News / Gemini's outdated hub-and spoke strategy will prove 'ineffective'

Gemini Cooperation’s “hub and spoke” strategy was predicted to be “ineffective” by speakers at the Busan International Port Conference in South Korea last week.

The Gemini tie-up between Maersk Line and Hapag-Lloyd will launch operations in February 2025.

Among the container shipping alliances, Gemini Cooperation is offering the fewest Asia-Europe services and is skipping various ports, opting instead to use dedicated shuttle services to tranship goods to certain ports, such as Busan.

Linerlytica chief analyst Tan Hua Joo (pictured above, third from left), who was among the speakers, commented that Maersk Line and Hapag-Lloyd were the ‘most passive’ liners in expanding their fleets during the Covid 19-induced boom.

He said: “Maersk expanded its fleet the least over the past seven years, and Hapag-Lloyd is similar.”

And Mr Tan described Gemini as a “coming together of the weakest shipping companies”.

MSC, which displaced Maersk as the world’s largest liner operator in January 2022, has been the most aggressive in building up its fleet, having an orderbook of nearly 2m teu, almost 33% of its current fleet’s 6.1m teu capacity.

In contrast, Maersk’s orderbook stands at 424,928 teu, equating to 10% of its present fleet, of 4.38m teu. Hapag-Lloyd’s orderbook of a dozen ships, 176,126 teu, is 8% of its current fleet of 2.23m teu.

However, Maersk and Hapag-Lloyd are reportedly planning to order more newbuildings and have been chartering vessels in a bid to close the gap on MSC.

Mr Tan said: “Maersk lost a lot of market share by not increasing its fleet in the past four years when it was highly profitable.”

Suggesting that Gemini would be the weakest among the container shipping alliances, he continued: “Gemini will only have four Asia-US West Coast sailings a week, compared with 12 for Ocean Alliance and 10 for Premier Alliance.”

Mr Tan also implied that Gemini’s strategy was outdated, having been drawn up before the Red Sea crisis started in November 2023.

“Right now, liner operators are detouring [round the Cape of Good Hope] and the market is short of 300,000 teu. I think the hub-and-spoke method wasn’t chosen because it’s better than direct calls, but rather as a last resort due to lack of slots – Gemini’s transhipment costs will go up,” he explained.

Although Maersk and Hapag-Lloyd have asserted that Gemini’s strategy would offer greater reliability, Mr Tan doubted that shippers would pay a premium for punctuality.

And Vespucci Maritime CEO Lars Jensen, also speaking at the event, agreed that Maersk and Hapag-Lloyd would not have enough tonnage. But he said:  “Since transhipment costs are rising, increasing vessel utilisation and operational efficiency will be key to increasing commercial viability.”

Asked if Gemini’s dedicated shuttle services would offer an alternative for ports that cannot accommodate large ships, Mr Jensen said: “This is a method the industry has already tried for the past 10 years. It’d be nice to operate a precise service with smaller ships, but the reality is that large ships are continuously appearing, and we have no choice but to cope with them.

“In the past, punctuality was not commercially feasible, so people were not willing to pay more, but now that we have passed the Covid 19 period, we know that punctuality is important.”

In an accompanying opinion piece today, The Loadstar’s Mike Wackett argues that, with the right sales pitch, Gemini could prove a success with customers