Tariff volatility is driving companies to expand Foreign-Trade Zone (FTZ) operations to reduce duty exposure, strengthen audit readiness, and protect margins, according to research released by QAD | Redzone.
The research also reveals that many teams are scaling these FTZ programs on fragmented systems that are not keeping pace with today’s operational and compliance demands.
“FTZs are no longer a back-office compliance program. They are now a strategic tariff mitigation tool, but many companies are trying to scale them on systems that were never designed for this level of volatility,” says Joshua Guy, VP, global trade management at QAD. “The risk is not just that teams are working harder. The risk is that fragmented FTZ operations are creating audit exposure, missed savings, and preventable financial loss.”
Key takeaways:
· 67% of companies using FTZ software reported negative FTZ audit findings in the last 11 months, while 87% said inadequate FTZ software has caused financial harm.
· 97% of respondents use multiple software applications to manage daily FTZ operations, including ERP systems, dedicated FTZ ICRS software, spreadsheets, custom applications, and repurposed tools.
· At the same time, 80% said their FTZ software is missing key capabilities needed to manage current tariff volatility, and only 20% said their software automatically updates when tariffs change.
· Most negative audit findings were attributed to fragmented FTZ software issues, and financial loss was identified as the top consequence of negative FTZ audits.
· 99% of companies are using or planning to use AI to manage FTZ operations, underscoring the need for stronger data foundations, integrated workflows, and scalable compliance infrastructure before automation can deliver meaningful value.
