Hub and Spoke System and Ocean Shipping

The following review of the literature concerning the topic of hub and spoke system structure as applied to oceanic shipping presents the following relevant areas: hub and spoke system in the airline industry; hub and spoke system in free trade; hub and spoke system in warehouse management; hub and spoke system in additional areas; and summary and conclusions.

Hub and Spoke System in the Airline Industry

Hub and Spoke Systems in the Unites States

Barnett, Curtis, Goranson, and Patrick (1992) reported that in the United States, airline deregulation reflects the degree that the government intervenes in private industry, and this deregulation has resulted in the transformation of airline route networks into a hub and spoke system. This system provides frequent one-stop service between cities based on intermediate transfers at hub airports. These new systems decrease nonstop flights between origins and destinations except at hub cities. These systems resulted in a decline in easy travel from one place to another. Consumer reports stated that the hub and spoke system has resulted in pointless and time-consuming connections that are convenient for the airline but not for the customer. The new systems resulted in an increase in number of flights with a smaller percentage of these being nonstop; hours and stress have been added to consumer trips and hub airports are congested. It was estimated by airline consultants that the average trip under 2,000 mi

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due to deregulation, the North America and southern Canadian airline markets are changing dramatically and it is anticipated that airline network rivalry will result in alliances formed by one of two paths: one mega-carrier creating an alliance network aligning with several junior partners on the continents; or an alliance among large partners from each continent will form supplemented by regional feeder carriers in continents that are junior partners. Hub and Spoke System in Free Trade Rivera (1995) reported that following NAFTA assession, hub and spoke systems and trade agreement merging was found. Puga and Venables (1997) stated that the hub and spoke arrangement favors the hub location with improved reciprocal access to spoke nations, compared to the access that they have with each other. Lloyd and MacLaren (2004) reported on gains and losses from regional trading agreements based on the hub and spoke system. In a network with a hub and spoke system, the hub is the Global Trade Organization and the spoke represents Regional Trade Organizations ("TNCs," 1993). Lloyd and MacLaren (2004) stated that a hub exists if one country is a member of two distinct Regional Trade Agreement (RTA). Single country hubs come about

Category: Science - H