Importance Score: 65 / 100 🔴
DB Cargo Considers Halting Loss-Making Single Wagonload Freight Service
DB Cargo, the freight division of German rail operator Deutsche Bahn, is considering halting its single wagonload freight service due to persistent losses, according to executive Sigrid Nikutta. This move could significantly impact various industrial sectors relying on this service.
Financial Sustainability in Question
In a statement to Deutsche Presse-Agentur (dpa), Nikutta conveyed the critical juncture for this sector. “Either we in Germany succeed in structuring single wagonload transport to be financially sustainable, or we will no longer be able to operate it in its current form,” Nikutta stated.
Importance of Single Wagonload Freight
This individual service, a vital component for sectors including steel, chemicals, and construction, involves collecting goods directly from businesses. These goods are then consolidated into trains at shunting yards and subsequently delivered in reverse sequence. This bespoke service is crucial for industries requiring flexible and direct freight solutions.
Profitability Demands and Government Support
While this loss-incurring sector currently receives support from the German government, Nikutta emphasized that demands for profitability are now emanating from the European Union, the German government, and supervisory boards. The emphasis has shifted towards financial viability for the long-term operation of DB Cargo.
Restructuring and EU Mandates
DB Cargo is undergoing restructuring measures, anticipating a reduction of 5,000 positions by 2029. The European Commission mandate requires the company to achieve profitability by 2026, following a €350 million loss last year and a projected loss of under €100 million for the current year. This financial pressure necessitates significant operational changes.
EU Regulations Restrict Loss Compensation
European Union regulations prevent DB Cargo from offsetting losses with profits from its other divisions. This financial ring-fencing underscores the urgency for DB Cargo to address the losses within its single wagonload freight operations and achieve independent financial stability.