Resilient Supply Chain — How Leaders Keep Business Moving
Resilient Supply Chain is for supply chain, operations, procurement and technology leaders who need practical ways to manage disruption, reduce risk and keep business moving.
First launched in 2019 as Digital Supply Chain and later known as Sustainable Supply Chain, the podcast continues today as Resilient Supply Chain, with the same extensive archive of more than 525 episodes covering supply chain technology, resilience, logistics, procurement and sustainability.
Each Monday, technology and sustainability analyst, keynote speaker and former SAP Global VP Tom Raftery speaks with the executives, operators, founders and innovators redesigning how goods, information and decisions move through global supply chains.
These are candid conversations about what works in practice—not polished PR narratives or vague predictions. Guests explain how they are responding to supplier failures, geopolitical shocks, volatile costs, capacity constraints, changing regulations and rising pressure to improve both performance and sustainability.
The podcast examines:
Faster planning and decision-making under uncertainty
Supplier risk, sourcing strategy and business continuity
AI, automation, visibility and operational intelligence
Warehousing, logistics and fulfilment performance
Scope 3 emissions, circularity and responsible sourcing
The systems, incentives and organisational changes needed to turn data into action
The central question is simple: what helps a supply chain withstand disruption, adapt quickly and continue serving the business?
New episodes are published every Monday at 7am CET. Resilient Supply Chain+ subscribers also receive bonus analysis, highlights and briefings on emerging industry trends.
Follow Resilient Supply Chain for practical lessons from the people solving real operational problems—and building supply chains that perform when conditions do not go to plan.
Tariffs can turn a reliable supplier into the expensive option. A US foreign trade zone (FTZ) may preserve sourcing flexibility, but customs compliance adds costs and risk.
In this episode I speak with Curtis Spencer, CEO of IMS Worldwide. He describes a customer he says preserved around $50 million in export sales through FTZs, not $50 million in avoided duties. We examine how those commercial gains compare with operational obligations.
Listen to judge whether tariff relief improves your sourcing choices enough to justify the investment.
Questions we cover
What changes inside an FTZ warehouse? (11:53)
Curtis explains how weekly customs entries and software linked to warehouse management systems can reduce repetitive filings without stopping shipments, where the operation qualifies.
Why does supplier data matter so much? (18:05)
Invoices, advance shipping notices and bills of lading arriving as separate emailed PDFs may still need manual entry, even when the FTZ system supports electronic integration.
When should a company reject an FTZ? (21:15)
Curtis argues that an illustrative $200,000 annual saving against $100,000 in running costs leaves too little reward for the added customs compliance risk.
If disruption hit tomorrow, would you know where your supply chain was most exposed? In 15 minutes my free scorecard helps you assess 27 resilience statements, calculate your score, and turn the result into three priorities and a 30 day action plan. You can download the scorecard free at tomraftery.com/scorecard.
Podcast supporters I'd like to sincerely thank this podcast's generous Subscribers:
Alicia Farag
Kieran Ognev
Gary Lynch
And remember you too can become a Resilient Supply Chain+ subscriber - it is really easy and hugely important as it will enable me to continue to create more excellent episodes like this one and give you access to bonus episodes of topical, timely supply chain resilience analysis.
🎤 Looking for a keynote speaker on supply chain resilience, AI, and sustainability? I help leaders understand the forces reshaping global supply chains, from geopolitical disruption and climate risk to AI and real-time decision-making.
Download my Speaker Pack: https://tinyurl.com/spkrpck
Finally If you have any comments/suggestions or questions for the podcast - feel free to just send me a direct message on LinkedIn, or send me a message using this link.
Foreign trade zones sound great but if I'm gonna save a customer 200,000 a year small little customer 200,000 a year and it cost him a hundred thousand to manage the zone, don't bother. The customs compliance risk two to one is not enough. 3 to 1, 4 to 1, 5 15 to 1? Yeah! Make the investment. But you gotta know what that cost benefit analysis is first.
Tom Raftery:
The numbers are only the starting point. A foreign trade zone still depends on reliable supplier information and customs processes that work under pressure. Good morning, good afternoon, or good evening, wherever you are in the world. Welcome to episode 148 of Resilient Supply Chain Stories and Strategies That Keep Business Moving. I'm your host, Tom Raftery. My guest today is Curtis Spencer, CEO of IMS worldwide, who's worked with US foreign trade zones for decades. Our conversation tests where tariff relief creates genuine sourcing flexibility and where it becomes another operational burden. For supply chain leaders, the payoff is a sharper way to assess both the economics and the implementation risk. And the urgency behind those decisions has changed. Curtis. What's different about the tariff environment today?
