Exploring Global Supply Chains & Trade Dynamics with Mark Houghton

Suraj (Host)

Welcome to The True Trade Talks, where we dive into the fascinating world of global logistics and trade. I'm your host, Suraj, and today we have a very special guest joining us to shed some light on the most pressing issues and exciting developments in the industry. Our guest today is Mark — a cross-border logistics expert with over 15 years of experience in the field. Welcome to the show, Mark!

Mark

Thank you very much for inviting me — looking forward to this.

Suraj (Host)

Let's dive right into the topics. Mark, what is the biggest challenge the logistics industry is facing today?

Mark

It's a very good question. From my point of view, it's the conflicts in the Middle East — especially around the Red Sea — which are really affecting sea freight at the moment and causing issues for transportation. The conflict between Russia and Ukraine is also having a major impact on global trade, which in turn reduces and flattens pricing. The market is very, very volatile right now, especially around those areas.

Suraj (Host)

Fascinating — it's clear the logistics landscape is continuously evolving, and one factor driving that evolution is technology. How have recent advancements in technology changed the logistics industry?

Mark

The advancement of AI technology in the world of logistics is steadily increasing the flow of trade and the flow of goods. Take the customs side, for instance: if you're declaring your goods on sea freight right now, you can use AI in advance to produce your manifest and to literally check that your HS codes match the criteria of your goods — all done before the shipment moves. Whereas before you had possible delays in paperwork and misinterpretation of goods. AI technology is the way forward in the world of logistics.

Suraj (Host)

Totally agreed. Another concept that's becoming very popular in the logistics world is supply chain resilience. Can you explain what it means and why it's important?

Mark

It's really important. You need a robust end-to-end solution, and you need to make sure it works: it's cost-effective, you have the technology, you have the tracking, and — most importantly — you're able to do reverse logistics as well. A big part of becoming resilient is also looking at the sustainability of that supply chain. If you can offset your footprint anywhere along the chain, that gives you an advantage in the market.

Suraj (Host)

That makes a lot of sense. Let's shift gears and talk about sustainability. How can companies balance cost efficiency with sustainability in their logistics operations?

Mark

It's quite difficult for a business to remain very competitive in the market and focus on its costs, but everyone has to look at sustainability. First: do you supply that capability within your business — do you own your own final mile, or do you outsource it? If you outsource your final-mile delivery, what you need to do is offset it — by working with a partner that uses electric vehicles on the final mile, especially in Europe and the UK. That's a big advantage if you're looking to promote your sustainability as a business and grow by reducing the carbon footprint of your logistics.

Suraj (Host)

It's impressive to see businesses taking proactive steps towards sustainability. Let's zoom out to the bigger picture: what role does logistics play in international trade, and how do geopolitical factors influence it?

Mark

I think it's going to change in the next 5 to 10 years. Look at the market now: roughly 90% of goods are currently manufactured in or shipped out of China to the US, the UK, Europe and onwards. In the next 5 to 10 years you'll be looking at places like India, Malaysia and Vietnam taking that market and being very competitive against China — with cost-effective labour and production, and good trade relationships with the UK and Europe. There are a lot of advantages for up-and-coming markets and manufacturers to produce their own goods without relying too heavily on China — especially with the conflicts going on, the COVID situation China went through, and the Red Sea situation, all of which reduced traffic from China. China is probably finding it hard to stabilise itself after the effects of COVID.

Suraj (Host)

Absolutely. As the world becomes increasingly interconnected, the logistics industry must adapt to the evolving demands of global trade.

Mark

There are a lot of newer markets too — Mexico, for instance; South America is a growing e-commerce market; India is really starting to take shape; and Vietnam, Malaysia and the Philippines have always been trading but are slowly catching up with China.

Suraj (Host)

Inventory management is another critical aspect of logistics. How can businesses optimise their inventory to minimise cost and maximise efficiency?

Mark

Especially in the e-commerce world, if you're shipping into the UK and the EU you have options. Shipping by sea, you have LCL — less than container load — which reduces your stockholding in the UK because you only send the product you want to send to market. But what we're finding now is that a lot of businesses want to hold some stock in the UK and Europe, so they don't have to keep sending FTL or LCL containers on a regular basis — they send it all in one go. Then you find a suitable warehouse with a bonded solution, which can act as a cash-flow advantage for a seller expanding overseas. And going into Europe, limited fiscal representation will delay your VAT until you sell the goods into other destinations in Europe — that's a big advantage.

