Following the approval of the Supervisory Board of Deutsche Bahn AG granted at yesterday’s meeting, the company plans to take over the entire shares in English Welsh & Scottish Railway Holding Limited (EWS) and acquire a majority share in the Spanish company Transportes Ferroviarios Especiales (Transfesa). Once the contracts have been signed and the approval of the relevant authorities obtained, the acquisition of these two companies will consolidate DB’s leading position as a global player in the transport market, especially in the rail freight sector in Europe. As a result of this move, DB Logistics will extend its central corridors in Western Europe and will be able to develop even better products for its customers as a one-stop shop.

“The transport and logistics industry is booming. Only companies which can offer their own network and consistently high quality standards will be able to succeed in that market. The climate-friendly rail mode still is and will remain our core business,” explained Hartmut Mehdorn, CEO and Chairman of the Management Board of Deutsche Bahn AG. Looking at the stagnant, loss-ridden rail freight transport markets in many European countries, Mehdorn claimed that de facto liberalisation of the rail network was a crucial requirement for growth and economically efficient operations. He pointed out that Germany was a perfect example of how open access to the network, which is used by more than 330 rail companies, could lead to a substantial increase in rail traffic, and added that DB AG would continue to encourage European liberalisation in future.

DB Logistics Chairman Norbert Bensel stressed the growing business potential for the company resulting from this new constellation: “The expansion of our Europe-wide network is our answer to the increasingly complex demands of our customers. EWS and Transfesa will enable us to close important gaps in the DB Logistics rail freight network. As a result, we shall be better equipped in future to offer our customers attractive products.”

Following the takeover of the two companies, DB Logistics will have direct links to the transport and logistics markets in Western and Southern Europe and will thus strengthen the south-west corridor. The integration is intended to lead to a noticeable boost in rail’s market share in Europe and raise product quality. DB Logistics, EWS and Transfesa complement each other ideally, especially in the rail logistics, automotive, industrial and bulk goods segments.

Moreover, DB Logistics hopes that this acquisition will improve its business position in France, where EWS is already represented by its subsidiary Euro Cargo Rail. At the same time, DB’S avowed aim is to continue its close cooperation with SNCF, which is already successful in the single wagonload segment, and win a higher volume of transport for rail by offering attractive products.

EWS – the largest British freight railway and one of the largest freight transport companies in Europe – specialises in trainload transport in the energy industry, industrial freight and building materials segments. Its business activities in the United Kingdom and its emergent market position in France make EWS an excellent complement to DB Logistics. “We can build on the platform we have created in the UK and France for rail freight growth, offering our customers a comprehensive European rail freight network”, said EWS Chief Executive Keith Heller. “This agreement between DB and EWS will allow greater volumes to be moved by rail.” With a workforce of around 5000, the company generated revenues of approx. EUR 770 million last year.

The Spanish company Transfesa is a global provider of transport and logistics services specialising in rail and road transports in the automotive, bulk goods and general cargo segments. “This operation will boost rail freight sector on the Iberian Peninsula, will contribute to the process of liberalisation in this part of Europe and will enable Transfesa to take forward its international strategy improving its offer and quality of service to the client”, said Transfesa General Director Luis del Campo. Thanks to its excellent coverage of the Iberian economic area as well as its gauge changeover facilities, Transfesa will provide DB Logistics with ideal access to the south-west corridor. The company currently has around 1100 employees and generated revenues of approx. EUR 290 million last year.

A little history by TRC
At the moment Deutsche Bahn AG is 100 percent owned by the German government. It is a stock company which does give it a degree of autonomy. EWS was a UK Company with 30 percent owned by the Canadian National Railway, 18 percent owned by Fay, Richwhite and Co, and lesser amounts by large private equity companies.

In the freight side of the business DB AG, the holding company, owns Schenker AG, one of the 10 largest logistics companies in the world, Schenker AG, owns Railion AG, the freight railway operating subsidiary, with Railion having subsidiaries in German, Netherlands, Denmark, Switzerland, and Italy.

It is possible and quite likely that EWS will become Railion Great Britain or Railion UK, while Euro Cargo Rail could become Railion France.

Schenker AG is a profitable company, but Railion is not. Last year Railion showed its first profit in about 10 years, the profits are mainly due to being able to offer long-haul operations under open access, and more streamlined management.

Lets wait for the changes to unfold. One thing for sure is that DB are unlike to allow EWS to continue in the way it has in the UK, with major loss of freight services to other more competitive and willing operators.