In this thesis, we study the problem of designing a service network for cargo delivery sector. We analyzed the structure of cargo delivery firms in Turkey and identified the features of the network. Generally, in the literature only one type of vehicle is considered when dispatching cargo. However, our analysis showed that in some cases both planes and trucks are used for a better service quality. Therefore, we seek a design in which all cargo between origin and destinations is delivered with minimum cost using trucks or planes within a given time bound. We call the problem “Time Constrained Hierarchical Hub Location Problem (TCHH)” and propose a model for it. The model includes some non-linear constraints. After linearizations, the TCHH is solved with data taken from cargo delivery firms. The computational results are reported and comparison with the current structure of a cargo delivery firm is given.