Hubs of Major Air Freight Integrators

Hubs of Major Air Freight Integrators

Three major air freight integrators account for the bulk of the global air cargo; DHL, FedEx, and UPS. Each integrator has a hub-and-spoke organization of its network, with hubs clustered around the world’s three major zones of economic activity; North America, Europe, and Pacific Asia. The choice of the primary consolidation hub is based upon an airport that is well located and has good infrastructure, but that does not necessarily serve a very large local passenger market. The integrator is thus the airport’s main customer and gets privileged access to the runways. Louisville, Kentucky, is the major UPS North American air hub, while Memphis, Tennessee, performs the same role for FedEx.

There is a high concentration of hubs in the Eastern Part of the United States, which roughly corresponds to its demographic centroid. Other hubs in North America are regionally oriented (with Toronto and Hamilton servicing the Canadian market for FedEx and UPS, respectively), except Miami, which services Latin America, and the only airport with Hong Kong, where three integrators are using the facility as a hub. In Europe, DHL followed a strategy similar to its North American counterparts by selecting Leipzig, a smaller airport, as its main hub. Hubs have also been established at intermediate locations like Anchorage, Dubai, and Bahrain. Although their initial use was for refueling, they became logistical hubs in their own right.

The growth of e-commerce is having a substantial impact on air cargo operations. Initially, main e-commerce firms became major customers for air freight integrators. Still, as they command larger volumes, they tend to take more control of their supply chain, including the air transport segment. The giant e-commerce firm Amazon founded Amazon Air (formerly Prime Air) in 2016 and established its main hub in Cincinnati.