- Maersk and Hapag-Lloyd’s new Gemini Cooperation, launching February 1, will implement a hub-and-spoke model for container shipping.
- The model reduces cascading delays by decoupling shipping legs at hubs, increases efficiency with larger ships on main routes, and lowers emissions under EU regulations.
- Success hinges on efficient transshipment hubs, with ports like Singapore and Tanjung Pelepas already excelling in this area.
Maersk and Hapag-Lloyd are set to launch the Gemini Cooperation on February 1, adopting a hub-and-spoke model for container shipping. This shift aims to enhance schedule reliability, which has been a persistent issue in global trade lanes, reports Forbes.
How Hub-and-Spoke Differs from Traditional Rotations
Traditional container shipping relies on long rotations, where ships call at multiple ports in sequence before returning.
These routes are vulnerable to cascading delays, as a delay at one port affects the entire schedule. Hub-and-spoke routing breaks up these long chains, similar to how airlines operate with hub connections, reducing the impact of delays.
Why the Shift Makes Sense Amid Global Disruptions
With disruptions like the Red Sea crisis impacting global trade, decoupling shipping legs at hubs allows for more flexible rerouting.
This model also aligns with Maersk’s observations that transshipment is already being used informally due to these disruptions.
Economic and Environmental Benefits
The hub-and-spoke model improves ship utilization by aggregating cargo demand, leading to higher load factors on major Asia-Europe and Asia-Americas routes. This model can better accommodate cargo from smaller ports as global manufacturing diversifies beyond China into Southeast Asia and India.
Additionally, the model reduces carbon emissions, as larger ships operating at high capacity are more fuel-efficient, aligning with International Maritime Organization regulations and reducing costs under the European Emissions Trading Scheme (ETS).
Smaller Ships for Spoke Routes
While major routes will benefit from high-efficiency mega-ships, spoke routes will likely use smaller vessels.
Over time, these may transition to new fuel technologies like methanol, improving sustainability.
Lessons from the Airline Industry
The airline industry successfully adopted hub-and-spoke models, allowing for better demand aggregation and route flexibility.
While newer aircraft have enabled more direct flights, most still operate through hubs, mirroring the expected evolution in container shipping.
Transshipment Efficiency is Key
For the hub-and-spoke model to succeed, major hubs must efficiently handle transshipment.
Ports like Singapore and Maersk-controlled Tanjung Pelepas in Malaysia excel in this area. In Europe, APM Terminals in Rotterdam is expanding its automated operations to improve cargo movement.
Potential Industry-Wide Shift
While some industry leaders were initially skeptical, many are reconsidering the hub-and-spoke approach.
If Maersk and Hapag-Lloyd succeed, other carriers may be forced to adopt similar strategies, marking a major transformation in global shipping logistics.
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Source: Forbes
