QAD research flags software gaps in foreign-trade zone operations

A new QAD | Redzone survey says tariff volatility is pushing more companies into Foreign-Trade Zones, but many are using software that cannot keep up. The findings point to financial losses, audit problems and growing compliance risk as trade teams lean on fragmented systems and AI.

Why it matters: - Tariff volatility is turning Foreign-Trade Zone management into a board-level financial risk, not just an operations issue. - Companies are expanding FTZ programs to defer, reduce or eliminate duties, but weak software can expose them to penalties, failed audits, disruptions and enforcement actions. - The risk is broader than compliance. Poor FTZ tooling can hit margins, inventory control and continuity of operations.

What happened: - QAD | Redzone announced new research on how tariff volatility is affecting Foreign-Trade Zone operations. - The survey found that 87% of companies using FTZs say inadequate software has caused financial loss. - The study also found that 67% of respondents reported negative FTZ audit findings in the last 11 months. - The survey covered 301 qualified enterprise executives and senior professionals responsible for international trade, supply chain and compliance operations. - Dimensional Research conducted the study. - QAD sponsored the study in conjunction with AWS.

The details: - FTZ programs require precise tracking of inventory, production, shipments, customs activity and compliance documentation. - 97% of companies said they use multiple software applications to manage FTZ operations. - 80% said current software is missing key capabilities needed to handle today’s tariff volatility. - Only 20% said their software automatically updates when tariffs change. - Many organizations are relying on disconnected systems, spreadsheets, custom tools and repurposed applications to manage FTZ work. - Most negative audit findings were tied to FTZ software issues and lack of adaptability for current market conditions. - 99% of companies said they are using or planning to use AI for FTZ operations. - The research warns that AI could magnify existing gaps if companies do not have integrated systems and reliable data foundations. - Joshua Guy, VP of Global Trade Management at QAD, said fragmented systems and manual workarounds can move trade risk from an operational problem to measurable financial exposure.

Between the lines: - The survey suggests companies are modernizing around tariffs faster than their trade software stack can adapt. - FTZs are becoming more strategic as firms look for ways to protect margins, but many operations still run on patchwork technology. - The AI adoption figure shows companies want automation, yet the research suggests automation alone will not fix broken data flows or disconnected workflows.

What's next: - Companies are likely to keep expanding FTZ programs as tariff pressure persists. - The research implies more investment will be needed in integrated trade, compliance and inventory systems that can update quickly as tariffs change. - QAD says the full report is available here.

The bottom line: - Foreign-Trade Zones may help companies manage tariff costs, but the software running them is now a material source of financial and compliance risk.