About True Grade

A food shipment often reaches the United States before its final destination becomes clear. It may require inspections, cold storage, relabeling, or customer approval. Meanwhile, tariffs, freight costs, seasonal demand, and strict delivery schedules continue placing pressure on margins. The financial challenge begins before the product generates revenue. Importers may owe duties while inventory remains in storage or awaits allocation. Therefore, customs timing can directly affect cash flow, purchasing capacity, and customer service. In 2025, U.S. agricultural imports reached $212 billion, nearly matching the 2024 record of $213 billion. Processed foods and beverages continue representing a significant share of that activity. As import volumes grow, companies need greater control over when customs costs become final. Foreign-trade zones provide that control. They can delay duty payments, support re-exports, reduce processing fees, and improve inventory flexibility. For food and beverage companies, those benefits can strengthen daily operations and long-term growth. What Is a Foreign-Trade Zone? A foreign-trade zone is a designated U.S. location supervised by Customs and Border Protection. Within an activated zone, foreign merchandise receives special customs treatment. Companies pay duties when products enter U.S. commerce, rather than when they first arrive. If companies re-export those products, U.S. duties generally do not apply. Companies may also store, inspect, relabel, repack, sample, test, or destroy merchandise inside the zone. However, production activities require approval from the Foreign-Trade Zones Board. The program already plays a major role in U.S. trade. In 2024, U.S. FTZs received $964 billion in merchandise. During the same year, FTZ exports reached $134 billion. These numbers show that FTZs support much more than isolated customs transactions. They now support major warehousing, distribution, and international trade activity. Why FTZs Are Relevant to Food and Beverage Companies Food and beverage inventory rarely follows a simple path from port to customer. Products often move through storage, inspections, quality reviews, relabeling, and customer allocation. At the same time, demand may shift after the shipment arrives. Inventory could move to domestic customers, cruise lines, hospitality accounts, or export markets. An FTZ gives importers time to make those decisions before duties become final. Therefore, customs treatment can follow the product’s actual destination. That flexibility reduces rushed decisions and unnecessary costs. It also helps companies manage one inventory pool across several markets. 1. Duty Deferral Protects Working Capital Under a traditional import model, duties become payable when merchandise enters U.S. customs territory. This can tie up cash before the inventory begins generating revenue. An FTZ changes that timing. Companies pay duties only when products leave the zone for domestic consumption. As a result, importers keep more cash available during storage, inspections, allocation, and quality reviews. That liquidity can support purchasing, operations, and customer demand. Consider a distributor holding $8 million in average foreign inventory. At a 5 percent effective duty rate, the company defers $400,000. With an 8 percent capital cost, that timing creates approximately $32,000 in annual financial value. The company still pays duties on domestic withdrawals. However, it pays them when inventory begins moving toward revenue. The benefit grows when products remain in storage longer. This structure can also support seasonal purchasing, advance inventory programs, and large-volume buying opportunities. 2. Re-Exports Can Eliminate U.S. Duties Many food distributors serve domestic and international customers from the same facility. Their customers may include cruise vessels, Caribbean destinations, overseas hotels, and international distributors. However, companies may not know the final destination when inventory first arrives. An FTZ allows that merchandise to remain unentered until the destination becomes clear. If the company re-exports the inventory, U.S. duties generally do not apply. This creates a clear advantage for businesses serving several markets. Other cases may support cruise operations or export orders. The distributor pays duties only on inventory entering domestic commerce. Therefore, the company keeps one flexible inventory pool while avoiding unnecessary duties on exported products. 3. Weekly Entry Can Reduce Processing Fees FTZ savings can also come from customs processing, not only tariff treatment. This difference becomes important for high-volume importers. The Merchandise Processing Fee applies to many formal customs entries. For fiscal year 2026, the rate is 0.3464 percent. The minimum fee is $33.58, while the maximum reaches $651.50 per formal entry. Eligible FTZ operators may combine qualifying withdrawals into one weekly entry. That change can create substantial savings. Assume a distributor files ten large entries each week. Without weekly entry, annual maximum processing fees could reach $338,780. With one consolidated weekly entry, those fees could fall to $33,878. The annual difference would reach approximately $304,902. For low-duty food products, this benefit may exceed direct tariff savings. Therefore, every FTZ feasibility study should examine entry frequency. A low tariff rate does not always mean limited FTZ value. 