Understanding the "Hub & Spoke" System in Container Shipping
Efficiently and reliably moving cargo across the globe requires strategic planning and coordination. One of the most effective models for managing this is the hub & spoke system. In this article, we’ll explore what the hub & spoke system is, how it works, and why it has become a cornerstone of modern container shipping logistics.
Table of Contents
In this system, instead of every vessel traveling directly from point A to point B, ships route their cargo through a hub port. From this hub port, containers are either transshipped onto other vessels bound for their final destination or distributed to regional spokes for further transport.
At Hapag-Lloyd we will introduce our very own hub & spoke model with the Gemini cooperation that will be in effect by 2025.
How the hub & spoke model works
In practice, the hub & spoke system follows these steps to efficiently transport cargo across the globe:
Collection at spoke ports: Containers are loaded at smaller, regional spoke ports and then transported by feeder vessels or shuttles to a central hub. These feeder services typically connect several spoke ports to the main hub.
Sorting at hub ports: The hub ports receive cargo from multiple spoke ports. Here, containers are unloaded and sorted based on their final destinations.
Distribution to final destinations: Once the cargo is sorted, it is either loaded onto larger vessels heading to other international hubs or smaller feeder ships bound for regional spokes, where the containers can be delivered to their final destination.
The hub & spoke system allows us carriers to optimize vessel capacity, reduce transit times, and manage routes more effectively and thus, ensure timelier deliveries by concentrating their operations in fewer, larger hubs.
Benefits of the model
Apart from optimizing the capacities and reduce transit times, the hub & spoke model offers more benefits that also benefit the other involved parties of the supply chain:
1. Increased efficiency and cost savings
The hub & spoke system helps to reduce costs by focusing on fewer, larger routes between hubs (mainlines). Larger vessels can carry more containers at a lower cost per unit, making these major routes more economical. Shuttles operating between the hub and smaller spoke ports are more cost-effective for regional distribution and result in fewer port calls of the large vessels.
2. Better capacity utilization
One of the biggest advantages of the hub & spoke system is the ability to maximize vessel capacity. Large mainline vessels can be deployed on the busiest routes between hub ports, ensuring that ships are fully utilized and thus go on those routes faster. This also applies to the shuttle and feeder vessels.
3. Improved service frequency
By centralizing operations around hub ports, the model enables us to offer more frequent services on the major routes. This improved frequency benefits you as well as you can plan and manage your supply chains more effectively due to a higher schedule reliability and faster transit times.
You can check our schedules any given time and filter for your unique requirements using our Schedule solution in the Online Business Suite.
4. More flexibility in shipping routes
The hub & spoke model provides us with a higher flexibility in managing cargo routes. If demand for a particular region changes or if a spoke port needs additional services, we can adjust our feeder services to accommodate those changes without disrupting the entire network. Hubs also serve as critical points for cargo re-routing, ensuring that any disruptions (e.g., weather delays) can be managed more efficiently.
How we use the hub & spoke system in the Gemini Cooperation
Hapag-Lloyd and Maersk have signed an agreement for a new long-term operational collaboration called “Gemini Cooperation”, which will start in February 2025. The ambition is to deliver a fast, flexible and interconnected ocean network with industry-leading reliability being its cornerstone.
Gemini Cooperation will cover seven trades and offer up to 59 services, including mainliner and dedicated shuttle services. The fleet of our new partnership will consist of more than 300-340 modern and efficient vessels, many ready to adopt cleaner fuels, with a total standing capacity of ~3.4-3.7 million.
Find more information here.
Conclusion
The hub & spoke system has become an integral part of modern container shipping, offering greater efficiency, flexibility, and cost savings for carriers and shippers alike. By consolidating cargo at major hub ports and using feeder services to distribute containers to smaller spokes, operations can be streamlined, costs reduced, and service coverage improved.
For you as a shipper, this means more reliable and efficient transportation options, excellent network coverage and can also result in accelerated decarbonization.
© Hapag-Lloyd AG