DB Cargo is attempting to improve its loss-making performance, and plans entail restructuring the company’s business. In doing so, Europe’s largest freight operator aims to outsource a large part of operations to other companies, some of them DB subsidiaries. This process will open the way for DB to focus closely on the remaining operations by creating smaller and specialised teams for single wagonload transport and block trains, among other things.
Regarding the outsourcing of operations, the plan is as follows: combined transport to and fro maritime terminals will be delegated to Mitteldeutsche Eisenbahn (MEG), a joint company between DB Cargo and VTG Rail Logistics. Additionally, Transfacht will take over part of domestic operations, while RBH Logistics, a DB subsidiary, will take over cross-border combined transport operations. Finally, it is said that Kombiverkehr will take care of the sales.
This information has been confirmed to the German newspaper DVZ by “sources within the industry”. At the same time, quoting the works councils of DB and its subsidiaries and trade union EVG, DVZ explains that employees are discontent with the plans since they are concerned they will result in massive job cuts that could see around 1,500 employees walking out the door.
Job cuts or not?
Massive job cuts by DB have been around as a possibility for quite some time. Although the concerns of employees and trade unions are legitimate, given the restructuring plans in place for DB Cargo, the company’s head, Sigrid Nikutta, has denied such allegations and has characterised them as “just speculations”.
Most importantly, the German federal government seems to safeguard the future of DB employees. In a communication from January, the German government said that “DB Cargo’s transformation process may involve an adjusted number of employees in administrative and production overhead”. This is precisely the point of employee concerns.
However, in the same communication, the government clarified that “there are no plans for contract terminations” since the DB Group as a whole needs to increase its workforce, and employees will, therefore, be re-employed internally and not lose their jobs. As a result, the possibility of 1,500 employees losing their jobs overnight does not seem realistic.
EU inquiry
Despite the harsh process that DB is currently going through, it also seems to be ahead of developments. That is because of the inquiry that the EU has opened on the company concerning the losses DB Cargo has been making and possibly the illegal state aid it has received.
Since this situation is allegedly disturbing competition in the German market, the EU is considering breaking up DB Cargo in the same fashion it did with French Fret SNCF. Yet, with the restructuring plans that DB is willing to implement in its business, it will already go through an indirect break-up, thus avoiding a force majeure decision from Brussels.
