APICS Certified in Logistics, Transportation and Distribution (CLTD) — Question 7

A company wants to minimize tariff costs while avoiding the need to file for duty drawback. Which of the following practices would best achieve this objective?

Answer options

• A. Adopt Customs Trade Partnership Against Terrorism (C-TPAT) rules
• B. Use foreign/free trade zones (FTZs)
• C. Use an international third-party logistics (3PL) provider
• D. Ship by free on board (FOB) terms

Correct answer: D

Explanation

Shipping by free on board (FOB) terms allows the company to transfer ownership and risk at the shipping point, which can help minimize tariff costs. The other options, while beneficial for different reasons, do not directly address the goal of reducing tariff expenses without filing for duty drawbacks.