Hub and Spoke (H&S) vs.

Point-To-Point (PTP)

1. Number of daily services organised

You should keep in mind we organise daily services to connect two logistics centres (1 service from i
to j and vice versa). The demand (or traffic) on each one-way service will be 10 units (PTP) and 80
units (H&S).

2. Transportation time between two logistics centres

4 hours (PTP)
H&S: 4 hours from a logistics centre to hub 1 (vice versa)
9 hours from i to j (different from hub 1)

3. Cargo demand on each service (explained above)

4. Risk of missing services

In PTP: one service from i to j, so in case you miss a service, you cannot deliver
the product.
In H&S: demand on each service will be much higher (80 units vs. 10 units),
besides utilising big vehicles (lower transport cost), logistics companies may
provide more than a service per day due to high demand, for instance 2
services per day (each service transport 40 units). In case more services are
organised, the risk of missing delivery will be lower.
But if a hub is disrupted, the entire system will be collapsed.

5. Pros and cons of each model

You may compare in several aspects such as:
- Economies of scale (vehicle)
- Transit time (and inventory carrying cost during the transit)
- Complexity of transport activities
- Service frequency (the number of services we can organise per day – relevant
to customer service)
- Disruption risk (of a service, a logistics centre, or a hub)