The Advantages of Intermediate Hub Terminals

Intermediate hubs particularly owe their emergence to the following factors:

• Location. 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 where traffic bound to different routes can be transloaded. This is known as a relay function. Offshore 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.
• Depth. Intermediate hub terminals 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. Their selection often involves a long term 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 requirement to be an effective transshipment hub.
• Land. The sites of intermediate hub terminals tend to be less crowded and outside the traditional coastal areas that have see 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 also often have land for future expansion, which is a positive factor to help securing existing and future traffic.
• Costs and productivity. Since transshipment is an activity that does not add any value to the cargo, costs and productivity factors are highly important. Labor costs tend to be lower, since intermediate hub terminals are located at the periphery (e.g. developing countries) and they tend to have less labor regulations (e.g. unions), particularly if it concerns a new terminal facility. Transshipment costs of $100 to $200 to FEU are considered to be within an acceptable range. Ships tend to spend as little time as possible at the hub, thus the necessity of a high level of productivity for the terminal equipment. 50 moves per hour per crane is considered a desired level of productivity. Also, due to quick turnaround issues, fast custom procedures are fundamental.
• Hinterland access. Limited inland investments are required since most of the cargo is transshipped from ship to ship with a temporary warehousing on the port facilities. The footprint intermediate hub terminals have on the local or regional transport system is thus limited. In addition, the port 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.
• Ownership. Most terminals are owned, in whole or in part, by port holdings or carriers (often a single one) which are efficiently using these facilities and are free to decide future developments or reconfigurations. Intermediate hub terminals are avoiding a legacy of governance structure controlled by port authorities. They thus tend to be responsive and adaptable to market changes.

In an initial phase intermediate hub terminals solely focus on accommodating transshipment flows and many have a transshipment share exceeding 80% of their container throughput. As the transshipment business remains highly volatile, intermediate 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 could change port competition.

Not all port systems feature transshipment hub development. In the United States, many impediments in American 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.