Curtis Spencer:
This last I'll say decade has been a real roller coaster that has been unprecedented. We're sitting at a tariff level Tom in the United States that is 10 times higher on average than it's ever been. When you multiply 10 x times any kind of savings you get out of a foreign trade zone it's a material event. It is is no longer a rounding error It's material
Tom Raftery:
Okay. And so for people who are not versed in this space, Curtis, what's a foreign trade zone?
Curtis Spencer:
Great question. So a foreign trade zone is specifically approved piece of property within a port of entry or adjacency. Now there's 302 port of entries in the United States so virtually anywhere can become a foreign trade zone. There are very few exceptions and we tend to find those exceptions but very few locations that cannot qualify to be a foreign trade zone. It can be approved as a new piece of property and you build on it or it can be literally wrapped around the four walls of your parcel. And we create a foreign trade zone on top of where you exist. A foreign trade zone allows the duty free admission of goods into the foreign trade zone without effect of quota without effect of any kind of customs requirement even labelling and and packaging for FDA, USDA all of that can be held off until the goods leave the foreign trade zone and come into US Commerce. Now if you leave the foreign trade zone and go elsewhere you never paid the duty up front You don't pay the duty on outbound. If you make something in a foreign trade zone and it creates a scrap or a waste stream you don't pay the duty on the imported items in that waste and scrap. There are two other major benefits time value of money which right now it's seven point half 8% interest rates and 10 times as high duty rates. That time value of money is very important. And then the last big benefit is merchandise processing fee which is a fee charged by customs to every entry.
Tom Raftery:
Okay. And when you say a port, is it just marine ports or could it be airports as well?
Curtis Spencer:
Well it's all ports of entry Kansas City for example has several foreign trade zones. Indianapolis several foreign Denver so it's not seaports or land ports it's customs ports of entry
So what would you say has changed that made tariffs a supply chain leadership issue, not just a customs issue?
Curtis Spencer:
That is probably the most important question of the day and quite frankly I mean what we've seen in the last 10 years of black swan logistics events, let's go through those. The tsunamis in Japan major Black Swan event, COVID, the Israeli Iran war, the Panama Canal drying up to half capacity. These black swan events tie in directly into the name of your podcast. The Resilient Supply Chain. How do you keep resilience in a supply chain when you have normal terribly crapola issues. Prices too high, fuel too low, supply demand These force you to consider resilience as a much higher perspective for the C-Suite When you add the black Swan events now it's Hey I can't even get my product What the hell is going on? And now the supply chain executive has been elevated to a level. So how do tariffs play into this? People are changing their supply chains left and right. And then they're making the very smart move, have three to four two to three to four suppliers of every key ingredient that you need. Every key part, every key sub-component You need two to four suppliers in case you have a problem over here you buy from over there And that impact of the tariff shifts has been just as important as a Black swan event Tom. So if my cost of goods sold go 30% higher from the part from over here I've gotta go to the part from over here that's only 10% higher And that is happening lickety split nowadays. People have really learned that that is the way to manage it So in a foreign trade zone I have less pressure to change the supply chain if I can mitigate the impact with the FTZ savings. If I mitigate the impact And I I really like Charlie over there that can satisfy my needs And he works overtime and he gives me what I've gotta have And if I need double the amount I can get it I can get it in a timely fashion But the tariff difference is 15%. Well how do I mitigate that? Let's see if the FTZ does that. And that's what's happening That's what people are making smart decisions using the foreign trade zone as another lever in their resiliency toolbox.
Tom Raftery:
And where does tariff pain usually show up first? Is it in margin or cash or inventory or routing or customer promises or all of the above or?
Curtis Spencer:
Well it's really good that you came up with that. So cash for sure So purchasing cash it shows up in profitability inevitably. I had a customer this is really you're gonna love this This customer is setting up foreign trade zones in five of their locations. Not as much to save in the US cost but they were kicked out of foreign sales because they were paying this high tariff and then re-exporting the product They said if we can not pay that high tariff, sell into that export market the items that we're importing with the highest tariff and then save for the domestic market those items that don't have the highest tariff I mean the these guys are really using the FTZ. That saved them about $50 million in export sales. It's huge
Tom Raftery:
Impressive
Curtis Spencer:
I mean, they just weren't meeting the margin differential of their competitors without the FTZ and it was a big margin It was like a 25% differential So yeah the FTZ is allowing you to strategise on how you take the mix.
