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Radical restructuring of DB Cargo
Deutsche Bahn is investigating how the loss-making goods division can be made profitable again. Ideas are massive job cuts and an end to single wagon traffic in northeast Germany.
Deutsche Bahn is examining how the loss-making goods division can be made profitable again. © Pixabay
According to the news agency "Reuters", Deutsche Bahn is playing a radical austerity course with the end of almost half of the freight loading points. This program would practically end the rail freight traffic of Deutsche Bahn, especially in north-east Germany. "A focus will have a strong impact on DB Cargo staff and will lead to a reduction of more than 3,000 full-time positions at DB Cargo by 2030," says Reuters. According to the report, the report by the consulting companies Oliver Wyman and SCI-Verkehr focuses on changes in single wagon traffic, in which individual wagons are put together to form longer trains by shunting. This division is held responsible for the majority of DB Cargo's losses. A spokeswoman for DB Cargo emphasized to “Reuters”: “There are no resolutions whatsoever on the proposed scenarios, rather the report is first evaluated internally by us and discussed with interest representatives, politics and other stakeholders.” None of the scenarios is currently in the ongoing planning taken into account for DB Cargo for the next few years. According to "Reuters", Oliver Wyman and SCI-Verkehr had essentially proposed two scenarios for single-wagon traffic (EV). On the one hand, the focus: "Larger areas, especially in northern and eastern Germany, are left behind from the EV network and disadvantaged as potential industrial locations." On the other hand, the consultants propose years of subsidization of single wagon traffic, which is unlikely to meet with much approval. It is true that the railways are to receive more funding from the federal government than before. According to "Reuters", however, further billions for freight traffic are unlikely.
Quality deficiencies and economic influences
In its annual reports, the Group blames quality defects, weather-related operational disruptions and economic influences for the problems of rail freight transport at DB. Currently, the volume is falling, especially for transports for the automotive and steel industries. Quality defects are caused by a lack of staff and vehicle bottlenecks. And compared to its competitors on the railways, DB Cargo has disadvantages when it comes to scheduling the train drivers.
To put it simply, the DB train drivers must be deployed in such a way that they return to the starting point within one shift. This is always a problem if the train scheduled for the return of the engine driver is delayed. Competitive railways, on the other hand, have long journeys and rest outside of the country of more than 36 hours. In addition, problems with the availability of the network exacerbate the bottlenecks. Lack of network availability is often caused by unpunctuality in passenger traffic. These quality problems then lead to a loss of market share, which exacerbated the economic problems due to the high proportion of fixed costs in DB rail freight transport. In addition, non-functioning or not yet delivered software packages are still causing problems for the company. Since DB Cargo has grown through the acquisition of other state freight railways, the need arose to develop a common system for operational management. On the initiative of the Supervisory Board, a new “Freight Transport” department will now be set up on the Executive Board at the beginning of 2020. The task will be taken over by Sigrid Nikutta, previously head of the Berliner Verkehrsbetriebe BVG. At the same time she is to take over the chairmanship of the board of directors of the DB rail freight company DB Cargo. Before joining BVG, Nikutta worked for DB Cargo, most recently as head of production at the Polish subsidiary DB Cargo Polska.
We at HDS International Group are eagerly following all trends and developments in logistics - and would be happy to advise you on cost optimization and planning of your transports.
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