Planning a freight network with hub and spoke strategies

Abstract

The location of freight terminals in a territory is a key factor for their performance and competitiveness. Nowadays, several factors led to the implantation of a freight terminal in an area and then different possible micro-locations are evaluated. Micro-location considers several pieces of land in the same region depending on prices, availability, and transport connections. However, the macro-location is not normally considered in current analysis, that is to say, that flows among regions are not considered before deciding where the terminal should be located. In this article, we present the development of a methodology to locate strategic areas for freight terminals taking into account the interaction of freight flows. The methodology is based on Hub and Spoke networks which are extended to accommodate a new network structure: the arborescent allocation formulation. The new structure proves to be suitable for freight network, providing savings but not being extra rigid. The methodology presents an optimal configuration of freight terminals according to the goods flow, transport costs and node connections. A case study is devoted to the Spanish network.