Tom Raftery:
The $50 million Curtis cites is export sales preserved, not 50 million in duties avoided. That's an important distinction. Both matter commercially, but they're very different measures when you're assessing the return on an investment. Okay, so what's the part then of foreign trade zones value that senior leaders most often underestimate?
Curtis Spencer:
Well there's two areas where the underestimation comes in. It's a good point. The first is the mid-level or executive level looks at the management of the zone compliance complexity, customs compliance complexity and says I don't care how much money it's gonna save us we don't want a part of it. So there's barrier number one. Oh it's gonna mean three more full-time employees? We're locked into our headcount. We're not adding any more FTE Then the COO or the CFO more accurately finds out that if he throws $300,000 expense he's gonna make $3 million in an FTZ environment And he looks down at the guy the operating guy that just told him no and says are you crazy So it's getting to the right person that has the purse strings that says any investment that starts out with 300,000 down 300,000 cost extra per year but I get $3 million every single year That's a no brainer 10 to one That's a 10 to one cost benefit ratio. So I think that what's happening is is that the C-suite because of the resilient the anti resilience that the tariffs bring in other words they they impede resilience Now that's a super important piece for them for the C-suite And they're saying what can you guys do below this level below my level come up with ideas where we can start saving enough money to bring back resilience to bring back these opportunities.
Tom Raftery:
Okay. And what does, let's say, from a practical perspective, what does an FTZ status change operationally in the warehouse, the system, and the broker relationship?
Curtis Spencer:
If done well it should have absolute minimal operational impact. I have to take my hats off to the custom service the allowance and the Foreign Trade Zone Association has worked diligently to get these allowances passed And let me explain those. Weekly entry I don't file an entry every time something leaves my facility. And have customs check it off. I ship 24 7 all through the week against an estimate that my system spits out every week I don't have to even manage that And I ship out 24 7 Then I have four days at the end or the beginning of the next week to reconcile what was supposed to have shipped to what actually shipped. Get all that figured out. File the customs entry I'm done No stoppage Inbound is done on normally on every receipt every bill of lading But there are several zones that qualify for what's called direct delivery They collect all of the receipts and file one 214 admission document at the end of the first day At the end of the next day they file another one So they're only filing five admissions. They may have had 50 bill ladings come in that day 55 containers on 50 bill of lading, it doesn't matter the software systems that have been developed over the last 40 years are now they're top tier WMS connective systems They just bolt onto your WMS They pull all the receipts. They pull all the shipments. They pull all the cycle count adjustments. The over under. And you're shooting directly to customs over Ace. So they're self auditable they're self reconciliation. All of what I'm bringing to you is: are zones hard to operate? Well they used to be but in today's environment, and we like many others we offer third party zone management So you're in the business of importing candles. You import a whole lot of candles but you're not in the customs compliance business You're designing, sourcing, and importing candles. You don't need and nor do you want all that compliance risk So you put it to a third party. Nothing's easy with customs Tom nobody don't lie to your people at all ever. Nothing's easy with customs
Tom Raftery:
Okay. And again, just from a practical perspective, can you walk through a real foreign trade decision from problem to outcome? You don't have to name the company involved if necessary.
Curtis Spencer:
Okay so let's use let's use something that's very fashionable today That's wafer fabs. A wafer fab Intel TSMC all of these wafer fabs that are being courted by this administration. Now they look at a foreign trade zone and here's what happens in a wafer fab They have 23 26 tier one suppliers from all over the world that support that plant Each one of those suppliers and let's take a very small one a certain gas has to be manufactured overseas brought to the United States and then that gas is emitted in the etching process to create the correct bonding of that etching onto that piece of silicon, that wafer. Well that gas is completely used up and consumed in that process. So you come in with 10 gallons of gas it's manufactured and you come out with zero gallons of gas Okay So that is a production loss of that gas that's essential to make that wafer and the duty rate on it's 30% So TSMC Intel will tell their vendor Hey I need you to be close to me and by the way I'm a foreign trade zone I need you to be a foreign trade zone and I need you to be a foreign trade zone so you can import that gas I mean there's there's liquids and there's parts and there there's a million different things that go into making a wafer All right I'm just giving you one example. So you bring that stuff here put it in a foreign trade zone. Zone to zone transfer to me. Because that's a duty free movement. You zone to zone transfer that to me. And it allows you then to admit that merchandise in, don't pay the duty on it The wafer comes out. Now guess where all the wafers go by the way Tom. They're exported to the packaging centre in Singapore in Malaysia. And so a hundred percent of the duty's gone. Brilliant use of foreign trade zones Now they're gonna bring the packaging to the United States. This is public knowledge You're gonna start bringing some packaging that will also be in a foreign trade zone And it will be very interesting because when you package the integrated circuit that little teeny tiny right you know three mil microns by three microns and you put the little feet on there and then it goes into the roll that Dell and everybody else uses to make the servers, there's a lot of scrap and waste in that. The little feet get bent in the packaging process they crunch something something happened I mean this is very expensive stuff You don't wanna waste anything But in modern manufacturing circumstances there will be waste. There's no duty paid on waste.
