EC INVESTGATES DISTORTING STATE SUPPORT TO DB CARGO
Reuters reported recently that the German rail freight operator is under investigation by the European Commission to determine whether the €300 million annual financial support received from the German government to cover its losses is market-distorting. Last year only, DB Cargo losses amounted to almost € 500 million.
DB Cargo has rapidly lost market share in recent years and now accounts for less than half of rail freight transport in Germany. The losses are not due to a lack of demand and are largely due to single wagon load traffic, a branch that does not generate profits for DB Cargo. The company could follow the path of French rail operator Fret SNCF, which risked a fine of € 5 billion last year due to illegal government support. Following EC investigation, Fret SNCF had to abandon more than 20 rail freight routes.
The German government has targeted raising the railway freight market share to around 25% of all cargo transport by 2030 in line with its climate goals. But it is currently around 19% and has only increased slightly in recent years.
Source: Reuters