4. Documented Waste May Reduce Duty Exposure Food inventory does not always reach the customer. Products may become damaged during handling, inspection, repacking, storage, or temperature deviations. Without the right structure, companies may still owe duties on inventory that never produces revenue. FTZ procedures can reduce duties on approved waste or destroyed merchandise. However, companies must follow customs requirements and document every adjustment correctly. This includes destruction, loss, inventory movement, and final disposition. The benefit can become especially important for perishable products and high-duty ingredients. Still, normal commercial shrinkage does not automatically qualify. Strong inventory controls remain essential. They protect compliance while helping companies capture the available financial benefit. The FTZ Program Has Expanded With Global Trade The growth of the FTZ program reflects its increasing role in modern supply chains. FTZ merchandise receipts reached $964 billion in 2024. That figure increased from $238 billion in 2000. The change represents fourfold growth and an average annual rate of approximately 6 percent. During the same period, FTZ exports increased from $15 billion to $134 billion. That represents nearly ninefold growth. The average annual export growth rate reached approximately 9.6 percent. These figures show how companies increasingly use FTZs for complex supply chains. For food companies, the warehousing share deserves particular attention. In 2024, nearly two of every five FTZ dollars

Behind every meal served at sea is a complex supply chain that requires careful planning, reliable logistics, and strong collaboration between cruise lines and their suppliers. Unlike land-based foodservice, cruise operations have limited opportunities to restock once a ship leaves port. Every product must arrive on time, meet detailed specifications, and comply with food safety and import requirements. That level of precision cannot be achieved through transactions alone. It requires suppliers who actively contribute to planning, problem-solving, and long-term success. As the cruise industry continues to grow, these relationships have become more important than ever. According to the Cruise Lines International Association (CLIA), the industry welcomed 34.6 million passengers in 2024, with continued growth expected in the coming years. As passenger volumes increase, supply chains must become even more resilient and responsive. Cruise Supply Chains Leave Little Room for Error Cruise food procurement is unlike any other segment of the food industry. Every sailing depends on thousands of products arriving at the right port, at the right time, and in the right condition. Procurement teams coordinate deliveries across multiple countries, suppliers, and regulatory environments while supporting consistent dining experiences across an entire fleet. Every turnaround day is a race against the clock. Cruise lines have only a limited window to receive, inspect, and load the products needed for the next sailing. Unlike restaurants or hotels, cruise ships cannot simply place another order when inventory runs low. Once a vessel departs, the opportunity to correct a supply issue may not come for several days. This is why collaboration starts well before products are loaded onto a ship. Suppliers and procurement teams must work together to anticipate challenges, share information, and make informed decisions throughout the planning process. Suppliers Bring Valuable Market Intelligence One of the greatest contributions a supplier can make is market knowledge. Suppliers often recognize changes in availability before they impact operations. They monitor harvest conditions, production capacity, transportation challenges, labor shortages, and changing regulations that can influence supply. During the MHA conference, Vina Jumpp, Associate Vice President of Food, Beverage, Hotel, Gallery and Private Destination Procurement at Royal Caribbean Group, identified import restrictions as one of the industry’s biggest sourcing challenges. As regulations evolve across different countries, procurement teams increasingly rely on suppliers to provide insight into local markets and available alternatives. This information allows cruise lines to adjust sourcing strategies before disruptions occur. Rather than reacting to shortages, procurement teams can plan proactively with suppliers who understand both regional conditions and long-term market trends. Before a new product reaches a cruise ship, it often goes through multiple tastings, evaluations, and approval stages involving procurement, culinary, and operations teams. Compliance Requires Shared Responsibility Food safety and regulatory compliance depend on collaboration throughout the supply chain. Cruise lines rely on suppliers to provide accurate documentation, maintain product integrity, and support complete traceability from origin to delivery. As traceability requirements continue to evolve, information sharing becomes even more important. Regulations such as the FDA’s Food Traceability Rule (FSMA 204) reinforce the need for detailed records across the supply chain. Organizations that work closely with their suppliers are better positioned to meet these requirements while maintaining operational efficiency. Turning Collaboration into Action At True Grade, our role extends beyond sourcing products. We work closely with manufacturers around the world to identify innovative products, monitor market conditions, and evaluate new opportunities that align with our customers’ evolving needs. One way we support this process is through continuous product evaluations and tastings. Our sourcing and culinary teams regularly review new products from existing and prospective suppliers before presenting them to cruise line procurement and culinary teams. This allows customers to evaluate products that meet their quality standards while introducing new ideas that can enhance onboard menus. We also recognize that cruise operations require consistency throughout the year. Seasonal changes, shifting market conditions, and global supply challenges can all affect product availability. By maintaining strong relationships with a diverse supplier network and continuously monitoring sourcing markets, we help ensure our customers have access to the products they need, regardless of the season or market conditions. For us, supplier collaboration is not a single step in the procurement process. It is an ongoing commitment to helping cruise lines maintain reliable supply chains, support consistent guest experiences, and stay prepared for changing market conditions throughout the year.

