What does hub-and-spoke system mean?

In logistics, the term hub-and-spoke (also hub and spoke or spoke architecture) refers to a transport system for distributing goods from a central handling point (na-be or hub) to various end points. These connections to the hub are called spokes. Thus, in hub and spoke, the delivery is not made directly from A to B, but via a central transshipment point.

Since the hub is usually located centrally, the transportation network structure is represented as a wheel. There is no traffic between the individual end points, only the fine distribution takes place here. This eliminates the need for further transport connections, which leads to a reduction in costs. By using the hub-and-spoke system, only one outward and return trip is necessary. For a smooth process, the information flows must always take place before the goods traffic.

Hub and Spoke in logistics

In logistics, hub and spoke refers to the star-shaped organization of goods transport, in which the connection (spokes) between the consignor (A) and the consignee (B) takes place via a central logistics node (hub). In contrast, the transport in direct traffic between the connection A and B takes place on a direct route.

The aim of the hub and spoke system is to optimize transport utilization. Hub and spoke is used in particular in mail and parcel delivery, courier transports, groupage transports and rail freight transports. Since hub and spoke always gives top priority to optimal utilization of the transport capacity, even longer distances are covered with the involvement of the central hub than would be the case with direct transport.

Hub-Spoke System: Deployment of the Transportation Network Structure

The transportation system called hub-spoke came into use in the late 1970s in commercial air freight transportation within the United States to optimize transportation utilization. This transportation network structure allows for both the clustering of transportation locations and the avoidance of empty runs or empty flights of the transportation vehicles used. However, the disadvantage of the spoke-and-hub system is that the transport route is longer than that of direct transport.