Selection Factors for a Transshipment Hub
Sequential port call services can be partially replaced through the insertion of an intermediate hub (also known as a transshipment hub). These hubs usually have several advantages inciting maritime shipping companies to configure their service network, namely with interlining and hub-and-spoke configurations. The selection of a port to act as a transshipment hub is based on a set of considerations:
  • Location. Many intermediate hubs have emerged on island locations or on locations without a significant local hinterland to fulfill a role of intermediacy within global maritime networks. They are close to points of convergence of maritime shipping routes (low deviation) where traffic bound to different routes can be transloaded. This is known as a relay function. Intermediate hubs tend to be located nearby major bottlenecks in global maritime networks (Strait of Malacca, Mediterranean or the Caribbean) as they take advantage of the convergence effect with a minimal deviation from shipping routes. For ports that specialize in transshipment limited inland investments are required since most of the cargo is transshipped from ship to ship with a temporary warehousing at the port facilities. The footprint such transshipment hub terminals have on the local or regional transport system is thus limited. In addition, the terminal operator does not have to wait for local/regional transport agencies to provide better accessibility to the terminal, which is often a source of conflict between the port and the city/region. In other cases, the transshipment hub can also benefit from being able to handle a significant share of local cargo. The confers the advantage to shipping lines of being able to combine the benefits of using the transshipment hub to access feeder and relay services as well as with the benefit of a local cargo base.
  • Infrastructure. Transshipment hubs tend to have greater depth since they were built recently in view to accommodate modern containership drafts, placing them at a technical advantage over many older ports with more constraining settings. Their selection often involves the consideration of growing containership drafts and the future capacity, in terms of transshipment and warehousing, of the hub to accommodate such growth. About 13.5 meters (45 feet) is considered a minimal requirement to be an effective deepsea transshipment hub. The sites of intermediate hub terminals tend to be less crowded and outside the traditional coastal areas that have seen a large accumulation of economic activities. This is supportive in the setting of large yard areas that are important to accommodate transshipment activities since few containers are leaving the terminal. They often have land for future expansion, which is a positive factor to help securing existing and future traffic.
  • Operations. Since transshipment is an activity that does not add any value to the cargo, costs and productivity factors are highly important. Operation costs for transshipment hubs in developing countries tend to be lower, in part due to lower labor costs, particularly if it concerns a new terminal facility. Transshipment costs of $100 per box are considered to be within an acceptable range. Costs below $100 improve the competitiveness of the transshipment hub. Ships tend to spend as little time as possible at the hub (turnaround time), thus the necessity of a high level of productivity for the terminal equipment. An average of 35-40 moves per hour per crane is considered a desired level of productivity, but standards are aiming towards 60 moves. Most terminals are owned (concessioned), in whole or in part, by a global terminal operator (often a single one) which are efficiently using these facilities and have leeway in deciding future terminal developments. Transshipment hubs are avoiding a governance legacy of public port authorities. They thus tend to be responsive and adaptable to market changes.
Since the transshipment business remains highly volatile, transshipment hubs can eventually develop services that add value to the cargo instead of simply moving containers between vessels. This strategy could trigger the creation of logistics zones within or in the vicinity of the port area, in many cases implemented as a Free Trade Zone. This potential capture of added value can help improve the competitiveness of a transshipment hub in view of a general footlessness of transshipment traffic.
Not all port systems feature transshipment hub development. In the United States, shipping regulations gravitating around the Jones Act have favored a process of port system development with limited (feeder) services between US ports and the absence of US-based transshipment hubs (Freeport in the Caribbean to a limited extent takes up this role). Instead, the US port systems at the east and west coast are characterized by a strong inland orientation supported by extensive double-stack rail services, local and long-distance trucking and limited barging.