mofair and NEE Present Competitor Report Railways 2021/22

The competitors of DB in freight and passenger transport on the rail have also made progress in the railway market since the presentation of their last competitor report two years ago. In freight transport, their market share reached 57 percent of rail transport performance in Germany in 2020, with a continuing upward trend. In local passenger transport, the market share of competitors rose to nearly 41 percent of the offerings. The competitors demand that priority be given to rail now.

(Berlin) Reflecting on the entire last legislative period, NEE and mofair note that there was a high verbal openness and also additional funds for rail. “However, the grand coalition did not address the fundamental competition problems in transport at all and thus failed to achieve its transport policy goals,” said NEE Chairman Ludolf Kerkeling at the presentation of the report in Berlin. The railways not belonging to the DB group now place great hope in the announced departure under a traffic light coalition and expect a consistent policy that prioritizes rail and does not rely on the federally owned DB. Competitiveness, especially between rail and road, must be comprehensively targeted – only in this way can a smart strategy for the transport transition be initiated in the future.” mofair President Dr. Tobias Heinemann adds: “The reform of Deutsche Bahn AG is by no means the only, but an essential building block for a successful climate-friendly transport policy with significantly more rail.”

Ludolf Kerkeling appealed: “The traffic light parties must learn from the omissions of recent years,” and Tobias Heinemann added: “The federal government has indeed provided significantly more funds for rail through additional regionalization funds, the Corona rescue umbrella, track price funding, and some funding programs, but at the same time, it has weakened the incentives for rail use with various funding programs for new trucks or the e-purchase premium and the unrestrained infrastructure expansion of the road.”

Standstill in Rail Construction

For the railway companies, the years of standstill in rail construction and the persistently poor performance along with high costs of the DB infrastructure operators have become the number one growth brake. Despite significantly more budget funds for the existing infrastructure, the aging of the network has not been curbed. New construction and expansion are still underfunded. The electrification of the network has progressed by only one and a half percentage points instead of ten, in the past three years not even ten kilometers of rail track have been newly built, and the number of designated “overloaded railways” has risen to over twenty. The Germany timetable is currently only communication and a brand for DB long-distance transport, but has not yet triggered the additional rail expansion that shortens travel and transport times and brings more traffic onto the rail.

The associations demand that the new federal government finally accelerate the actual levers in rail expansion, namely the process flows, and provide adequate financial and personnel resources, for example, by reallocating from road construction.

Corona Has Slowed Market Shares of Competitor Railways

In long-distance rail passenger transport (SPFV), the Corona pandemic has abruptly slowed the market share growth of competitor railways in the meantime. For too long, the federal government insisted on a one-sided support of DB long-distance transport through a capital increase, instead of supporting all affected companies through an industry solution. As a result, neither DB nor the competitors received support for over three quarters of a year due to the foreseeable objection from EU competition authorities, before the federal government finally corrected its course and temporarily lowered track prices. The competitors now have to work their way up again from a market share of one percent, which had already been nearly four percent in 2019. The stabilization of low track prices at marginal cost level would help significantly here. To incentivize the politically desired night train traffic, prices below marginal costs would also be sensible.

In local rail passenger transport (SPNV), the market share of competitors has indeed grown to nearly 41 percent of the performance offerings with a further upward trend, and passengers benefit from an overall increased and more modern offering. However, adjustments must be made in light of the significantly increased personnel needs, the consequences of increased construction activity, and poor construction site management, which were not foreseeable for all railway companies – including DB subsidiaries. Contracts must become more flexible during the term. Regarding this, mofair President Tobias Heinemann states: “The fact that the infrastructure operator DB Netz still refuses to take responsibility for consequential damages from its poor performance, and that contracting authorities still demand penalties from us for delays over which we have no influence, must be urgently changed. Otherwise, the return to the DB monopoly in local transport – with monopoly prices – threatens.”

Endangerment of Fair Competition in Rail Freight Transport

In freight transport, DB’s strategy of operating its rail freight transport with prices below costs increasingly endangers fair competition. NEE Chairman Ludolf Kerkeling: “Now the EU Commission must take action because the federal government as the owner has obviously decided to close its eyes and open the subsidy floodgates. The victims are the competitors and their employees, who cannot expect direct or indirect deficit compensation from an infinitely solvent owner year after year. It is time to discuss in the coalition negotiations how a common level playing field for fair competition can be created.”

Innovations are the key to a digitized rail transport that meets the productivity requirements of the transport transition. Therefore, not only a rapid equipping of routes and signal boxes is necessary, but first and foremost the complete promotion of ETCS reception devices in rail vehicles is urgently needed. Data management must be regulated.

New Railway Reform Demanded

The revision of tax and levy systems based on their climate-friendliness, the reduction of subsidies, the principle of “transport finances transport” instead of the previous closed financing cycles, and a multi-year rail infrastructure fund are the most important instruments for mofair and NEE to finance the new transport policy. Last but not least, the fatal connection and joint management of market-oriented transport and public welfare-oriented infrastructure companies within the DB group must be ended through a new railway reform. The still pending EU procedures for two capital increases at DB must be brought to a non-discriminatory conclusion, and the control and profit transfer agreements within the DB group must be terminated.

Photo: @ NEE