News / DB Cargo eyes rail freight arm sale amid concern over state subsidy

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German outlets are reporting that Deutsche Bahn may be considering selling its freight arm, DB Cargo, as EU regulators eye the operator amid claims of market distortion.

Losses at the beleaguered German state operator have passed the half-a-billion euro mark and European authorities have become increasingly concerned that the government plugging these losses is proving anti-competitive and distorting the market.

Seeking to avoid sanctions, DB has been seeking a resolution, and Handelsblatt reports general counsel Alexander Gommlich’s claim that DB Cargo’s future was “open”.

Citing multiple sources, the German paper suggests nothing is off the table t settle the issue – partial and total sale being considered, despite it still accounting for some 20% of DB’s total traffic.

Other reports have suggested that the EC would be content with the sale of just a minority share.

A spokesperson for Die Gueterbahnen, which represents Germany’s private railroads, told The Loadstar DB Cargo had only survived due to its “below-cost prices”, subsidised by the state. Handing over DB Cargo’s rail freight services that compete with other railroads would be “a major step forward for fair competition in rail freight transport” it added.

Private operators have, nonetheless, managed to dent DB Cargo’s dominance, securing some 59% of market share by 2022, with a source noting that, contrary to reports, recent strikes at DB Cargo had not stopped all German rail freight.

Meanwhile, Germany is not alone in being investigated by European authorities for subsidising its national rail operator. France’s Fret SNCF faces being shut down by its parent – the response to which has been less than positive. Criticism – including from the European Parliament – is that the decision was ‘ill thought out’, and there would be little sign of a private company picking up the volume shortfall.