Survey: FTZ software gaps are driving audit failures and losses

A new QAD | Redzone-sponsored survey says tariff volatility is pushing more companies to expand Foreign-Trade Zone operations, but fragmented software is creating compliance risk and financial harm. The findings show widespread audit problems, weak automation and a fast-rising push toward AI in FTZ management.

Why it matters: - Foreign-Trade Zones are becoming a key tariff-mitigation tool as companies try to reduce duty exposure and protect margins. - The research suggests many companies are scaling FTZ programs without the software needed to manage higher compliance complexity. - That gap is showing up as negative audit findings and financial losses.

What happened: - QAD | Redzone announced new research on FTZ operations, tariff volatility and software readiness. - The research was sponsored by QAD, conducted by Dimensional Research and supported in conjunction with AWS. - Dimensional Research surveyed 301 qualified enterprise executives and senior professionals responsible for international trade, supply chain and compliance operations. - The survey found 67% of companies using Foreign-Trade Zones reported negative FTZ audit findings in the last 11 months. - The survey found 87% said inadequate FTZ software has caused financial harm.

The details: - 97% of respondents use multiple software applications to manage daily FTZ operations. - Those tools include ERP systems, dedicated FTZ ICRS software, spreadsheets, custom applications and repurposed tools. - 80% said their FTZ software is missing key capabilities needed to manage current tariff volatility. - Only 20% said their software automatically updates when tariffs change. - The research said most negative audit findings were tied to fragmented FTZ software issues. - Financial loss ranked as the top consequence of negative FTZ audits. - Joshua Guy, VP of Global Trade Management at QAD, said many companies are trying to scale FTZs on systems that were never designed for this level of volatility. - Guy said the risk includes audit exposure, missed savings and preventable financial loss.

Between the lines: - The survey points to a common pattern: companies are responding to trade pressure with more FTZ activity, but not always with integrated technology. - The 99% of companies using or planning to use AI for FTZ operations suggests automation is becoming a priority, but the report also implies AI will only be effective if the underlying data and workflows are cleaner. - The findings frame FTZ management as a strategic function, not just a back-office compliance task.

What's next: - Companies are likely to keep investing in FTZ automation as tariff volatility continues. - The report suggests stronger data foundations, integrated workflows and scalable compliance infrastructure will be needed before AI can deliver meaningful value. - QAD | Redzone said the full report is available here.

The bottom line: - Fragmented FTZ software is turning tariff-management efforts into compliance and financial risk, even as most companies move toward AI-driven operations.