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 limited 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. There is a risk of performance 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 with at the same time 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 medium term, changes in the competitive environment may result from the following developments:

• New competitors: Our markets are increasingly seeing the emergence of providers from outside the industry, such as automotive manufacturers, IT companies and start-ups.
• New platforms/data-driven business models: Digital platform providers are increasing competition and transparency, and are also changing perceptions of pricing. Start-ups in particular are the driving force behind the platform business and aim to occupy the digital customer interface.
• Shift in value creation: Value creation in the mobility and transport sector could shift toward ancillary services.
• Integrated on-demand mobility: Mobility-as-a-Service (MaaS) concepts could become standard offerings in the long term. Customers will be able to order, book and pay for transport easily and in real time.
• Cost pressures on the public sector could increase: In addition, contracting patterns could change, and tenders could be expanded to include on-demand, minibus and shuttle services. This would increase the cost pressure on established providers.
• Goods structure effect: The share of highly specialized goods, such as pharmaceuticals and high-tech products, in total production is growing rapidly. 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.

To adequately address the resulting opportunities and risks, we are implementing digitalization measures across the Group, among other initiatives.

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

Demand for our products and services also depends in part on the development of our customers:

• Rail freight transport is partly dependent on sectors 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.