Gemini Partners Maersk and Hapag-Lloyd Opt for ‘Hub & Spoke’ Operation

By Mike Wackett (The Loadstar) –

The liner industry’s new vessel-sharing alliance, the Gemini Cooperation, will buck the recent trend of direct port calls in favour of a ‘hub & spoke’ operation.

However, for the concept to work, shippers must be convinced that the Gemini relay network is resilient, has sufficient buffer and that exports and imports are guaranteed to make connections.

Moreover, the Gemini partners will need to have assurances from spoke and hub ports that feeders will get the same priority as mainline vessels, in terms of working prospects.

Indeed, according to one liner industry veteran, hub & spoke operations have a chequered history.

“The theory is fine, but the model is only as good as its weakest link. If, for instance, some feeders get delayed, be that at the spoke port or by bad weather, which results in ships arriving at the hub at the same time, it can be an operational nightmare for ship planners,” said the contact.

Maersk and Hapag-Lloyd, which announced the new VSA yesterday, will no doubt advise details of their intended feeder network to and from spoke ports later this year, when the full schedule is unveiled to customers and partners.

The network principles of the Gemini VSA is to nominate two to three mainly owned or controlled hub ports per region, which will be served by a feeder network.

For example in North Europe, the hubs will be at the German ports of Wilhelmshaven and Bremerhaven and at the Dutch port of Rotterdam, which will then be served by 14 dedicated feeder services.

Yesterday, Maersk and Hapag-Lloyd said using a hub & spoke operation would significantly improve schedule reliability, the latter adding that the network would be “more reliable and interconnected than traditional set ups”.

CEO Rolf Habben Jansen said Hapag-Lloyd needed “a step change in operational performance from our status quo”, with its schedule reliability score at just 54%. And he noted: “While we have improved in customer satisfaction, we have not made the progress we hoped for on the reliability of our operations.”

The suggestion is that, as it stands, the four-carrier membership of THE Alliance is too unwieldy to achieve Hapag-Lloyd’s schedule integrity aspirations – not least perhaps because its partners are all headquartered in Asia.

Meanwhile, Maersk is happy that it managed to persuade Hapag-Lloyd join it in a new VSA, calling the partnership “a strong match”, with a “shared ambition and commitment to deliver quality”.

Hitherto, following the decision in January last year to dissolve its 2M alliance with MSC, Maersk seemed reluctant to enter into a new VSA; CEO Vincent Clerc referring to the downside of vessel sharing as “just being a 3PL on somebody else’s vessel”.

Nevertheless, Maersk clearly feels confident of its new partner’s “business culture” and scheduling integrity, with both companies committed to achieving a very ambitious 90% schedule reliability.

“This objective is backed by a strong governance model and contractual obligations,” said Maersk.

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