Markets and strategy
DB Cargo operates a close-knit international network and is active in 17 European countries. This unparalleled network is the foundation for building on DB Cargo’s leading position in the European rail freight transport market and repositioning on the market as an international integrated railway logistics provider by 2030.
Rail freight transport in Germany and Europe will see considerable growth by 2030. On the one hand, the entire European freight transport market will see further gains thanks to stable global economic development and the rise in intra-European trade and, on the other hand, climate change will necessitate a shift from road to rail. There are further growth expectations as a result of an expanded customer base, particularly due to the stronger participation of rail freight transport in growing transport demand from the consumer and capital goods industry and combined transport. The digital and technological upgrades to operations play a crucial role in further performance growth in rail freight transport. Important levers include (partially) automated driving and shunting, digital operation and fleet control, as well as predictive maintenance based on intelligent rolling stock. The removal of operational barriers in the cross-border traffic growth area is a significant opportunity for rail freight transport.
Policy in Germany has created significant initiatives for modal shifts from the road to the rail. The master plan for rail freight transport and the Climate Protection Plan 2050 have improved the framework conditions for rail freight transport. Central thematic areas here include the increased performance capacity of the infrastructure, the digitalization and automation of rail freight transport and the promotion of multimodal traffic concepts. In addition, train-path price support was agreed to provide rail at a more attractive price compared to road in the short term.
DB Cargo’s volume sold and revenues have been in decline for several years. This development is reflected in the operating profit. The improvement measures have not achieved the desired success thus far due to insufficient and inflexible production capacity. As a result, the restructuring of DB Cargo is in the focus of the new Agenda for a Better Railway.
- Economic dimension: We are applying a consistent growth strategy so that we can continue in our mission as the leading European rail freight transport company and achieve a trend reversal in quality, revenues and profitability in 2019. Given the high fixed costs, the business can only be competitive and fit for the future if the resources we deploy are sufficiently productive. Revenue growth is based on increasing our own production capacity and making it more flexible, thereby improving transport quality on the rail. We are working to achieve the target by implementing three sets of measures in the near future:
- “Smoothly through the network”: We quickly and sustainably remove operational barriers in the production process. We also address resource bottlenecks by hiring more operating personnel and investing in rolling stock. We efficiently allocate resources through improved processes and IT, increasing reliability and staff and asset productivity through a performance pact with employees. We are driving the digital and technological renewal of operating and maintenance processes.
- “Growing confidently with our customers”: We are increasing revenues by consistently harnessing our advantages and the advantages of rail as a system in long-distance transport. This means taking a pioneering role in the growth segment of cross-border European transport and using our many years of experience and expertise in the rolling stock life cycle management segment to build on our work with rolling stock. In addition, we enable stronger revenue growth by further developing the established transport segments of single wagon, block train and combined transport, taking into account changed customer needs, and strengthening DB Cargo’s market awareness as a solution-oriented rail logistics service provider and innovative road-to-rail transport provider.
- “Efficiency and excellence as maxims”: We stringently orient processes, management and leadership based on customer needs and we design our business processes to be as lean as possible so that we can improve our efficiency. We achieve process excellence by establishing process owners, applying lean principles and digitalizing core processes. We are working to improve corporate management by implementing performance management formats across the board and creating a greater focus on achieving goals for the company as a whole by looking toward the operational and production system units and corridors. Leadership excellence supports incentives for a stronger customer focus, for proactively taking responsibility and demonstrating important leadership qualities in the process. Overall, this will help us to achieve greater productivity, which will benefit our customers.
- dimension: Our goal is to be a top employer in Europe. To this end, we will use the employee survey, for example, as a feedback instrument for assessing the measures we have initiated. We see the core of our European HR work as being in digitalization, demography and diversity. We want to impart skills to, and develop, our executives and employees through targeted measures. To give a permanent lift to our employee satisfaction, we are refining our feedback tools and communication and dialog platforms. In this way, we ensure that we are working together on the further development of DB Cargo and we prepare for trends in the logistics market.
- Environmental dimension: We will reinforce rail freight transport as being an environmentally and climate-friendly means of transport and use this as a base from which to reduce greenhouse gases through transport shifts. We are developing sustainable transport solutions and modernizing our fleet for this purpose. We will equip our entire active German fleet of freight cars with quiet brake shoes. By 2020, we will have reduced our specific final energy consumption by 21% compared with 2006. We are pushing the use of hybrid technology, while the research project Construction and testing of innovative freight cars will test further developments in freight cars and innovative components for sustainable and environmentally friendly rail freight transport. We underscore our position as an eco-pioneer by providing eco-friendly offerings such as DBEco plus no. 1 (CO₂-free rail transport) and DBEco neutral no. 32 (CO₂-neutral transport). Furthermore, we are identifying potential energy savings through our programs Green Maintenance and Energy Management.