Hubs, as a network structure, allow a greater flexibility
within the transport system, through a concentration of flows. For instance,
on the above figure, a point-to-point network involves 16 independent
connections, each to be serviced by vehicles and infrastructures. By
using a hub-and-spoke structure, only 8 connections are required. The
main advantages of hubs are:
Many transportation services have adapted to include a
hub-and-spoke structure. The most common examples involve air passenger
and freight services which have developed global,
national and regional hubs, such as those used by parcel carriers
such as UPS, FedEx and DHL.
However, potential disadvantages may also occur such as additional
transshipment as less point-to-point services are offered, which
for some connections may involve delays and potential congestion
as the hub becomes the major point of transshipment.
Economies of scale on connections by offering
a high frequency of services. For instance, instead of one service
per day between any two pairs in a point-to-point network, four
services per day could be possible.
Economies of scale at the hubs, enabling the
potential development of an efficient distribution system since
the hubs handle larger quantities of traffic.
Economies of scope in the use of shared transshipment
facilities. This can take several dimensions such as lower costs
for the users as well as higher quality infrastructures.