As reported, logistics company DSV is to take over Deutsche Bahn subsidiary DB Schenker. This calls for a comment.
“We would like to thank the German government and Deutsche Bahn for choosing financial investor CVC as our future majority shareholder. This way, the traditional Schenker name will be preserved, and our 72,000 jobs worldwide are secure, as there are no duplicate structures and therefore no reason for major redundancies.”
Schenker boss, Jochen Thewes would probably have spoken these sentences in one way or another if CVC rather than DSV had won the tender for Schenker. As known since Friday, things have turned out differently.
From the Danish logistics company’s point of view, the takeover of Schenker is like a marriage made in heaven. In terms of size, turnover and number of employees, the companies are very similar. DSV thus catapults itself to the top of the global logistics players. The 1976-incepted Danish firm has achieved this pole position primarily through acquisitions, as shown by the incorporation of DFDS Dan Transport, Frans Maas, UTI Worldwide, ABX LOGISTICS, Panalpina, Agility GIL and now DB Schenker. There is no question that the Danes’ aggressive business strategy has proven its worth.
On the other hand, that of Deutsche Bahn has not. DB wanted to become an international big player with Schenker as its global flagship. After the sale to DSV, the Deutsche Bahn Group will concentrate on its core business – rail transportation. However, this is ailing and has been generating high losses for years. The EUR 14.3 billion that Deutsche Bahn will receive from the Schenker sale, will remain within the Group and will be used to reduce debt. This amounts to around EUR 33 billion. So, a debt gap of approximately EUR 19 billion will be left following the sale of Schenker.
As reported by CFG on various occasions, Schenker was the only division of the Group that generated considerable profits year in, year out. These will soon be flowing into DSV’s coffers. DB therefore lacks the funds to brighten up its disastrous balance sheet. Currently, the best-kept secret at DB’s Berlin headquarters is how the managers want to lead the Group out of the red. There is reason to fear that they have no strategy for a financial U-turn at all.
The second loser alongside Deutsche Bahn, is the German government. It was the tripartite coalition that pushed for the sale of Schenker. Reducing the rail group’s debt was their political credo; especially that of its smallest member, the Free Democrats (Liberals). This is an ideological policy without any economically viable perspective. Deprived of the Schenker profits, the rail company’s deficits will continue to rise. This conclusion is obvious, based on the miserable operating performance of DB, combined with blatantly wrong and costly management decisions and an ailing infrastructure which has been cut to the bone by its owner, the Federal Republic, for more than two decades.
The third loser is Germany as a former top logistics performer. With the imminent demise of Schenker, the country is losing an industrial gem that ranks fourth among the world’s leading logistics service providers. It can be expected that many of the approximately 72,000 employees will quit, as DSV will not allow costly duplicate structures. The Copenhagen-based conglomerate is not known for handing out expensive gifts.
The Schenker sale has not yet been finalized. It still needs the approval of the Supervisory Board. However, the voices of the trade unions, the political opposition, employees and a growing number of customers who oppose the DSV deal, are already getting louder. It is not likely, but cannot be completely ruled out, that Schenker boss, Thewes will be giving a new speech.
