Fundamentals

Business model with a clear customer focus

DB Group offers attractive, customer-­­focused and environmentally friendly mobility, transport and logistics solutions and networks from a single source. We use the possibilities of digital technologies, to improve our operational and administrative processes, to constantly further develop offers for the customer, to integrate new services, and to simplify the customer interface. Our customers are individuals, business customers and contracting organizations in local and regional transport.

The integrated rail system is at the heart of our business activities. In addition, we are gradually expanding our business portfolio in the area of mobility and logistics in order to meet our customers’ needs more effectively and respond to new market demands.

  • Our passenger transport business activities are broadly diversified. In addition to bus and rail transport, this also includes intelligent links with other modes of transport such as cars and bicycles, but also with new forms of mobility that complement the core business and enable door-­­to-­­door mobility. We offer long-distance rail passenger transport within Germany and into neighboring countries. DB Arriva has a Europe-­­wide presence in regional and local transport.
  • Our business activities in the freight transport and logistics market were moved to an international platform very early on. DB Cargo and DB Schenker operate first and foremost in the business-­­to-­­business segment. We offer our customers industry­specific solutions in rail freight, in land transport, in global air and ocean freight as well as contract logistics. Covering all relevant modes of transport allows us to offer complex combined logistics services and to make use of synergies in our networks for the benefit of our customers.

As an operator of networks and provider of services in passenger transport, freight transport and logistics, as well as track infrastructure, our economic success is influenced by the general economic environment and the specificdevelopment of the various relevant markets:

  • Demand for passenger transport is driven first and foremost by the growth of major cities, the size of the population, the number of people in employment, and real disposable incomes. The competitive situation relative to the car is markedly influenced by the trend in fuel prices.
  • Our freight transport and logistics operations depend largely on economic developments. Due to our global networks we monitor the development not only of global gross domestic product (GDP) and world trade, but also of economic growth in the regions, countries, and trade relations in which we have a high market share or in which high growth rates in the exchange of goods can be expected. Customary early-­­warning indicators of the business climate and of the expectations of procurement managers are an integral part of our monitoring system. The market environment of DB Cargo is particularly influenced by the manufacturing industry’s production output and the development of the iron, coal and steel, and chemical industries. Furthermore, the cross-­­border movement of goods within Europe is growing in importance.
  • The services of the Infrastructure business units cover important elements of their customers’ value-­­added chains. In this respect, the development of demand is a factor that is largely determined by upstream passenger and freight transport markets. The area of marketing in DB Netze Stations is also important. Consumer trends in the general public are an important factor here, much as they are in general retail in Germany.

The development of the economic and early-­­warning indicators, as presented above, influences how we manage our market activities and resources. Opportunities and risk can therefore be recognized early on, and as a result short-­­term management activities and long-­­term positioning can be focused accordingly. At the same time we work systematically on optimizing our operating value drivers.

Operating regional and worldwide transport networks often necessitates a high level of capital employed, long capital expenditure cycles and distinctive fixed-­­cost structures. In this respect, achieving optimal capacity utilization of our networks and systematically developing, integrating and cost-­­effectively operating these networks with the efficient use of resources are important to DB Group’s economic development. Ensuring and improving service quality for our customers is at the center of our activities. By expanding what we offer our customers, particularly digital services and customer loyalty programs, and integrating new forms of mobility and intelligently linking different modes of transport, we intend to gain additional customers in order to realize increasing volumes and economies of scale.

We generally use operating performance data to measure capacity utilization in our networks and our relative shares of the markets. In order to determine a relative return, we calculate ratios comparing this performance data with the revenues generated (specific revenues).

With our national and international subsidiaries, we op­­er­ate as DB Group in all segments of the transport market. Our comprehensive service portfolio enables us to offer our customers services combined from a single source.

In most of our business units, incoming orders are not a relevant performance indicator, and the majority of the Group’s revenues are generated independently of long-­­term contracts.

DB Regional and DB Arriva are an exception to this rule, together accounting for about one-­­third of Group revenues. In these business units, the order book in the form of long-term transport contracts entered into with the public transport authorities of Germany’s Federal states and franchisers in other European countries constitutes a key performance metric for business development. There are also long-­­term contractual relationships with customers in DB Schenker’s contract logistics line of business, which generates about 6% of Group revenues.

There are five key success factors in the development of DB Group, which are a central component of DB Group’s business model:

  • Corporate social responsibility: As a provider of mobility and logistics solutions, DB Group has a great deal of responsibility. As the backbone of green and networked mobility, rail plays a key role: it helps to achieve set climate targets, it promotes peoples’ integration and quality of life, and it strengthens the business location as well as Europe’s people and economy. We are consistently focusing our business operations on achieving Strong Rail and prioritizing our activities along the value-­added chain.
  • Entrepreneurial approach to business: In the course of the German rail reform in 1994, DB Group established itself as a commercial enterprise.
  • Integrated Group: As a system integrator in Germany, we serve as an important driving force for technological innovation. The integrated Group structure enables us to achieve positive synergies and align our infrastructure to support efficiency, market orientation and profitability. The digitalization of rail can only be successfully developed and implemented in the integrated rail system. Thanks to the economically, environmentally and technologically intelligent links between different modes of transport, we offer our customers door-­­to-­­door mobility and logistics solutions from a single source.
  • Europe as the field of action: As the geographical and economic heart of Europe, Germany has a special responsibility for the future of the continent. Given the importance of a strong rail system for Europe, Europe will continue as the field of action for DB Group in the future. In order to take into account the customersʼ need for cross-­­border solutions, we continue to position ourselves at European level with our passenger transport activities. Due to the European and worldwide orientation of our freight transport and logistics activities, we offer our customers the access they need to global networks.
  • Digitalization: DB Group uses the technologies and methods of digitalization to offer customers an attractive range of products. This means, on the one hand, that we are incorporating new transport offers into our product portfolio, such as on-demand mobility, and establishing new platforms for our customer interfaces. On the other hand, we support our internal processes with technologies such as artificial intelligence (AI), so that we can continue to offer customers a reasonable price level with efficient processes.

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