DB Cargo is undertaking significant workforce reductions, eliminating over 2000 positions.
At DB Cargo's freight division, thousands of positions are set to be eliminated. The company, which has been grappling with financial issues for quite some time, has devised a restructuring strategy to steer it out of crisis. The plan entails the termination of 2,300 roles, the company announced.
Furthermore, new business units will emerge to cater to customer requirements more effectively. These units will concentrate on sectors such as steel, automotive, chemicals and raw materials, in addition to consumer goods.
Each business unit will operate autonomously, with its designated workforce, locomotives, and freight cars. It will be responsible for overseeing quality, transport performance, and financial results.
Combined transport will persist under DB Cargo's wing
Contrary to earlier plans, combined transport operations - including container shipping from seaports or terminals - will not be transferred to a separate subsidiary. Instead, combined transport will continue to fall under DB Cargo's umbrella. This was a contentious issue between management and the works council.
The logistics industry remains tough, a company representative admitted. "We will adapt to this challenging environment and anticipate more substantial alterations," the representative commented. Furthermore, significant adjustments might be necessary in administrative roles.
The works council has reportedly approved the concept following further rounds of negotiations last Wednesday, bringing an end to persistent disagreements and offering a promising outlook for the company.
"Achieving this accord wasn't easy," Cosima Ingenschay, deputy chair of the EVG and the Cargo supervisory board, acknowledged. "DB Cargo has been thrust into a financially precarious situation due to mismanagement and a lack of political support."
No compulsory layoffs are planned, as per EVG. A social plan and a voluntary redundancy scheme have been agreed upon. "This was difficult, but considering the current circumstances, it was a viable decision," Ingenschay noted. With these measures in place, the board now possesses all the necessary tools to revitalize the company's future prospects.
DB Cargo employs approximately 31,000 individuals and has been reporting significant losses for years. In the first half of the current year alone, the operating loss before interest and taxes (EBIT) surpassed 260 million euros.
The majority of these losses originate from "single wagon traffic," a service where loads are collected directly from industrial clients and wagon trains are constructed at marshaling yards. The German government subsidizes this service.
Meanwhile, an EU Commission state aid procedure is still under review. The authority is currently evaluating whether the loss compensation at DB Cargo through a result transfer agreement is permissible. It is clear that the Commission will prohibit this practice.
In the future, DB Cargo will need to finance itself independently. It is also plausible that the Commission may order the separation of certain Cargo business divisions as part of the ongoing procedure.
The EU Commission is currently evaluating whether the loss compensation at DB Cargo through a result transfer agreement is permissible, as part of an ongoing state aid procedure. This evaluation could lead to the Commission prohibiting this practice.
In light of these financial challenges, The Commission has a role to play in ensuring that DB Cargo operates independently in the future, and may consider ordering the separation of certain Cargo business divisions as part of the ongoing procedure.
