Container Shipping Quarterly

Special Report

In their most advanced form, hub-and-spoke loops may have just one port at each end of the trade.

COMMENTARY

By Jeremy Masters

The change in 2025 to four major east-west networks from the former three has created new pressures for container carriers and consortiums to differentiate their services.

All networks need as much market access as possible at as low an overall system cost as possible to maximize profit. The starting point consists of key hubs that combine a large local market with excellent connectivity by multiple transport modes— e. g., feeder ships, barges, railroads, trucks, etc.— to a cargo-rich hinterland.

Hubs are often associated with ocean transshipment, but a hub can be anywhere with cost-effective and service-effective access to significant local and regional markets.

There are comparatively few ports outside of China that fully deliver that combo. Rotterdam, Antwerp and Hamburg in Northern Europe are obvious examples. Los Angeles, Long Beach and New York-New Jersey in the US are the biggest North American cases, but Vancouver and Montreal in Canada also exhibit the key features.

Many other significant ports have a strong local market or great connectivity, but not both. In the long run, those ports’ cargo flows are more vulnerable.

The Gemini Cooperation’ s hub-and-spoke system differentiates itself by focusing on limiting the number of hubs as much as possible to places where one of the partners has terminal ownership. By adding in-house feeder systems and serving fewer other ports directly, Maersk and Hapag-Lloyd feel they are able to make service guarantees that considerably exceed previous industry performance.

The design question Gemini faced and will continue to review based on commercial and operational experience is: If the hubs are very strong cargo generators, how many other ports do we need to fill the ships and what kind of frequency, transit time and reliability features are required to meet client needs?

Gemini’ s North Atlantic loops, for example, have the following port rotations: ― TA3 / AL1: Southampton, Rotterdam, Hamburg, Wilhelmshaven, Newark, Norfolk, Baltimore, Saint John and Southampton.

― TA1 / AL2: Antwerp, Rotterdam, Bremerhaven, Norfolk( including Portsmouth), Houston, Norfolk and Antwerp.

― TA2 / AL3: Antwerp, Southampton, Hamburg, Rotterdam, Charleston, Savannah, Norfolk and Antwerp.

― TA4 / AL4: Southampton, Antwerp, Rotterdam, Hamburg, Wilhelmshaven, Veracruz, Altamira, Miami and Southampton.

Each string has at least three European ports and three North American ports in the rotation. There are good reasons for every choice, but the result is more port calls than were originally envisaged, which ultimately means more ship costs, more bunker costs, more port costs and longer transit times for some port pairs.

The other networks’ North Atlantic services typically call four to five ports in North Europe and three to four ports in North America and need five to seven ships to maintain a weekly schedule. Independent Container Line, which calls at three ports in Europe and two in the US, needs four ships to maintain a weekly rotation.

If Gemini or others decided to take hub-andspoke to its most advanced form, they may ultimately have some loops with just one port— or a maximum of two— at each end of a given trade. It would be possible depending on the ports chosen, the rotation and average speed to run a weekly rotation, at least in the summer, with just three ships, but four would be ample.

The downside would be the loss of some direct port pairs and less frequency in other port pairs. But the upside is clear: overall system costs would be significantly lower and transit times in some port pairs would also improve. If some of that cost saving went toward speeding up the ships, requiring higher bunker consumption, the loops would have some of the fastest industry transit times. Further, accepting Gemini’ s assertion that the more ports in a loop, the less reliable it is, such an ultra-streamlined service would have the potential to be the most reliable product in the trade.

There is a long-term precedent in the North Atlantic for the one-port model: Montreal. The local market is large, and there is excellent connectivity to the hinterland with two railroads, so carriers have been able to operate with just one call in North America on some of their loops.

Running loops with fewer ships will not be the current priority for an oversupplied industry, but new entrants may be more inclined to look at a lean, efficient product that has a competitive service edge in the key hubs it serves.

The US Trade Representative’ s proposed taxon Chinese tonnage calling US ports could also prompt carriers to rethink how many US calls are essential. Ultra-streamlined services may then be an idea whose time has come, even if it is not universally welcomed.

Jeremy Masters consults for the Montreal Port Authority. email: jeremy @ shippingmastershk. com

30 Journal of Commerce | April 7, 2025 www. joc. com