DB Cargo could get rid of the lion’s share of its single wagonload (SWL) business. That news has caused an uproar in the rail freight industry: the move would be a disaster for the rail freight sector and is the result of misconceptions at the highest level, experts say. They see a need for a new future for SWL in Germany and Europe.
By the end of 2026, DB Cargo needs to be profitable. Otherwise, the company may face harsh measures by the European Commission for receiving market-distorting levels of state aid. To save the company, no option seems to be off the table. German publication Handelsblatt reported that consultants have suggested downsizing the SWL by 60% to 80% and halving the workforce.
Some rail freight industry insiders have reacted furiously to the news: “They [DB Cargo management] do not seem to have an idea what they may be kicking off here, unless this is just another political signal and an indirect call for more financial support”, says Martin Metz, an economist, a life-time international rail finance expert and independent advisor, to RailFreight.com.
To cut a long story short, years of misconceptions at the highest level have led to this moment. Now, German (and international) rail freight could stand on the brink of a mess.
The long story
“The market has seen this coming for more than twenty years”, continues Metz. From a corporate governance perspective, it starts with a sequence of transport ministers in Germany, he says. “They have not used the government’s role as owner of DB properly, nor taken the control function of their supervisory committees seriously, to force DB to define a fundamental business, sector and corporate strategy.”
In Europe, we have collectively decided that we want more freight on rail, rather than on the road. “If politics wants rail freight, it needs to push DB to formulate a strategy”, explains Metz. “Thinking it through, purely from an economic and free market point of view: where private operators can perform better, DB Cargo may not necessarily be needed as a block train operator”, he continues.
“Except, basically, for services as an operator of last resort. The state railway needs to do those things that no one else can do: marshalling and single wagonload.”
How does that work? Well, a lot of companies are too small to send block trains full of their goods onto the railways. If they want to use rail, they will need to rely on SWL. The problem here is that SWL is inherently unprofitable. You need a locomotive to pick up a wagon or two, bring them to a marshalling yard, and assemble wagons into a train. That requires a lot of movements, a marshalling yard and therefore raises costs. No for-profit operator would necessarily want to do that.
Yet, if you want to capture vast amounts of freight and boost the modal shift to rail, you need to make rail accessible to smaller companies too. “If there is the political will to have rail freight play a prime role in transport, there needs to be a separate system for single wagonload transports”, says Metz.
The role of DB Cargo on the German rail freight market is in decline. Private operators that perform better have overtaken its market share, but DB Cargo still dominates in SWL: it occupies around 90% of that market. That has been possible, because as a state company, it did define its role for a long time as the operator for all services, even if some operated at a loss. If the company now gets rid of the SWL business, it could essentially bring about the end of that market segment in Germany.
Many companies rely on SWL
Dirk Munder, a rail consultant, says that killing SWL is the wrong way forward to stabilise rail freight. “If you want to have profitable rail freight, you need more single wagonload transports.” The logic here is the same: capture more freight, get more rail freight business.
At the same time, many companies simply rely on SWL for their business. For example, the chemical industry: “They send their products to smaller customers who need single wagonload deliveries. Without it, they won’t be served anymore.”
Besides a simple necessity for single wagonload transport, a reduction in SWL services would also mean a decline in the quality of rail freight. “Fewer trains will also mean that some wagons might miss daily departures from shunting yards”, Munder explains. If there are three daily departures now, but that is reduced to one, then there is a bigger chance that a shipment will need to wait longer. “As a result, people won’t know when their freight is going to arrive, leading to reduced quality.”
“There are a lot of companies that want to do more on rail”, continues Munder. “But it is not reliable enough. There are customers that need to call shunting yards to ask for information about their shipments.” It does not necessarily need to be that way. “If I look at the website of BNSF from the US, they market their shunting yard dwell time”, says Munder. “Nobody in Germany will make this figure public, because it would be too bad. It’s an indication of the quality.”
The future of SWL
The views of Metz and Munder are clear. DB Cargo is blundering, and it will hurt rail freight ambitions. Where do we go from here?
Munder does not beat around the bush. “You need to quit DB Cargo”, he says. “They can’t organise this. It’s a state organisation rather than a company. It is difficult to make improvements in an organisation. It is not a matter of drivers or rolling stock, it’s the organisation and how to make smooth processes.”
By contrast, private companies can do much better. “They have dynamic and smooth organisational structures. You need a new start of the system, something new from the ground up.”
Metz, on the other hand, sees it differently. Again, he says that the state operator needs to do those things that no one else can do, in particular marshalling and single wagonload transports. “DB Cargo must provide, as a function of infrastructure (and single wagonload is infrastructure), single wagonload services”, Metz argues. “They must define their role as operator of last resort, allow the efficient operation of the overall system and accept to take a loss on it.”
Remote village on a hill
In other words, DB Cargo must formulate a strategy, and that strategy needs to revolve around providing a public SWL service. Against a loss, perhaps, but it is public infrastructure. “The state operator should be the operator of last resort: it needs to go to a remote village on a hill and take their one wagon and bring it to a marshalling yard.” At the same time, Metz says that you can also decide not to do SWL altogether, but then you also need to accept that rail will be inaccessible to many smaller companies and that the freight base will be smaller.
In France, Hexafret focuses heavily on SWL transportation, with the help of state aid. If they can do so without subsidies, only time will tell, in the words of DB Cargo France’s CEO Alexandre Gallo.
