Economic climate, market and competition

Demand for our mobility services and, in particular, our transport and logistics services depends, among other things, on overall economic developments:

• Macroeconomic shocks such as economic and financial crises, disruptions to supply chains or economic downturns, including as a result of geopolitical conflicts or epidemics, can have a significant negative impact on our business.
• Risks resulting from depleted public sector budgets could have negative effects (particularly in the form of spending cuts). The market volume is greatly determined by the financial situation of the contracting organizations.
• Developments in the competitive environment are of particular importance for DB Group:
  • In long-distance transport, we are currently primarily exposed to fierce intermodal competition, particularly with motorized individual transport as the dominant competitor, but also with long-distance bus services and aviation. However, stronger intramodal competition in the long-distance rail passenger transport market is also expected.
  • In regional transport, there is intense competition for securing long-term transport contracts. This means there is a risk of volume losses. In order to remain competitive in this market, we are constantly working to optimize our tender management and our cost structures. In addition, risks arise from the implementation of transport contracts if the parameters of the underlying calculation do not materialize as planned. We have set up appropriate programs to continually increase quality and customer satisfaction and improve our efficiency.
  • In rail freight transport, there is a high level of competitive pressure. Risks arise from the fact that, to some extent, competitors can operate with less expensive cost structures while enjoying more flexible working conditions. Further risks result from possible future efficiency gains in trucks, for example through digitalization. Several measures are being implemented to tackle these challenges.

In the mid-term, changes in the competitive environment may result from the following developments:

• New competitors: Our markets are increasingly open to providers from outside the industry, such as automobile manufacturers, IT companies and start-ups.
• New platforms/data-driven business models: Digital platform providers are increasing the intensity of compe­tition and transparency, and are also changing the perception of prices. Start-ups in particular are the driving force behind the platform business and aim to occupy the digital customer interface.
• Shifts in added value: Added value in the mobility and transport sector could shift towards additional services.
• Integrated on-demand mobility: Mobility-as-a-Service (MaaS) concepts will become part of the standard offering in the long term. Customers will be able to order, book and pay for transport easily and in real time.
• Cost pressure on the public sector could increase. Order­ing behavior could also change and tenders could ex­pand to include on-demand, minibus and shuttle services. This would increase the cost pressure on established providers.
• Goods structure effect: The production share of highly specialized goods such as pharmaceuticals and high-tech products is growing strongly. At the same time, types of goods with a generally lower weight and higher value density, such as electronic components, are growing at an above-average rate. Heavy, bulky goods, such as steel, paper and chemicals, are becoming less important.

In order to adequately counter the resulting opportunities and risks, we are striving to implement our digitalization strategy.

We are also responding to opportunities and risks arising from changing demand patterns and from shifts in traffic patterns throughout DB Group with intensive market observation and by continually upgrading our portfolio and our services.

The demand for our products and services is partly dependent on the development of our customers:

• Rail freight transport is partly dependent on industries that are stagnating. In addition, disruptions in production or even temporary shutdowns (e.g. as a result of supply chain disruptions) can result in a drop in customers’ demand for transport services, at least temporarily.
• The development of demand in track infrastructure is dependent on rail transport’s ability to compete on the upstream transport markets.