Suraj (Host)

Looking ahead, what trends do you foresee shaping the future of logistics and trade?

Mark

I see it becoming a very competitive market, with more countries starting to manufacture their own goods — and for sellers looking to expand overseas, the up-and-coming markets and manufacturers are all new marketplaces to sell on. Prices out of China are extremely low at the moment, and there's a reason behind that. I think the market will stabilise in the next two to three years, and then everyone will be very competitive with everyone else. There's a big focus on sustainability, especially with the big carrier lines like Maersk and MSC, and a lot of joint ventures happening in the background. In the logistics world, if you wish to remain competitive, maybe the best advantage now is to partner with someone — and nobody should be afraid of partnership as long as the agreement is in place and works both ways. The logistics industry is here for a long time.

Suraj (Host)

It seems an exciting time to be in the logistics industry, with so much innovation on different horizons. Speaking of innovation — how are logistics companies addressing the growing demand for last-mile delivery in urban areas?

Mark

It's a big factor in the UK and Europe. In the last five years, parcel lockers have become very popular — what's called PUDO, pick-up drop-off points. Royal Mail in the UK just launched their own parcel lockers in the last couple of weeks. That gives the consumer the choice to drop off or return a parcel, or pick it up close to a retail area — collect it while they're shopping. Businesses like InPost are thriving across Europe and the UK with this method. In the inner city, you also have to look at bikes and electric vehicles — again focusing on sustainability. Take London: it's very dense, and to get around it you'd use bikes, electric bikes or electric vehicles.

Suraj (Host)

What about drones for delivery?

Mark

I wouldn't say drones in urban areas — drones belong in non-urban, far-reach areas. I'd be very surprised if you saw a load of drones over Heathrow! Maybe the outer isles of Scotland, or genuinely remote places. In central, urbanised places the parcel locker is probably one of the best solutions — or a carrier offering a seven-day delivery cycle with AM/PM time slots. Take Amazon: they work seven days and deliver up to 8 o'clock at night. As long as there's traceability and tracking — everyone photographs the parcel at the door these days — that works. But for urban delivery, the way forward is parcel lockers, definitely.

Suraj (Host)

That's incredibly innovative. Before we wrap up — with your 15 years in the industry, could you share an example of how innovative logistics solutions have transformed a company's operations?

Mark

There's been a lot of innovation in my time. Having a fully functional WMS — a warehouse management system that suits your business — is essential, especially in eCommerce fulfilment. In the early days, having a WMS was seen as an advantage; today it's seen as standard. But it still plays a vital role: having the right systems that connect you with other markets and platforms to sell your products is a very big advantage. And robotics has changed how we pick and pack goods — in the early days it was done by hand, now a lot is done by robotics. You need a big warehouse and big investment for that, and you need the return on investment. AI is seen as the way forward for a lot of logistics businesses — not only enhancing technology but also customer service: automating simple questions like "where are my goods?" and "what's my tracking number?" saves logistics businesses a lot, and lets them focus on what they do best.

Suraj (Host)

You talked about warehouse management systems — it's not just a need but a must in today's world. And AI — do you think it's going to replace humans?

Mark

No — you still need the human touch, in my eyes. But if you can take the savings from using AI and reinvest them — to automate your customer service, your invoicing, the technology in your warehouse — then you'd be wise to use it, not ignore it. There was skepticism around AI when it first came out: is it reliable, can this really happen? The answer is yes, it does all of it. But you still need the human touch — there needs to be somebody who can control the machines.

Suraj (Host)

As we near the end of the conversation — Mark, what advice would you give to businesses looking to improve their logistics processes and stay competitive in today's global market? Everyone wants to enter the logistics and e-commerce industry, but how do they stay ahead?

Mark

You have to be very mindful of where your business is and what your business plans are. You need to understand your own business before you launch it, and you need to understand your competitors — what they're good at and what they're not. Logistics has changed over time: service has become standard, technology has become standard, WMS systems have become standard, and more operators are offering all kinds of final-mile services, delivery times and tracking capabilities. If you wish to open a new business and remain cost-effective in eCommerce logistics and freight forwarding, be 100% sure you understand what your business needs — and what it needs to service your customers. It's great having loyal customers, but they can change at any time if a competitor offers a better service. You need to be ahead of the game all the time. Keep investing — but only invest at the right time.

Suraj (Host)

Wise words indeed. Thank you, Mark, for sharing your expertise with us today — it's been a pleasure to have you on the show.

Mark

Thank you very much for having me, Suraj — I'm sure we'll meet again.