General Purpose Zone (GPZ)
A GPZ is a third-party logistics provider that operates a warehouse as a Foreign Trade Zone (FTZ), allowing customers to import cargo without immediately clearing Customs. The cargo receives preferential treatment, with duties eliminated, deferred or reduced:
- Exports: Foreign merchandise may be re-exported free of duty and federal excise tax.
- Returns: Importers using the FTZ program typically pay no duties on returned products.
- Scrap/Waste/Damaged Goods: No duties are paid on most scrapped product.
- Consumed Merchandise: Merchandise consumed during a process in a GPZ/FTZ is generally not subject to Customs duties.
Duty Deferral: There is significant deferral on the average inventory during the first year in the GPZ/FTZ program with capital costs captured each subsequent year.
Duty Reduction: Companies can receive authority to consolidate multiple import duties, paying only the duty for the final product.
Additional benefits include:
Faster Supply Chain:
- No need to hold product for Customs clearance resulting in a 1 to 3-day reduction in the supply chain.
- GPZ/FTZ operators can facilitate the movement of foreign product; they do not need Customs officers present to break seals, inspect products, assemble material, or ship product. A valuable benefit to cross dock operations.
Improved Cash Flow: Duties are only paid when merchandise enters US Customs territory. Standing inventory in a GPZ/FTZ often results in particularly large savings the first year.
Who can benefit?
Businesses of all types and across many sectors of the economy may benefit from the U.S. Foreign Trade Zone program. In general, those that engage in international trade can optimize their supply chain by using the GPZ for storage, assembly, inspection, repackaging, and distribution.
Savings will vary depending upon a company’s business model in relation to:
• Total annual merchandise value
• Volume of imported (dutiable) merchandise
• Total annual merchandise processing fees paid (MPF)
• Annual customs broker fee(s) paid
• Average duty rates of imported merchandise before processing
FOR MORE INFORMATION: GPZ Fast Facts