DB Cargo

DB Cargo AG

DB Cargo AG was previously known as Railion and DB Schenker Rail is an international transport and logistics company. It is responsible for all of the rail freight transport activities of the German railway company Deutsche Bahn (the DB Group) both inside Germany and on a global level. DB Cargo has a registered office in Mainz and a further administrative office in Frankfurt am Main.

The company was founded as DB Cargo AG on 1 January 1999 under the second stage of liberalisation reform of the German railway system (Bahnreform) underway around this time. Initial operations were primarily focused on the rail freight market within Germany, however, during early 2000, the company was reorganised under the Railion holding company as part of a merger between DB Cargo and the Dutch state-owned rail company Nederlanse Spoorwegen's rail freight operations. This new structure was designed for the cooperation, and incorporation, of future partnerships with other rail freight companies, between 2004 and 2009, Railion expanded its operations into Italy, Switzerland, and Poland, typically via acquisitions.

Following the acquisition of Schenker AG in the early 2000s, the company was restructured again and adopted the DB Schenker Rail branding. During 2016, to indicate its core focus on rail freight transportation, the company was once more rebranded as DB Cargo AG, this naming scheme has been progressively replicated across the majority of its international subsidiaries as well.

The services provided by DB Cargo include both block train and single wagonload transport services, the latter of which have been abandoned by many of the company's rivals. Based on the number of kilometres travelled, DB Cargo is the market leader in both Germany and Europe, although its transport services have been in decline for several years. Seeking to reverse this decline, a more flexible price structure was adopted alongside various cost-cutting measures in 2016.

During the early 2020s, major global events such as the COVID-19 pandemic and the 2022 Russian invasion of Ukraine have challenged the company and driven changes. Within the context of the battle against climate change, however, the role of DB Cargo is also thought to be increasingly important, as the company offers transport options that are entirely carbon neutral. However, the company has been criticised for a lack of investment into both its rolling stock and infrastructure, and thus constraining its performance. In late 2019, Sigrid Evelyn Nikutta took on the role of CEO of DB Cargo.

DB Cargo History

German Rail Reform

At the end of the 1990s, the operational business of Deutsche Bahn was reorganised into five legally independent joint-stock companies. This measure formed part of the second stage of the German rail reform. Within the scope of this restructuring, a precursor company was initially established in 1997, which had the purpose of facilitating a transformation of the entity's rail freight transport division structured under public law into a private enterprise company. Accordingly, on 1 January 1999, the company DB Cargo AG was ultimately founded to undertake these operations. The headquarters of DB Cargo AG were established in Mainz.

DB Cargo European Expansion

At first, DB Cargo solely focused on its domestic activities. Accordingly, the Deutsche Bahn Group produced investment plans that directed billions in its subsidiary in order to improve its position in the German transport and logistics market. As the competitive environment with other European providers became increasingly challenging in the late 1990s, Deutsche Bahn (DB) and the Dutch state-owned rail company Nederlandse Spoorwegen (NS) announced plans to merge their rail freight transport activities in 1998.

Together, DB Cargo and NS Cargo reached revenues of around 6.9 billion Deutsche Mark (3.5 billion euros) and had roughly 50,000 employees. Their amalgamation was the first ever cross-border rail merger, in which Deutsche Bahn retained its majority share of 94%. A financial holding company, Railion GmbH, was created for this new company, and commenced operations during early 2000.

DB Cargo Internationalisation

The successful creation and launch of Railion laid the foundation for the establishment of a leading European transport and logistics company. Specifically, from the onset, the organisation was open to the incorporation of further partners. While the European Commission and European Parliament aimed to promote competition among providers, the providers themselves instead opted to foster cooperation. During 2001, the Danish state-owned rail company Danske Statsbaner (DSB) opted to merge its rail freight transport activities into the joint venture, becoming its third partner and received shares totalling 2% in Railion in return, thus decreasing the stake of Deutsche Bahn in the venture to 92%.

The cooperation between DB, NS and DSB has reportedly played an essential role in Deutsche Bahn's long-term strategy for expansion in other European countries. This strategy covered not only state-owned rail companies but also the acquisition of private sector rivals, for example in Italy (2004), Switzerland (2007) and Poland (2009). These were joined by a multitude of smaller acquisitions such as the transport and logistics divisions of RAG AG. In Sweden, where Deutsche Bahn was unable to acquire its chosen target, the company instead focused on establishing collaborative ventures. At the end of the 2000s, Railion was therefore able to not only offer connections across large stretches of Europe running from north to south, but reliably serve rail route that run from west to east as well.

Despite this expansion into the rai freight sectors of several neighbouring nations, the presence of effective competition to provide freight services had reportedly made a negative impact on the company's economic development by May 2005. Recognising the company's unfavourable financial position, Deutsche Bahn opted to respond by enacting numerous cost-saving measures, these were credited with a significant improvement in Railion's circumstances. During 2010, the rail freight transport crisis was initially deemed to have been largely resolved.

DB Cargo Linking Rail and Road

During early 2003, Deutsche Bahn transferred its share in Railion to the Stinnes AG (which later became DB Mobility Logistics). After the successful acquisition of the then-listed logistics company Stinnes, including its freight forwarding subsidiary Schenker AG, a restructuring of responsibilities took place within Deutsche Bahn. Subsequently, DB Cargo, NS Cargo and most of the other Railion companies solely focused on freight forwarding while Stinnes and Schenker took on central tasks in the fields of rail freight transport and sales. By consolidating all of its transport and logistics activities, Deutsche Bahn also aimed to achieve growth in the freight transport domain. The company adjusted its image to reflect this aim and as a result, DB Cargo was renamed Railion Deutschland.

At this point, the general objective pursued by Deutsche Bahn was to better cover the entire transport chain with all transportation means and routes. Over the years that followed, however, this approach mainly resulted in a shift of its freight transport activities away from the rails and towards the road network instead. The company realised that it needed to improve the links between its rail and road transport in particular, and securing acquisitions was one way to do so. In 2009, Deutsche Bahn abandoned the Railion brand and instead chose to consolidate all of its rail freight transport activities under the name DB Schenker Rail. At the time, its organisational structure remained unchanged. Media reports, however, already began to speculate about a stock market launch of the newly formed DB Schenker division.

DB Cargo AG Overview

DB Cargo Trade Name: DB Cargo
DB Cargo Company Type: Private
DB Cargo Industry: Logistics
DB Cargo Founded: 2009
DB Cargo Headquarters: Mainz, Rhineland-Palatinate, Germany
DB Cargo Key People: Sigrid Nikutta, CEO
DB Cargo Products: Rail Transport
DB Cargo Revenue: €4.5 billion
DB Cargo Number of Employees: 29,525 (2019)
DB Cargo Parent: Deutsche Bahn
DB Cargo Subsidiaries: 20 worldwide, including freight and contract logistics