Deutsche Bahn (DB) does not rule out the sale of its freight subsidiary DB Cargo. Looming EU sanctions over excessive state support are forcing DB to find an escape route. A partial sale of financially underperforming DB Cargo might be on the table.
According to Handelsblatt, DB does not rule out a sale of its freight subsidiary DB Cargo. The publication found out that DB’s general counsel Alexander Gommlich called the future of the freight subsidiary “open” at a supervisory board meeting in March.
Reportedly, various options are on the table for DB Cargo. The freight division may be sent down the path of logistics subsidiary DB Schenker, for which a sale is currently in process.
Finding a safe haven from EU sanctions
The EU Commission has set its sights on DB Cargo for its unviable financial situation. The company incurred 500 million euro losses, twice as high as was initially expected. Particularly single-wagon traffic does not do the company’s financial situation any favours. Moreover, it has been yielding market share to private operators. In 2022, they occupied 59 per cent of the German market share.
Consequently, DB Cargo has been reliant on state support, which the EU Commission considers to be market distortion. Following the unexpectedly high losses, the EU launched a probe into the DB’s freight subdivision. The probe could ultimately force the German rail freight operator to break up.
DB may now be proactively looking for a way to shield itself from the EU’s legal weaponry. Handelsblatt writes that DB management expects the EU Commission to be content with selling a minority stake in DB Cargo if the freight subdivision continues to rely on subsidies.
Not a unique case
The EU probe into DB Cargo is not a unique case. In January 2023, the European Commission also opened an investigation into French Fret SNCF for excessive and illegal state support measures after it, too, had been making losses for years. In the French case, the state intervened and came to an agreement with the EU Commission.
Fret SNCF was forced to abandon over 20 rail freight routes to level the playing field. The main beneficiary of the partial breakup of Fret SNCF is notably DB Cargo France, which will take over some of the traffic.
Also read:
- EU may break up DB Cargo due to losses
- DB Cargo misses financial targets, volumes and performance drop
- DB Cargo to be divided into six units?