Every year on June 8, World Ocean Day highlights one of the most important resources on the planet. The ocean does far more than support marine life. It feeds billions of people, powers global trade, regulates the climate, and supports industries that impact everyday life. From seafood supply chains to international shipping routes, much of the world’s economy depends on healthy oceans. World Ocean Day serves as a reminder of that connection. It encourages governments, businesses, and communities to recognize both the value of the ocean and the responsibility to protect it. The Story Behind World Ocean Day World Ocean Day traces its origins back to 1992 during the Earth Summit in Rio de Janeiro, Brazil. At the summit, Canada proposed creating a dedicated day to recognize the ocean’s importance and encourage global action to protect marine ecosystems. The initiative was supported by the Ocean Institute of Canada and the International Centre for Ocean Development. The idea gained momentum over the following years. Environmental organizations, research institutions, and coastal communities began recognizing June 8 through educational events and conservation efforts. However, the day was not officially recognized by the United Nations until 2008, when the UN General Assembly adopted Resolution 63/111. The first UN-recognized World Ocean Day was celebrated on June 8, 2009. The journey from proposal to international recognition took nearly two decades, reflecting the long-term commitment required to address ocean-related challenges. The Challenges Facing Our Oceans World Ocean Day is also an opportunity to recognize the growing pressures affecting marine environments. Many of the benefits the ocean provides cannot be taken for granted. Microplastics have been discovered in marine animals at every level of the food chain, from plankton to whales. Overfishing According to the FAO, approximately 35% of global fish stocks are harvested at biologically unsustainable levels. When fish populations decline faster than they can recover, entire marine ecosystems can become unbalanced. This creates long-term risks for both biodiversity and food security. Plastic Pollution An estimated 8 to 12 million metric tonnes of plastic enter the ocean every year. Plastic waste has been found in remote deep-sea trenches, Arctic ice, and even seafood consumed by humans. As plastic breaks down into microplastics, it becomes increasingly difficult to remove from marine environments. Ocean Acidification Since the Industrial Revolution, ocean acidity has increased by approximately 30%. This change affects species that rely on calcium carbonate to form shells and skeletons, including oysters, mussels, crustaceans, and coral reefs. The consequences extend beyond marine ecosystems and can directly impact fisheries, aquaculture operations, and coastal economies. Why World Ocean Day Matters World Ocean Day serves as a reminder that the ocean is not separate from everyday life. It supports global food systems, enables international trade, regulates the climate, and sustains countless communities around the world. For businesses involved in food production, distribution, and supply chains, ocean health is closely tied to long-term sustainability and resilience. The challenges facing marine ecosystems are significant, but awareness is an important starting point. Understanding the ocean’s role helps create better decisions across industries, governments, and communities. Every June 8 offers an opportunity to reflect on that connection and recognize the importance of protecting one of Earth’s most valuable resources.

Latin America’s food export renaissance is reshaping global supply. Explore key markets, trends, and what food buyers need to know.