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June 2012
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Foreign-Trade Zone status helps riverport to compete

By DAVID ZOELLER dzoeller@paducahsun.com


he Paducah/McCracken County riverport's Foreign-Trade Zone status should help level the playing field in competing against larger port cities for business, according to its executive director.

The riverport's application for FTZ status was approved by the U.S. Department of Commerce Foreign-Trade Zone board last November. Following the required paperwork and on-site inspection, the new trade status was activated at the end of May.

The activation of the FTZ wound down a successful fiscal year at the riverport, which also included moving "quite a bit of tonnage," landing a new customer, and working to improve equipment and production, according to Bill Miller, executive director.

According to Miller, the FTZ status provides local development teams global opportunities to attract manufacturing and distribution centers - and compete against larger ports.

"It puts Paducah and western Kentucky in a position of equal footing with everybody else," Miller said, citing cities such as Memphis and St. Louis as examples.

According to Miller, whether a city or area has a FTZ is among the top concerns of companies looking for a place to locate a manufacturing or distribution center.

"Normally, there's a worksheet they start with, and one of the top boxes they have to check is that Foreign-Trade Zone," Miller said. "That's what they look for."

One of the chief benefits of Foreign-Trade Zones is that U.S. Customs' duty (payment) is deferred until the goods are removed from the zone areas, which improve cash flow for its users.

In addition, Zone users pay lower duty rates on goods produced in the zone when the finished product has a lower duty rate than the imported components and parts.

"That way they (customers) can move cargo from an ocean port inland and receive the same benefits as if the FTZ were right next to the ocean," Miller said. "They're still enjoying the benefit of not having to pay the Customs duties up front."

Paducah's ideal location, and the multiple available modes of transporting cargo, make it potentially attractive, Miller said.

"Right now, we're promoting as much as we can the multimodal aspect of the Paducah region, between the truck, rail and the water," Miller said. "Its location makes it ideal for these manufacturing and distribution centers to look at."

Paducah's location within the nation's inland waterways is particularly important, according to Miller.

"Here in Paducah you've got the ability to travel by water, which is the most economic and eco-friendly mode of transportation there is."

Miller is also encouraged by the opportunity to utilize container-on-barge as a mode of transportation. Last year, the riverport participated in a container-on-barge test run in cooperation with Ingram Barge Company to test the logistics of transporting numerous containers at one time via barge.

The test run highlighted the effectiveness of the riverport's flat-top crane, the largest of its kind in North America.

Container-on-barge transport takes a lot of cargo "off the roadways, which makes the highways safer," Miller said. A manufacturer can ship 30-40 containers by barge, unload them at the port, put them in a warehouse and then distribute them to their stores in the region.

Paducah has a lot to offer that Miller thinks can be used to market western Kentucky and enable the riverport to become an economic driver for the region.

"If we can just get some traction, and get things started, once the first one (manufacturing or distribution center) comes in, the next one's easier to get," he said.

"Why not put a plant here?" he asked. "We're well-positioned when you look at all the sites and land that's available. Our crime rate's low, we don't have the issues of some of the major cities. We've got some great things as far as our educational system, and quality of life, like the fact that we have a symphony orchestra, for the size community we are.

"We've got so many things that we can brag about."

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