Hub-and-Spoke Network and Externalities

The hub-and-spoke structure has characterized the reorganization of transportation networks for the past 20 years, notably for air, rail and maritime freight transportation. It has reduced costs and improved efficiently through the consolidation of freight and passengers at hubs. Despite the cost savings in many cases, the flows, modes and terminals that are used by pursuing logistical integration are the less sustainable and environmentally friendly. The hub-and-spoke structure concentrates traffic at a relatively small number of terminals. This concentration exacerbates local environmental problems, such as noise, air pollution and traffic congestion. Thus, even if overall an hub-and-spoke network has a lower level of total externalities than a point-to-point network [E(A) < E(B)], a large share of the environmental externalities are assumed by a single node; the hub.