{"id":318234,"date":"2025-11-17T21:21:50","date_gmt":"2025-11-17T11:21:50","guid":{"rendered":"https:\/\/www.railfreight.com\/?p=67384"},"modified":"2025-11-17T21:21:50","modified_gmt":"2025-11-17T11:21:50","slug":"how-the-walls-started-closing-in-on-db-cargo","status":"publish","type":"post","link":"https:\/\/www.vibewire.com.au\/?p=318234","title":{"rendered":"How the walls started closing in on DB Cargo"},"content":{"rendered":"

The recent departure of Sigrid Nikutta as CEO of DB Cargo marked the culmination of a long period of financial problems at the German rail freight operator. The emphasis here is on the word long, because the process that is forcing the company to take difficult measures started over seven years ago. This explainer tells you all about it.<\/strong>
\n<\/span>Whereas Deutsche Bahn (DB) has not publicly explained why Nikutta was released from her position, her departure was preceded by heavy criticism of her restructuring plans. DB Cargo was planning to downscale significantly in various business segments in pursuit of a return to profitability. That led trade union EVG, for example, to call for her to be fired<\/a> from the company.<\/p>\n

The question of Nikutta\u2019s responsibility for DB Cargo\u2019s situation aside, the rail freight operator has unquestionably fallen into a rather challenging position throughout the past years.<\/p>\n

How it started<\/h2>\n

The story starts on 19 April 2018. A supposedly Belgian party filed a complaint with the European Commission (EC) on alleged state aid granted to DB Cargo. The identity of the complainant is confidential.<\/p>\n

In the following years, an information exchange took place between the complainant and the European Commission and Germany and the Commission. On 31 January 2022, the EC informed Germany that it was starting a formal investigation procedure into the state aid allegations.<\/p>\n

\"European
Image: Shutterstock \u00a9 Alexandros Michailidis<\/figcaption><\/figure>\n

The allegations of state aid<\/h2>\n

The complainant accused DB Cargo of receiving competition distorting state aid through four mechanisms. First is the profit and loss transfer agreement (PLTA) concluded in 2012 between DB Cargo and its state-owned parent company Deutsche Bahn. The agreement obliged DB Cargo to transfer any profits at the end of the year to DB, and it obliged DB to cover any losses made by DB Cargo.<\/p>\n

In practice, the European Commission said in 2024, DB Cargo never generated a profit during the years when the PLTA was in force. \u201cAs all losses generated have been transferred, DB Cargo has been shielded from having its losses affect its balance sheet, and hence from any negative financial impact of the accumulated losses\u201d, it explained.<\/p>\n

Since DB is a fully state-owned company, the complainant argued that it amounted to state aid that gives DB Cargo an unfair advantage over its competitors on the market.<\/p>\n

\"DB
DB Cargo\u2019s losses covered by Deutsche Bahn on the basis of the 2012 PLTA (EBT-based). Image: \u00a9 European Commission<\/figcaption><\/figure>\n

Besides the PLTA, the complainant also argued that the provision of intra-group service at DB amounted to state aid. Those include analytics, accounting, real estate, IT services, personnel services and training that took place at the cost of the group, not the freight operator. The third point concerned alleged advantageous financing conditions of loans provided to DB Cargo by DB Treasury. Those intra-group loans were not collateralised, because DB, as the only shareholder of DB Cargo, operated as both the equity provider and lender. \u201cConsequently, DB Cargo has been able to sign loans without using its assets as collateral\u201d, the EC explained in 2024.<\/p>\n

The fourth and last accusation of state aid concerns the partial remuneration of civil-servant staff that is assigned to DB Cargo by the Federal Railway Fund. DB has only paid a part of their costs since the introduction of the system, following Germany\u2019 railway liberalisation reform in 1994.<\/p>\n

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DB Cargo realises that it needs to change<\/h2>\n

The European Commission notified Germany of its decision to launch a formal investigation into the matter on 31 January 2022. DB Cargo and Sigrid Nikutta, who joined the company in 2020, must have seen the writing on the wall: a couple of months later, in July 2022, they started working on a restructuring plan<\/strong> to become profitable. Consultancy Roland Berger was hired to help in creating such a plan, and in the following months, it was set in motion.<\/p>\n

Germany submitted DB Cargo\u2019s restructuring plan to the European Commission for an assessment for compliance with the Rescue and Restructuring Guidelines. It explained that the transformation plan for the freight operator aimed at creating smaller, more focused and autonomous business units<\/strong>, instead of the previously existing single wagonload, block train and combined transport segments.<\/p>\n

The restructuring plan not only envisaged a different structure for DB Cargo. In October 2024, the company took the decision to reduce its workforce by 27%<\/strong> by December 2029 compared to December 2023. That meant that nearly 5,000 people would have to leave the company.<\/p>\n