https://www.economist.com/business/2023/05/25/it-will-take-years-to-get-deutsche-bahn-back-on-track

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Business | Deutsche Bahn

It will take years to get Deutsche Bahn back on track

Europe's biggest rail operator has gone off the rails

Idled passenger trains, operated by Deutsche Bahn AG, during a strike
in Munich, at dusk in Germany, on Friday, April 21, 2023. German rail
passengers face widespread disruptions during their morning commute
on Friday after transport union EVG called for a nationwide warning
strike, escalating a dispute with Deutsche Bahn AG over pay.
Photographer: Michaela Rehle/Bloomberg via Getty Images
May 25th 2023 | BERLIN
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IN MID-MAY GERMANS were bracing for the third, and longest, national
rail strike this year. Deutsche Bahn (DB) was locked in a dispute
over pay with EVG, the union representing most German railway
workers, including 180,000 at the state-run behemoth. At the last
minute union leaders called off a 50-hour stoppage that was going to
begin on the evening of May 14th. German travellers breathed a sigh
of relief--and then gasped as DB failed to reinstate all of the 50,000
cancelled services. The next day roads were clogged by commuters who,
worried about getting stuck at a train station, took the car instead.

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On May 23rd DB and the union met for a fourth round of wage talks,
with no long-term resolution in sight. And labour unrest is only one
of many fronts on which DB is fighting. Once a source of national
pride, it has become the butt of bad jokes ("We have one about DB but
we don't know whether it will work"). In April just 70% of its
long-distance trains were on time. And even that was an improvement
on the whole of last year, when only 60% were punctual; the company's
(unambitious) goal is at least 80%. DB services are "too crowded, too
old and too kaputt", Berthold Huber, who sits on DB's board, told the
Suddeutsche Zeitung, a daily, this month.

DB's woes are the result of poor management, a bloated bureaucracy,
political interference and years of underinvestment. In 2004 DB's
annual budget for the construction and upgrading of railway lines was
cut from EUR4bn ($5bn) a year to EUR1.5bn, notes Christian Bottger of the
University of Applied Sciences in Berlin. It has edged up since but
last year was still only EUR1.9bn. This year it will be EUR2bn. The
railway business has been bleeding money for years; in 2022 it made
an operating loss of EUR500m. DB's overall operating profit of EUR1.3bn,
on revenues of EUR56bn, was all down to its logistics arm, DB Schenker,
which has benefited from the uptick in e-commerce and now contributes
nearly half of sales.

Vowing to make up for the failings of its predecessors, Olaf Scholz's
newish cabinet has ambitious plans for DB. It wants to pump an extra
EUR45bn into the network, hoping almost to double the number of
passenger journeys by 2030 to around 4bn, and to increase freight
volumes by 25%. This year DB is beginning to renovate and modernise
650 train stations, as well as upgrading 2,000km of tracks, 1,800
switch points and 200 bridges. It will also add another 500 people to
its 4,300-strong team of security personnel, who are tasked with
protecting train tracks against mischief-makers (last October DB was
hit by suspected sabotage, causing the suspension of all services in
northern Germany). And it is accelerating the digitisation of railway
traffic, from signals and switches to digital "twins" of wagons
ferrying goods.

In time this may improve passengers' lot. But not soon. This year
carriages may get more packed: since May 1st Germans can buy a
monthly Deutschland ticket, valid on all regional and local trains,
for just EUR49. Delays and missed connections are forecast to be worse
than in 2022, in part owing to all those upgrade works. And DB may
slip into the red. It is forecasting a loss of EUR1bn from operations
in 2023, because of the investments, as well as high cost inflation
that is politically tough to pass on to travellers (who, in a further
drain on DB cash, can demand compensation for all the delays). "The
pretence of running an economically viable business was abandoned
...long ago," says Mr Bottger. It is all about getting more cash from
the state. #

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This article appeared in the Business section of the print edition
under the headline "Trying to get back on track"

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