Spoke–hub distribution paradigm

The Spoke-hub distribution paradigm (also known as a hub and spoke model or hub and spoke network) derives its name from a bicycle wheel, which consists of a number of spokes extending outward from a central hub. In the abstract sense, a location is selected to be a hub, and the paths that lead from points of origin and destination are considered spokes. The model is commonly used in industry, in particular in transport, telecommunications and freight.

Analysis of the model

The hub-spoke model is most frequently compared to the point-to-point transit model.

Benefits

For a network of n nodes, only n - 1 routes are necessary to connect all nodes; that is, the upper bound is n - 1, and the complexity is O(n). This compares favorably to the (n(n - 1))/2 nodes, or O(n²)/2, that would be required to connect each node to every other node in a point-to-point network.

The reduced number of routes generally leads to more efficient use of scarce transportation resources. For example, aircraft will be more likely to fly at full capacity, and can often fly routes multiple times in a single day.

Complicated operations such as package sorting can be consolidated at the hub, rather than maintained separately at each node.

Spokes are simpler, and new spokes can be connected rapidly.

Customers may find the network to be simpler and more intuitive. Scheduling is more convenient for customers since there are fewer routes with more frequent service.

Drawbacks

The model is centralized and day-to-day operations may be relatively inflexible. Changes at the hub or even in a single route could have unexpected consequences across the network. It may be difficult or impossible to handle occasional periods of high demand between 2 spokes.

Route scheduling is more complicated for the network operator. Scarce resources must be used carefully to avoid starving the hub. Careful traffic analysis and precise timing is required to keep the hub operating efficiently.

The hub constitutes a bottleneck in the network. Total cargo capacity of the network is limited by the hub's capacity. Delays at the hub (e.g., weather) can result in delays across the entire network. Delays at a spoke (e.g., mechanical problems with an aircraft) can also affect the network, although to a lesser extent.

Cargo must be routed through the hub before reaching its destination, possibly requiring a much longer journey than a direct point-to-point connection. This is often a desirable tradeoff for freight, which can take advantage of the sorting capabilities of the hub, but it may be unacceptable for time-critical cargo such as passengers.

Commercial aviation

FedEx founder Fred Smith pioneered the hub and spoke model for overnight package delivery in the mid-1970s. Smith established his company's hub at Memphis International Airport (Memphis, Tennessee). Soon after, other firms like UPS and Airborne had no choice but to develop their own hub and spoke model given the natural superiority of this system for speedy delivery of packages. In addition to FedEx, Delta Air Lines pioneered the hub and spoke system in the passenger transportation industry at its hub in Atlanta, Georgia to compete with Eastern Air Lines.

In the early days of FedEx, customers would be surprised to learn that all packages went through the Memphis hub, even packages between relatively close cities such as San Francisco and Los Angeles. While it seems inefficient at first, in reality the aircraft leaving San Francisco would have packages for many destinations, and likewise the aircraft heading for Los Angeles would have packages from many sources.

More recently, airlines have extended the hub-spoke model in various ways. One method is to create additional hubs on a regional basis, and to create major routes between the hubs. This reduces the need to travel long distances between nodes that are close together. Another method is to implement point-to-point service for high traffic routes, bypassing the hub entirely.

Hub and spoke industrial district

The "hub and spoke" has also been used in economic geography theory to classify a particular type of industrial district. Ann Markusen, an economic geographer, theorised about industrial districts where a number of key firms and/or industrial facilities act as a hub with associated suppliers and firms spread out across the economic landscape like the spokes of a wheel. The chief characteristic of such hub-and-spoke industrial districts is the domination of one or more large firms, in usually one sector, surrounded by smaller associated stakeholders. Examples of cities with such estates include Seattle with Boeing and Toyota City with Toyota.

References

Babcock, B. A., 2002, Making Sense of Cities: A Geographical Survey, London: Arnold, pp. 63–94.

Markusen, A., 1996, "Sticky Places in Slippery Space: A Typology of Industrial Districts", in Economic Geography, 72: 293–313.