German-based freight forwarder DB Schenker Logistics, with ambitions in the European parcels business, could be partly sold off to enable owner Deutsche Bahn to reduce debts and finance major rail investments, although a decision appears to have been put off for at least a few weeks.
Schenker is Europe’s largest road freight transport company, a leading air and ocean freight forwarder as well as a major contract logistics provider, and has signalled ambitions in the European parcels business by launching a cooperation partnership with GLS last year.
State-owned Deutsche Bahn (DB), the German national rail operator, already announced last year that it might ‘partly privatise’ the logistics business as part of its new Strategy 2020 but little had been heard of the plan since then.
German news agency DPA reported yesterday, however, that an extraordinary DB supervisory board meeting scheduled for February 8 to discuss ‘the partial privatisation’ of international unit DB Arriva and freight subsidiary DB Schenker Logistics had been cancelled and any decision would be made in March at the earliest. According to the DPA report, the German government wants to clarify how any proceeds from a sale would be shared between DB and the state, as the company’s owner.
Business newspaper Handelsblatt said that a partial sale of the two highly profitable companies could raise up to €4.5 billion. DB Schenker Logistics made a profit of €332 million in 2014 while Arriva contributed €265 million. The whole DB Group expects to show a loss of up to €1 billion for 2015.
Under its ‘Future Railway’ programme, the German rail group wants to invest up to €55 billion in the coming five years, mostly in the rail network and new trains to improve passenger rail travel with better punctuality, more comfort and new services. About €20 billion would have to come from the company’s own cash-flow.
There has been surprisingly little speculation to date about the size of any ‘partial’ sale of DB Schenker Logistics and potential investors. A complete sale has apparently been ruled out, however. This suggests that financial investors are more likely than strategic investors but an ‘industrial partnership’ between DB Schenker Logistics and a logistics, express or postal company could be a possibility.
DB Schenker Logistics, with revenues of nearly €15 billion in 2014, has worldwide operations and competes in Europe with DP DHL’s freight businesses, multinationals such as Kuehne + Nagel and Panalpina, and a large number of overland freight transport operators.
Last September, DB Schenker and GLS unveiled a long-term strategic partnership enabling each partner to offer their customers both parcel and freight services across Europe in competition to rivals such as DHL, DPD, UPS and TNT as well as other freight forwarders. Since the start of this month, DB Schenker has been offering a Europe-wide parcel service to customers in Germany via the GLS network.