Tom Raftery:
On the flip side, what's harder than expected when a company activates a foreign trade zone?
Curtis Spencer:
What's harder than expected is making sure that the vendors that send you the imports provide you the accurate data that you need to hopefully EDI data and you drop it right down into the FTZ system So it's electronic drops right down Nobody touches it In so many cases though Tom I've gotta have somebody keying in that data because it comes as a PDF connected to an email Here's your ASN here's your advanced shipping notice. Here's the commercial invoice here's the bill of lading here's the IT the in transit in bond document and all that is separate PDFs. If we can just get to a hundred percent EDI Tom the whole world will sigh a big sigh of relief.
Tom Raftery:
The problem is that a foreign trade zone can alter tariff treatment without making the underlying data any better. If invoices and shipping notices still arrive as PDFs, the savings depend on a process that can actually reconcile them. Okay, so, let's say over the next three to five years, will companies optimise for lowest costs, lowest tariff exposure, or maximum optionality?
Curtis Spencer:
I think it'll be maximum optionality because lowering cost will be your number one job as a procurement or in logistics. And the way you do that is using the foreign trade zone so that whatever your costs start out at you mitigate that down That's your cost thing Then you're gonna look at your sourcing because that's gonna fit into that lower cost analysis But your optionality you have to have that for resilience So you've got to have backups to your backups You cannot rely on just in time outside the four walls of the United States You just can't And we're a global economy despite what the current administration is trying to do You can't get away from the global economy You can't And the more we get foreign direct investment you're actually embracing more global parts more global raw materials You can't get away from it So my thought is hey you've gotta have the optimisation option by looking at everything in sequence. Look at it all in sequence how does it play But if you employ the foreign trade zone you have the absolute flexibility to do so If you don't your flexibility starts to reduce dramatically
Tom Raftery:
Okay. And after this conversation for people who are listening, how should supply chain leaders think differently about tariffs and foreign trade zones?
Curtis Spencer:
Well the first thing to do is find someone who will give you a good cost benefit analysis You need to know where you are. Foreign trade zones sound great but if I'm gonna save a customer 200,000 a year small little customer 200,000 a year and it cost him a hundred thousand to manage the zone don't bother. The customs compliance risk two to one is not enough. 3 to 1, 4 to 1, 5 15 to 1 Yeah Make the investment But you gotta know what that cost benefit analysis is first. Then do an operational analysis You're either extremely robust in your WMS if you're just a warehouse importer or if you're a manufacturing you've got a robust or you've got less than robust Tom we all know how this works Some of the best companies in the world have less than robust ERP and import WMS systems So determine where the issues are Don't wait. Foreign trade zones still takes seven to 12 months to set up I can't make customs go faster. I try really hard But in today's environment you can't make em go faster And they're doing about 200% more than they were doing before So it's not their fault it's just the volume of that business has gone up
Tom Raftery:
Sure, A left field question for you, Curtis, if you could have any person or character, alive or dead, real or fictional, as a champion for foreign trade zones, who would it be and why?
Curtis Spencer:
Man I'd love to have my dad back for that Just to be honest with you he he was the most eloquent speaker He would love what's going on in this current environment. The guy had three degrees He was 165 IQ. If I could have my dad back to be a spokesman again for FTZs it would be phenomenal because he can talk at that high intellectual level. And he had me to help dumb it down You know I was the I was the PhD of dumbing it down So you you get both you get both halves of that That would be great
Tom Raftery:
Cool. Curtis, if people would like to know more about yourself or any of the things we mentioned in the podcast today, where would you have me direct them?
Curtis Spencer:
Just imsw.com we are on LinkedIn. Where we've got the website we're on social media We post two or three times a month so just look us up. And Tom you you did a great job with us we appreciate it
Tom Raftery:
Thank you so much and thank you for your time and expertise, Curtis. This has been a fascinating conversation.
