A dive into the network structure of the Gemini Cooperation

25/08/2024 trinhdoan

The Gemini Cooperation between Maersk and Hapag-Lloyd, set to launch in February 2025, plans to use the hub-and-spoke shipping model, marking a shift from direct port calls to transshipment-based operations. This approach involves moving cargo from larger vessels to smaller ones at central hub ports, reducing direct service to key container ports, particularly on the Far East – Europe trade route. The hub-and-spoke model contrasts with the point-to-point model, where cargo is transported directly from origin to destination without intermediate transshipment.

Maersk and Hapag-Lloyd argue that this model will improve reliability, aiming for a 90% reliability rate by minimizing the number of ports served directly. However, this comes with added costs and longer transit times due to additional feeder services required for transshipment. Despite these challenges, Maersk emphasizes that dedicated shuttle services in this network will operate with the same priority as mainline vessels, potentially reducing transit times by up to a week on some routes.

The restructuring has raised concerns among some ports, notably in Hong Kong, where businesses fear a decline due to the shift in cargo handling from Kwai Tsing Terminals to Yantian in South China. European ports like Hamburg, Aarhus, Gdansk, and Le Havre are also expected to see fewer direct calls, with Rotterdam emerging as a key hub for this network.

For shippers, the new model offers the promise of better on-time performance but also introduces the challenge of more frequent transshipments. Analysts are skeptical about whether the promised transit times, including transshipment, can be met consistently.

📌Key Point:

🚢 Hub-and-Spoke Model Adoption: Gemini Cooperation plans to adopt a hub-and-spoke shipping model, reducing reliance on direct calls to certain ports.
🌏 Impact on Major Ports: Key ports such as Hong Kong, Hamburg, and others in Europe and Asia may see fewer direct calls, impacting their operations.
⏱️ Reliability Improvements: Maersk and Hapag-Lloyd claim the new model will achieve a 90% reliability rate, despite the longer transit times for indirect port calls.
🏗️ Transhipment Hubs: Ports like Rotterdam, Nansha, and Tanjung Pelepas will become key hubs, with smaller ports being serviced through transshipment.
💼 Shipper Preferences: There is concern that shippers might prefer direct services, though the Gemini Cooperation aims to deliver on promised transit times despite the increased transhipments.
🗺️ Trade Lane Adjustments: The new network structure significantly reorganizes trade lanes, particularly on the Asia-Europe route, affecting how goods are routed.
📉 Decline in Business for Some Ports: Ports like Hong Kong and Aarhus may see a decline in business as more cargo is rerouted through other hubs.
🛳️ Dedicated Shuttle Services: Gemini Cooperation plans to operate dedicated shuttles with the same priority as mainliners at terminals, aiming for efficiency despite the added complexity.
🌐 Network Coverage: The network will cover fewer ports directly but promises faster transit times for many routes, including a two-day reduction on the Asia to North Europe trade.
🗣️ Shipper Reactions: Analysts are skeptical about shippers’ acceptance of more transhipments, though the cooperation’s ability to meet transit time promises will be crucial in gaining their trust.