Deutsche Bahn: Why cuts in rail freight traffic would be fatal

It sounds like a rather bulky piece of news, which at first glance should hardly alarm anyone: Sigrid Nikutta, head of the rail freight transport division of Deutsche Bahn, is considering an "almost complete cessation of single wagon traffic", reports the "Handelsblatt".

Deutsche Bahn: Why cuts in rail freight traffic would be fatal

It sounds like a rather bulky piece of news, which at first glance should hardly alarm anyone: Sigrid Nikutta, head of the rail freight transport division of Deutsche Bahn, is considering an "almost complete cessation of single wagon traffic", reports the "Handelsblatt".

So what? After all, they have to cut corners somewhere on the railways. And DB Cargo has been in the red for years. But behind the supposed trifle there is a message with great force. Because without single-wagon transport, Germany's economy – and with it the European economy – would get off track. Our logistics wouldn't work without the rolling pipeline, it holds large parts of our supply chains together.

Steel, chemical and automotive industries depend on freight trains to transport their chemicals, cars or components. But Coca-Cola, Heineken and Haribo also rely on this form of transport. These deliveries are organized in so-called single-wagon transport. A freight train is put together from individual wagons from different shippers, which travels from Munich to the Ruhr area and from there is distributed to major customers by truck.

They are important for many industries in two ways, for the delivery of the preliminary products and for the removal and distribution of the manufactured products. According to the Federation of German Industries, the rolling pipeline is the "backbone of many key German industries" and a "unique selling point of our industrial location". The business with individual wagons plays an important role in the transport of containers and dangerous goods. At the time of Corona, dozens of wagons with pasta rolled from Italy to Germany - when the trucks got stuck at the borders.

In addition, freight transport by rail is significantly more climate-friendly and causes 80 percent fewer greenhouse gases than trucks. With the exit from single-wagon transport, Deutsche Bahn is likely to alienate many customers who rely on rail to improve their CO2 balance. In addition, the goal of shifting a quarter of freight traffic to rail by 2030 would be a long way off.

A lot of things in freight transport are still analogue. At the marshalling yards things are partly the same as they were a hundred years ago. The wagon inspectors walk the freight train, for example, on foot, and most of the work is coupled by hand. The brake test on these trains alone takes up to two hours because there are no digital data lines on the train. For comparison: With an ICE, that's five minutes.

All of this costs a lot of staff and time, which makes the transport largely unprofitable. Improvements are under development. But there is still a long way to go before the digital coupling, which will cost billions of euros. Until then, single-wagon transport will remain a loss-making business for DB Cargo, which cannot work without government subsidies. According to the DB, not a single European country operates this type of transport on its own.

DB Cargo dominates single-wagon transport. It completes four out of ten of its ton kilometers with individually ordered wagons and thus has a market share of between 80 and 90 percent. In all rail freight transport, the competitors handle more goods than the state-owned company. The reason is simple: the business brings losses, only a few private freight railways operate the individual traffic profitably.

There can be no question of that, it says at the railway. DB Cargo continues to focus on a growth strategy, but structures must be made leaner and more efficient in order to reduce losses. Single wagon traffic is responsible for almost 30 percent of sales at DB Cargo, but for a significantly higher proportion of losses - which totaled 655 million euros in 2022. This year it should only be around 225 million euros, according to the Deutsche Bahn Board of Management. The freight subsidiary wants to be in the black by 2024.

The traffic light coalition has earmarked 300 million euros for single-wagon transport in the federal budget. So far there has been a grant of 80 million euros. That would be a significant leap and a clear signal. DB Cargo is likely to collect the bulk of this subsidy as the company has by far the largest fleet.

This text first appeared here at Capital.

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