Mid-market firms using international supply chains have faced significant disruption and headwinds as a consequence of the war in Ukraine, the long tail of COVID disruption, and wider geo-political tensions. However, despite ongoing economic uncertainty, many international business leaders continue to see international trade, and particularly exports, as a key driver for growth.

According to data from the IBR, Grant Thornton’s global survey of mid-market companies, 45% of mid-market firms expect to increase their volume of exports over the course of 2023. This represents a slight increase from the first half of 2022 (+1%), and continues the trend that expectations have been rebounding strongly from the lows of the pandemic.


Percentage expecting a rise in global exports

Graphic showing global expectations to increase volume of exports over last 5 years


Grant Thornton’s latest research shows how many businesses are innovating and adapting by reshaping their international supply chains, as they look to reduce risk, embrace opportunity and deliver value. Businesses have taken a variety of steps to increase resilience, from building inventory, to diversifying their suppliers, to setting up local manufacturing hubs and ‘friend-shoring’ – striking deals in sympathetic countries that are more politically palatable to shareholders and customers.

Firms that develop a sound understanding of their risk environment and plan ahead, will create sustainable value in their supply chains and be well positioned for growth as economic conditions improve and trade picks up from the current levels.



Mid-market firms turn stumbling blocks into stepping stones by rerouting supply chains to boost value and resilience

Business leaders have had some difficult decisions to make on supply chains as they contend with global issues beyond their control. Product costs have always been a key consideration but firms must also navigate fluctuating transport costs, trade restrictions and the reliability and security of trade routes. As a result, international trade has become more strategically complex and increasingly requires a multi-lateral solution. 

International trade was unexpectedly rocked in 2022 by the war in Ukraine, with the resulting spike in energy and certain food prices and higher transportation costs. But those initial shocks have eased and businesses now expect to get back on an even keel, with global shipping costs returning to pre-pandemic levels.


Elaine Daly quote


Trade offers route to growth 

Effective supply chains enable businesses to deliver value and drive growth. As such, mid-market leaders are adapting their export planning to respond to opportunities to optimize in international trade.

According to Jonathan Eaton, Principal, Grant Thornton US, every chief executive should have three main considerations when optimizing their supply chain:

Firstly, what makes most sense strategically? Where are the markets, channels, and customer segments that offer sustainable growth and support the overarching growth objectives for the business?

Secondly, what will be most effective operationally and financially? How can we minimise costs in our supply chain while maximising profit and mitigating risk at the same time?  

And thirdly, what is the most tax efficient solution? Are there tax benefits to be had from the way we structure the supply chain, the trading partners we use, and the supporting flow paths to get products to market?

Expectations for exports remain strong among mid-market firms, even though wider economic indicators are more subdued. Two in every five firms (40%) expect an increase in revenue from non-domestic markets in 2023. A similar proportion (41%) were planning to increase the number of countries they sell to this year. 


Scenario planning for success 

In the second half of 2022, mid-market firms saw a slight decrease in the ratio of their employees who were focussed on non-domestic markets. These figures were skewed by a major fall in the oil and gas industry, but not reflected across all sectors and regions. In Latin America and Africa the ratio of mid-market firms’ employees focussed on non-domestic markets increased. The top three markets to benefit are China, Germany and the USA, which are primed to increase supply from external markets. In China 26% (up from 25%) of companies report an increase in this activity over 2023. Meanwhile, China’s latest export figures show a near 15% jump in this activity, defying expectations, with some analysts having predicted a contraction of 7%.

Global events have made it a tough time for trade. The outlook from the WTO and others was that trade would slow in 2023, with rising interest rates and financial instability adding to geopolitical tensions. In April, the WTO expected export volumes to grow by just 1.7% this year, well below the average level for the past decade of 2.6%. Firms that plan ahead and are prepared to innovate will be able to make the most of their exports, helping them to stay one step ahead of the competition, despite current economic headwinds and a number of threats on the horizon.


Grant Thornton’s latest research shows how mid-market businesses are adapting in some key ways as they prepare for an expected upswing in wider economic conditions. We encourage you to read more here.