Time is ticking for DB Cargo. The German state rail freight operator is on a schedule to become profitable, otherwise the EU could break it up. The operator’s loss-making single wagonload (SWL) business might need to go in order to prevent that scenario.
“Either we in Germany manage to structure single wagonload transport in a financially sustainable way, or we cannot operate it in this form any longer”, DB Cargo’s CEO Sigrid Nikutta told German press.
Abandoning SWL might be necessary to save the company. Last year, the EU found that sky-high government subsidies for DB Cargo amounted to market distortion. Those mostly went to the company’s SWL business. In other words, DB Cargo was found to be in breach of EU rules, which could lead the Union to break up the rail operator altogether. That scenario came true for the French Fret SNCF.
DB Cargo does have a chance to save itself: it is operating on a deadline to reach profitability by the end of 2026.
Restructuring is a challenge
That seems a long way off. In 2024, DB Cargo made a loss of 350 million euros. To make ends meet, the operator entered into restructuring proceedings. Around 5,000 people will lose their jobs by 2029: a tough challenge to be overcome for the company.
“The pace we have to set for the restructuring is almost beyond our capabilities. We’re demanding a lot from our people”, Sigrid Nikutta commented. “Sometimes tears flow. I know that, and I acknowledge it. But it has to happen, because the future of DB Cargo also depends on the pace.”
Even if the company was not moving as many goods as expected (15 per cent less), sales and EBIT in January and February 2025 were exactly as planned. That might be good news when it comes to reaching short-term targets. This year, DB Cargo wants to reach a loss only in the double digits, as opposed to triple digits.
