Quynh Ngo

Essay Assignment Chapter 5

Hub-and-spoke and distributed networks are two of the commonly utilized transport networks. Each
type of network has its own advantages and disadvantages and best serves the particular needs of
different stages of transportation businesses.

Hub-and-spoke networks rely on a few large nodes to direct and redistribute traffic to smaller nodes are
often referred to as hub-and-spoke networks or a star network. Main advantages of hub-and-spoke
network are:

- Economies of scale on connections by offering a high frequency of services.

- Economies of scale at the hubs enable the potential development of an efficient distribution system
since the hubs handle larger quantities of traffic.

- Economies of scope in the use of shared transshipment facilities.

However, potential disadvantages may also occur. One of the biggest disadvantages is the creation of a
bottleneck, a single point of failure that can cripple the network. The time required to move
freight/passengers to their destination is higher than in a point-to-point network. As the demand and
the network load grows, more point-to-point services become feasible. Thus, hub-and-spoke networks
are an intermediate stage in network development as the service preference remains direct
connections.

The distributed network consists of nodes that are connected based on prevailing demand and supply
equilibrium. No routes or schedules are fixed. One great advantage of this type of network is that
Freight and passengers are taken from one node to another based on the availability of demand and the
ability of the transport provider to generate revenues in excess of the costs. The big disadvantage of a
distributed network is the inability to predict accurate demand in advance and, hence, plan for
upgrading infrastructure at the nodes.