Integrators’ Air Network A review of the Domestic Express European Market

The express industry witnessed dramatic growth during the 1990’s with an economic environment changing toward globalisation. Integrators’ international expansion has been supported by extensive transportation networks applying the model developed by FedEx: the hub and spoke model. This report investigates integrators’ air network configurations within a specific geographical area: the intra-European market. The research has been focused on the big four integrators, DHL, FedEx, TNT and UPS and provides an analysis on their strategy. Before presenting integrators, a review of the different network models presents the major role played by the Hub and Spoke network in the express freight industry. This model is one of the strategic foundations of the integrators’ success. Afterwards, the paper deals with three objectives. It first identifies the hub and spoke network configurations selected by integrators in Europe. Then, work uncovers the drivers behind network configuration. Finally, the key factors influencing the European Hub location are discussed through the case of the DHL move to Leipzig. This paper provides a location analysis and compares Brussels to Leipzig in term of distance to the core market. This paper brings several conclusions. First of all, there is a strategic area to locate a central hub in Europe, between Amsterdam Liege & Paris. Moreover several factors influence central hub selection as followed: market proximity, Airport capacity 1 , environmental restrictions 2 , operational cost and capacity of driving traffic are the key factors. Secondly, two hub and spoke configurations are used by integrators in Europe, the single hub and spoke network with pickup stopovers and feeders and the multi-hub and spoke configuration. Finally, network configuration relies particularly on the size of business and the transport strategy elected. 1 This term includes slots restrictions, runway capacity, and possibility of building logistic facilities. 2 Includes night curfews and environmental concerns of the local community