Hub-and-Spoke Model Improves Efficiency

Just-in-time shipments make all the difference in the automotive industry. Yet the speed of shipments must be balanced with affordability.

To deliver products in the most cost-effective and timely means possible, forward-thinking logistics companies are embracing hub-and-spoke models, where connections are arranged like a wheel. Freight traffic moves along spokes connected to a central hub. This efficiently moves products out of strategically located distribution centers and shortens travel time.

As an industry leader, Penske Logistics puts its own hub-and-spoke model into action for customers. Penske experts optimize the model to help you to speed up deliveries, increase efficiency, reduce costs and keep products moving.

Maximize Freight Efficiencies

As part of the hub-and-spoke model, hubs are positioned no more than 300 miles apart from one another. Here’s how it works:

Driver A leaves from his origin hub and meets Driver B at a switching point. They then exchange trailers. And while Driver B continues to the next switching point, Driver A heads back to his originating hub. This sequence of events keeps products in continuous motion and allows drivers to return home each night.

The hub-and-spoke model creates numerous benefits, including:

  • Continuous movement for loads thanks to centralized handoffs.
  • Reduced lengths-of-haul, which improve scheduling, reduce transit time and help drivers comply with hours-of-service regulations.
  • Consistent on-time performance, which enhances service levels and ensures products arrive in the right place at the right time.
  • Improved driver recruiting and retention. Drivers are able to return home each night, thus experiencing an improved quality of living. This produces additional benefits, including higher tenure, route consistency, increased transit dependability and performance, and improved safety.
  • Reduced costs and enhanced productivity thanks to Penske’s economies of scale (larger loads reduce per-unit costs) and the elimination of the need for team drivers.
  • Lower carbon footprint, because few empty miles driven reduces wasted fuel and emissions.
  • Consistent pricing mitigates the risk of third-party carrier price fluctuations.

Just-in-time doesn’t have to mean high costs. By partnering with Penske and leveraging our hub-and-spoke system, you can strategically use your transportation resources and steer a course toward efficiency.

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