DB Schenker: quo vadis?

Where to, DB Schenker? The intended sale of the logistics giant, DB Schenker, has reached a decisive stage as demonstrated by roughly 20 potential buyers that have expressed their interest. The registration deadline for this step was 10FEB24. Among the interested parties are the usual suspects such as DSV, Kuehne+Nagel, DHL Group, shipping lines MSC and Maersk, as well as various private equity funds, according to the German newspaper, Handelsblatt. 

How long will the logistics company’s flags continue to display its name? courtesy – DB Schenker

So far, so predictable. However, the entire exercise is extremely complicated because of conflicting interests. Hence, it cannot be ruled out that the project might go to ashes. In a nutshell, this is the current situation:

Chief sales lobbyist is the Minister of Transport, Volker Wissing – a member of the German Liberal Party (FDP). The FDP is the smallest of the three parliamentary groups in the Berlin government, trailing the Social Democrats (SPD), and the Green party. Its basic political conviction is that the market should be given priority over state decisions, combined with strict budgetary discipline.

Conflicting parties
In this specific case, the Liberals want to separate DB Schenker and its subsidiary, DB Cargo, from the state-owned Deutsche Bahn, and sell them at best price. Preference will be given to a German or European bidder, or a consortium based in the EU. Firms from China or the Gulf States are unlikely to be considered, Wissing indicated. The proceeds from the deal, estimated at between 10 and 15 billion euros, are to be used entirely for the restructuring of Schenker parent, Deutsche Bahn, and not channeled into any other projects. The railway company is 32 billion in debt.

On the other side of the government table sit the Social Democrats and the Green party. Both are rather cautious or even skeptical concerning the intended sale of DB Schenker. This is due to two basic convictions: for strategic reasons and military supply chain considerations. Critical infrastructure belongs in national hands or at least in European hands, they hold. This includes a transnational rail network and its main user – Deutsche Bahn together with its forwarding arm of the industry deliver vital goods to the county’s citizens.

Strategically important carrier
This argument is solidified by the fact that Schenker’s rail freight division, DB Cargo, constantly transports military equipment on behalf of the German Army and some other NATO members to Ukraine, constituting a lifeline for the eastern European country under constant attack by the Russians.

Despite DB Cargo’s strategic importance, the rail company is heavily in debt. According to a Reuters report, the loss in 2023 is expected to be almost half a billion euros. Final figures are still pending.

DB is €32 billion in debt
The trade unions also have a say concerning Schenker’s future fate. They fear job losses and refer to the takeover of Panalpina by the Danish logistics giant, DSV. Since the fusion, the number of former Panalpina employees at DSV can practically be counted on one hand, a leading official of the German railroad workers’ union, EVG, told CargoForwarder Global.

Therefore, the Transport Ministry’s intended sale of DB Schenker resembles a Gordian knot: Many conflicting interests, ideological differences, employment issues, and military security aspects still need to be discussed before a decision emerges. An attractive sales price is therefore an important aspect, but only one of several. This said, only the head of State, Olaf Scholz, has the constitutional right to take a final decision. The problem is that he is a good moderator but a lousy decision maker. So, the question ‘quo vadis, Schenker?’ will probably remain open for some time yet to come.

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