version of what are known internationally as free-trade zones) are designated locations on U.S. soil — typically at or near a port of entry — where incoming goods are handled, manufactured, and re-exported without U.S. Customs and Border Protection (CPB) intervention.
Both foreign and domestic merchandise are treated as international commerce that is outside the jurisdiction of U.S. Customs in an FTZ, allowing for increased freedom of movement for goods and people, streamlined administrative procedures, and more efficient free trade. FTZs help lower costs, increase delivery speed, and improve regulatory compliance of pharma goods.
Frontier Scientific Solutions (Frontier), a provider of temperature-controlled storage, and distribution company strategically headquartered near Research Triangle Park in Wilmington, North Carolina, has partnered with Wilmington International Airport (ILM) to develop a world-class pharmaceutical campus consisting of over one million square feet of cGMP temperature-controlled storage for global pharmaceutical drug distribution. Its campus is located in an FTZ with direct runway access and within a 15-minute drive to the Port of Wilmington, the most efficient port in North America in 2022, according to the Container Port Performance Index (CPPI).
Permitted Activities in FTZs
Any merchandise that is not expressly prohibited from U.S. entry can be admitted into an FTZ under oversight by the FTZ board. Activities allowed in an FTZ include assembly, exhibition, cleaning, mixing, processing, relabeling, repackaging, sampling, testing, storage, and display of merchandise.
Key Advantages of Utilizing Frontier’s FTZ Designation
FTZs offer a variety of benefits, both to individual companies and the public. By utilizing Frontier’s FTZ designation, pharmaceutical companies can defer or reduce duties on imported materials, providing significant cost savings and a competitive edge in the global market.
Rather than having to pay duties, taxes, and fees on a large volume of international product all at once, companies can manage their cash by keeping the bulk of that product in the FTZ and administratively importing product or portions of the product only when it is needed. This enables companies to use revenue from an initial batch to pay duties on the next batch.
FTZs also enable companies to consolidate shipments more easily by not having to perform multiple customs clearance entries. These streamlined customs procedures reduce administrative burdens and accelerate the movement of pharmaceutical products, helping to reduce product shortage challenges. For example, an active pharmaceutical ingredient (API) company in China or India with a primary consumer market of U.S. manufacturing facilities can get products to their customers much more rapidly because the products are already physically in the United States, ready to be imported.
Companies can engage in manufacturing, processing, and repackaging activities within the FTZ without being subject to certain customs duties, enabling greater flexibility in responding to market demands. Performing all commercial labelling and packaging in the FTZ as needed enables companies to maintain a constant flow of products into consumer markets.
Storing products closer to the consumer market within the FTZ until they are needed increases the speed of goods to market. For example, rather than waiting several weeks for API to ship from China and then even longer for that API to clear customs before arriving at a manufacturing site in the United States, the API is available much faster if it is stored at a temperature-controlled facility within a U.S. FTZ.
Reducing touchpoints of the API also minimizes risk of damage during transport. With state-of-the-art facilities and adherence to rigorous security protocols, Frontier’s enhanced security measures ensure the safety and integrity of pharmaceutical products throughout the storage and logistics process.
By leveraging Frontier's FTZ designation, pharmaceutical companies can optimize their supply chains, minimizing lead times and ensuring timely delivery to end-users.
Environmental Benefits of an FTZ Strategically Located to Provider Faster Connectivity
Storing products within an FTZ near the consumer market in which they are needed also has environmental benefits.
Having FTZs strategically located in places that allow for a more direct distribution model plays a crucial role in reducing CO2 emissions. Having dedicated flights dedicated to transporting pharmaceutical products also helps to reduce product waste by mitigating the risks associated with leaving sensitive pharmaceutical products on the tarmac or in warehouses while they are being cleared. When products are left on the tarmac during conventional commercial flights — often exposed to fluctuating environmental conditions — they face significant risks, including temperature deviations, which can compromise the quality and safety of temperature-sensitive products like biologics, vaccines, and other pharmaceuticals.
By utilizing FTZs, companies can store goods in climate-controlled, secure environments while they await regulatory approvals or customs clearance. This eliminates the need for products to sit idle at airports and significantly reduces the likelihood of exposure to extreme temperatures, humidity, or contaminants. The streamlined customs process available within an FTZ means that products can be quickly moved from the port or airport directly into a safe storage facility, bypassing extended time in vulnerable positions on the tarmac.
Frontier’s location in Wilmington enables more efficient distribution than product needing to be trucked from California to the East Coast, or arriving from Europe and being routed through Canada to be trucked down to the U.S. More direct and faster distribution significantly reduces carbon footprint emissions. The milder weather also mitigates transport issues caused by winter extremes.
Frontier also strives to provide greener storage and transport solutions by partnering with over-the-road distribution companies that follow science-based methods of measuring and reducing their carbon emissions.
A Holistic Solution for Economic Efficiency and Environmental Responsibility
In an era where efficiency, speed to market, and sustainability are paramount, FTZs like Frontier Scientific Solutions’ operations in Wilmington, offer an essential advantage. By providing cost-saving opportunities through duty deferral, optimizing the movement of goods, and reducing the need for long-distance transport, the zone significantly enhances the global pharmaceutical supply chain.
Beyond economic gains, Frontier’s FTZ contributes to a greener future. The ability to store and distribute pharmaceutical products in controlled environments, closer to the market, helps companies reduce their carbon footprint and prevent product spoilage due to environmental exposure. This holistic approach combines the strengths of logistics with a forward-thinking commitment to sustainability.
Frontier’s FTZ infrastructure is a prime example of how modern pharmaceutical logistics can serve not only economic interests but also the greater goal of environmental stewardship. As the global demand for pharmaceutical products continues to rise, utilizing an FTZ is not just a strategic decision — it is a necessity for companies looking to stay competitive, responsive, and responsible in an ever-evolving market.
By leveraging the unique benefits of Frontier’s Wilmington FTZ, pharmaceutical companies can remain agile in the face of supply chain disruptions, enhance their operational efficiency, and reduce their environmental impact, paving the way for a more sustainable future in global healthcare.
