IPI freight is used to define inbound freight moves from a port to a shipper’s door within the interior of the country via a domestic or international intermodal container.
The distinction with IPI freight is it is being sent to the consignee’s door.
Inbound freight moved to an intermodal rail terminal or container yard is called a landbridge freight move.
An IPI intermodal shipment is typically moved via truck for short distances and intermodal rail for longer distances. In some cases, the freight moves directly inland via the ocean container, while other times the freight is transloaded at the entry port location city by a third party logistics company (3PL) into a domestic 53’ intermodal container.
A little over 40% of the IPI freight is transloaded and that figure continues to rise.
IPI freight is often moved by freight forwarders through a 3PL, known as a container freight station (CFS) where the CFS will consolidate and re-consolidate various customers’ freight from the port inland to the cities of similar destination.
For example, the CFS has multiple customers’ freight coming in multiple import ISO containers that they then consolidate to similar destination cities where they then deconsolidate the shipment into smaller LTL shipments that go out of the pooling / consolidation city via LTL or straight truck freight options.
The largest US CFS company is STG Logistics.
Often shippers will not pay duties as soon as the import arrives, but instead they have a CFS ship the freight in-bond to a foreign trade zone (FTZ) to defer the payment of duties until the product is purchased by the customer.
The primary benefits an FTZ provides are duty deferment or relief from inverted tariffs, as the product is transformed into a lower taxes item within the harmonized tariff schedule (HTS) during a manufacturing or assembly.
An example of duty inversion can be seen in the automotive industry. All US auto plants are set up as FTZ’s. A car has the tariff rate of 2.5%.
So, under the duty inversion import process anything that enters the FTZ at a higher tariff rate than the 2.5% will come to the facility in-bond under a CF 7512. Once the fully assembled car rolls off the assembly line and exits the plant all duties will be paid. Under this example, if a car has an imported AM/FM radio that came to the facility in-bond would only be taxes 2.5% versus its stand alone tariff rate of 8%, thus tremendous cost savings.
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