Recently, media reports indicated a forthcoming sale of logistics giant, DB Schenker, which is part of state-owned rail company, Deutsche Bahn. Speculations ranged from Danish DSV being on the starting blocks to other capital investors having discreetly expressed their interest in acquiring a stake. However, a Bloomberg report on 24JUN22, states that Deutsche Bahn has scrapped sales plans at the last minute, at least in the medium term.
It has been a hot week for DB Schenker. Breaking news popping up in short intervals indicating sales considerations by parent Deutsche Bahn and ranging from a full sale to a partial sale of DB
Schenker. The Group itself has done little to clarify the situation. A spokesperson for Deutsche Bahn said there was “no new decision and no new factual situation.”
Political opposition stopped the sales project
According to information from internal circles, Deutsche Bahn management made a last-minute U-turn, after the sale of their logistics subsidiary had still seemed to be the most likely option during discussions in the days before. Political opposition has stopped the plan, well informed sources in Berlin say. If this so, then it is a blow for the Liberal Party, the smallest partner in the three-party coalition government, which has strongly backed the sales option up to now. Apparently, the opposition from the Social Democrats and the Green Party was too strong. Resistance came also from the transport union, EVG: “You can only sell silverware once - that's why owner DB has to carefully weigh such a step,” EVG Vice-Chairman, Martin Burkert loudly warned. As long as Russia continues to attack Ukraine, all plans should be put on ice. Selling DB Schenker would be a fatal signal, because the company has transported “large quantities of aid supplies to Ukraine by land, and continues to do so on an ongoing basis,” exclaimed Mr. Burkert. A statement applauded by a parliament member of the Social Democrats, who told CargoForwarder Global that instead of divesting itself of the logistics business, Deutsche Bahn should be further supported on its way to becoming a strong integrated group offering customers all transport modes, be it rail, road, air, or ocean. “Only then will the rail group be in a position to play a future leading role in the global logistics arena,” the politician urged.
Ruinous financial cuts in the past
In contrast, the Liberals sense financial advantages for the state budget resulting from a DB Schenker sale. Although no price tag has been attached to the company, it can be estimated that between 15 and 20 billion euros would be channeled into the state's coffers were DB Schenker to be sold. Funds that are urgently needed, argue the Liberals, to modernize the dilapidated German rail network, after no major investments were made during Merkel’s 16-year reign. Thorsten Herbst, for example, who is parliamentary director of the Liberal Party Parliamentary Group, told agency Deutsche Presse-Agentur: “I think Deutsche Bahn should concentrate on rail transport.” He added that his personal belief is that selling DB Schenker would make sense.
Modernizing the rail network costs a fortune
Experts forecast that the entire reconstruction project, scheduled to be accomplished by 2030, would require a mid-double-digit billion euros sum. This was indirectly confirmed by German Transport Minister, Volker Wissing (Liberals), and DB CEO, Richard Lutz, last week during their joint presentation of the ambitious plans to build a state-of-the-art rail network for both passenger and cargo trains. Its urgency is beyond question since long-time political and fiscal neglect has led to permanent train cancellations and recurring delays. These are a daily disgrace, annoying thousands of customers and damaging Deutsche Bahn’s reputation, Wissing and Lutz agree. “Each day, around 51,000 passenger and freight trains run across Germany and to neighboring countries such as France, Belgium, or Switzerland. In 2010, the figure was 47,000, and by 2030, it is expected to be 59,000 trains", DB helmsman, Lutz illustrated the urgent need for action. A second aspect for large investments in the rail infrastructure is that railing cargo across Europe plays a key role in the EU's Green Deal agenda because of the climate-friendliness of these transports. Without a radical makeover of the rotten German rail network, this ecological goal resembles a mirage.
Provided, the sales plans will be put on the backburner, the DB rail network modernization will be paid out of Germany’s national budget. It remains to be seen whether this will up track tariffs to counter-finance the massive expenditures. Taxpayers and rail users have a right to know this quickly.
DB Schenker grows in the USA
Parallel to the sales debate, DB Schenker announced the acquisition of the Van Buren, Arkansas-based company, USA Truck. The transaction values USA Truck at approximately $435 million, including assumed cash and debt. The combination advances DB Schenker and USA Truck’s shared vision of becoming the premier North American transportation solutions provider. Upon completion of the transaction, “DB Schenker aims to strengthen and expand USA Truck’s presence in North America, while utilizing its complementary international logistics expertise, air transport services, and ocean gateways to benefit USA Truck’s existing customer base,” a DB Schenker release reveals.
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