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Photo: DB Cargo
DB Cargo’s post-Schenker future looks gloomy, following a report from strategy consultancy Oliver Wyman lambasting the direction being taken by the company’s chief executive.
And employee unions are also out for blood, as an EU-demanded return to profitability deadline nears.
In a damning indictment of progress following the freight operator’s sale of DB Schenker, the consultancy said that, while it was still possible for the company to rehabilitate itself, this was not likely under the plan being pushed by DB Cargo CEO Sigrid Nikutta.
“The current restructuring concept is, even without a risk discount, objectively unsuitable for eliminating the causes of the crisis and establishing competitiveness,” said the assessment by Oliver Wyman, according to a report in Der Spiegel.
Sigrid Nikutta. Photo: DB Cargo
It added that Ms Nikutta’s policy of austerity lacked “sufficiently concrete measures”, her proposals were “very optimistic”, and “probably not achievable in the current market”.
The focus on Ms Nikutta has intensified since she took the post in 2020, with DB Cargo having seen almost 10% of its market share disappear as it racked up losses in the region of €3bn ($3.48bn) over the five-year period, leading a bailout by the German government.
That €1.9bn loan brought an almost three-year-long investigation by the EC into allegations from a DB Cargo competitor that the state support had resulted in market distortion.
The regulators, however, said the financial support was in line with EU state aid rules”, but made it contingent on a series of measures, including a restructure to separate DB Cargo into six business units and a guarantee of a return to profitability and long-term viability by 2026 without use of a profit-and-loss scheme to subsidise shortfalls.
All this prompted the ire of DB Cargo’s competitors.
Should the Oliver Wyman assessment prove accurate, Ms Nikutta and the team will miss the EC 2026 deadline, with expectations that this would result in the company being divided and sold, much to the pleasure of Europe’s private rail freight operators.
A spokesperson for Die Gueterbahnen, which represents German private railroads, has told The Loadstar that the only reason DB Cargo had survived was because of its capacity to offer “below-cost prices” thanks to the state subsidy.
Die Gueterbahnen MD Peter Westenberger described the EC’s decision as a “good day for the future of rail freight”, and that it would put “an end to the unfair subsidisation of the company through taxpayers’ money”.
Mr Westenberger added that “it also puts an end to the possibility of damaging competitors and keeping them down with the help of dumping prices”, but commented: “If the government was legitimately allowed to compensate rail freight losses from the past 10 years, due to the environmental friendliness of rail freight transport, all affected companies should be able to submit applications.”
Meanwhile, Germany’s trades unions have also smelt blood and are calling for the board to dismiss Ms Nikutta
Transport union Eisenbahn und Verkehrsgewerkschaft (EVG) slammed her proposed route to profitability, with its chair, Cosima Ingenschay, reportedly telling DB CEO Evelyn Palla that the company’s balance sheet under Ms Nikutta had been devastated, noting that the €3.1bn loss “since she took office speaks for itself”.
Ms Ingenschay added that what the DB Cargo CEO “calls transformation, is in truth a headless unwinding”, with proposals to cut the workforce by 5,000 by 2029 – a figure Der Spiegel calculated as “every sixth job”.
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