DB Cargo Company Restructuring

DB Cargo Company Restructuring

During the 2010s, the business operations of DB Schenker Rail experienced a significant decline. One of the primary factors behind this decline was the economic slump that had followed the global economic and financial crisis. The company initially responded to this negative development by introducing a more flexible price structure. It aimed to use a combination of block trains for large clients and bookings of single wagons to establish a fixed timetable that would in turn increase the capacity utilisation of its trains. Other measures considered included the closure of numerous freight railway stations in order to reduce fixed costs, and efforts to reduce staff headcount at all levels of the business.

News of these cost reduction measures was quickly met with sharp criticism by various trade unions, their opposition included demands that the approach be abandoned immediately, and accusations of the company's mismanagement. Following several months of negotiations, the Deutsche Bahn Group and its works council finally agreed on a restructuring programme for DB Cargo during February 2007. Under this programme, the previously proposed across-the-board job cuts that year were avoided, instead, the new approach aimed for the gradual reduction of headcount over a period of several years. On the whole, the company retained its ambition to grow its freight transport activities.

To reflect the company's focus on its core business activities in the domain of rail freight transport, it was again renamed, adopting the DB Cargo AG designation in early 2016. The name was also readopted for its most important German and international subsidiaries and continues to apply in the present day. Accordingly, DB Cargo and DB Schenker are equal sister companies within the integrated rail system of the DB Group.

DB Cargo Recent Developments

According to media reports, DB Cargo reduced its fleet size by nearly one half in the 2000s and 2010s. The remaining locomotives were increasingly replaced by multi-system models that can also be used in the international rail network. Furthermore, the company also equipped its inventory of wagons with whisper brakes, which had reportedly halved the noise pollution generated by the movement of its freight trains. Another area of investment by the company has been the addition of state-of-the-art sensors and telematics, which has reportedly been responsible for improvements in its competitiveness. Seeking to progress developments in this area, between 2016 and 2019, DB Cargo played a leading role in the "Innovative Freight Wagons" research project conducted on behalf of the German Federal Ministry of Transport and Digital Infrastructure (BWVI). Although the wagons used by DB Cargo have generally become older in recent years, they have also increased in size so that they can transport larger quantities of goods.

As of 2020, the majority of freight is still being transported by road, DB Cargo stands to gain from the increased interest in its services due to the expectation that rail freight transport will play an essential role in achieving climate targets. Within this context and based on expert opinions, in September 2019, the German Federal Government announced plans to transfer millions of lorry trips from road to rail, although similar attempts made in previous years had reportedly achieved little progress. One of the main measures planned towards achieving this aim is the gradual optimisation of train drivers' productivity. The current changes being implemented at DB Cargo form part of the strategy to strengthen Deutsche Bahn in its entirety that was launched in 2019.

During the global outbreak of the novel respiratory disease COVID-19, which hindered cross-border logistics due to limitations in the area of passenger and goods transport, the company was able to secure its transport operations successfully. DB Cargo provided additional capacities for transporting supplies for the population, especially food and hygiene products. The running of large special freight services, such as the "Pasta Express" from Italy, attracted considerable media attention. Shortly after the start of the 2022 Russian invasion of Ukraine, DB Cargo started hauling aid from across Europe to Ukraine, however, military officials have issued warnings that DB Cargo lacks sufficient capacity to meet the needs of a large scale military conflict in Eastern Europe.

DB Cargo Organisational Structure

DB Cargo AG, a public limited company under German law, acts as a holding company for the operational entities. Its corporate purpose covers rail and road services for the transportation of all kinds of goods and the procurement and operation of stationary and mobile means of transport such as locomotives, railcars, wagons and other containers. Its articles of association also cover related services. The holding company is entitled to carry out all activities deemed to serve the specified business purpose either directly or indirectly. This includes the establishment and management of companies and the acquisition of other companies.

DB Cargo Owners

DB Cargo AG has a share capital of 256,007,000,000 euros, which is divided into 51,201,400 no-par value bearer shares. When it transferred the assets and liabilities of its former freight transport division as part of the spin-off for the establishment of a new company, Deutsche Bahn AG acquired all of the company's shares and is therefore the sole shareholder of DB Cargo AG. A control and profit-and-loss-transfer agreement is in place between the parent company and subsidiary. DB Cargo AG is included in the consolidated financial statement of Deutsche Bahn. The company Deutsche Bahn AG is in turn wholly owned by the Federal Republic of Germany.

DB Cargo Management

DB Cargo Management Board

The Board of Management of DB Cargo AG is composed of at least two people, one of whom is responsible for staff-related and social matters in connection with employees. Otherwise, the Supervisory Board determines the number and identities of the members of the Board of Management The current Members of the DB Cargo AG Board of Management are Sigrid Evelyn Nikutta (Chairwoman), Ursula Biernert (Human Resources), Thorsten Dieter (Service), Ralf Günter Kloß (Production), Martina Niemann (Finance/Controlling) and Pierre Timmermans (Sales). The percentage of women on the board exceeds the average value of other German companies.

DB Cargo Supervisory Board

The supervisory board of DB Cargo AG has 20 members. It is composed of shareholder and employee representatives in equal measure, who are elected according to the regulations of the German Stock Corporation Act and German Codetermination Act. The supervisory board currently has six female and 14 male members. Its chairman is Richard Lutz (manager), who has been the CEO of Deutsche Bahn since 2017. The vice-chairman is Martin Burkert, a member of the board of the German Railway and Transport Union (EVG). Claus Weselsky, chairman of the German Train Drivers' Union (GDL), is another member of the supervisory board, which therefore contains representatives from the two leading trade unions for the rail industry in Germany.

DB Cargo Companies

The business operations of DB Cargo are divided into three regions: Germany, Central Europe and Western & Eastern Europe. The German company DB Cargo AG is responsible for both operational services in the field of rail freight transport in Germany and central functions such as production, sales, finance and human resources for the entire DB Cargo Group.

During 2010, Deutsche Bahn joined several other railway companies in becoming a partner of the European Xrail Alliance, represented by its subsidiary DB Schenker Rail (now DB Cargo). Ever since it was established, the alliance has focused on the objective of making single wagonload transport, namely freight trains with wagons used by different clients, a more competitive alternative to lorry transport. Xrail also aims to achieve more customer-friendly service, efficiency and punctuality in cross-border transport, for example with its universal booking system, Xrail Capacity Booking (XCB).

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