The Deutsche Bahn holding, DB Cargo’s parent company, published its annual report for 2025 last week: a good occasion to dive deeper into the circumstances at its freight subsidiary. Things are looking better, but not exactly rock solid. Further restructuring changes could provide the needed push to get DB Cargo back on track.

DB Cargo’s restructuring proceedings, which started in 2022, are not immediately visible when looking at the company’s basic financial indicator: revenue. Note that this number includes data from all of DB Cargo’s subsidiaries, including outside of Germany. Revenue has remained relatively stable, hovering between 4.5 billion and 5.5 billion euros since 2017.

EBIT is more ‘all over the place’

How different does that picture look when looking at Earning before Interest and Taxes (EBIT). EBIT is an indicator of operating performance, but does not yet include expenses such as taxes and interest payments. DB Cargo has not achieved a positive EBIT during any of the assessed years, with lows recorded during the pandemic years. In other words, the company’s operations are fundamentally unprofitable.

This is underscored by the operator’s performance figures. During the pandemic, DB Cargo broke the downward volume and operational performance trends. It transported more freight and did more transport work in terms of tonne-kilometres. Despite that, the finances were worse than ever. The more the company transported, the more money it lost.

That is clearly not a good sign for a rail freight operator – especially when it can no longer count on money transfer from its parent company Deutsche Bahn. But for all the criticism that DB Cargo has received, there has been a turnaround in 2022 in the company’s financial performance.

When looking at the EBIT figures, there is a clear change starting in that year. Since then, DB Cargo has only recorded year-on-year improvements on EBIT. In 2025, the operator came very close to operational profit at -7 million euros. There are various reasons for this, and there are also reasons to think that this may continue into the future.

Subsidies contribute most

The main windfall, which cannot directly be ascribed to sound business management or a restructuring, came in the shape of subsidies. Germany approved a 300 million-euro subsidy for single wagonload (SWL) traffic in 2024. DB Cargo received 163 million euros from those funds, which are also reflected in the EBIT figures. Moreover, DB Cargo received millions in track access charge (TAC) subsidies. In 2025, federal subsidies totalled 305 million euros (195 million for SWL, 78 for TAC, 32 for investments).

Additional federal funding has clearly helped DB Cargo to substantially improve its operational result. This, of course, is not necessarily a solid long-term plan. In order to continue cutting costs, the freight operator has put several plans on the table. These pertain to some of the biggest expenditures: personnel, maintenance and unprofitable contracts.

Halving the workforce

DB Cargo is planning a massive workforce reduction of over 6,000 employees. That would shrink the size of the workforce (in Germany) by around 50%. Across Europe, DB Cargo has over 25,000 employees. Terminations have helped to save 149 million euros on personnel costs in 2025.

The company has also been ending unprofitable contracts. This deliberately shrinks the company’s business, while improving operational performance. It has also sold the intermodal business of its subsidiary Transfesa.

This is reflected in the rolling stock fleet of the operator. Its size is shrinking, and has been shrinking consistently for a couple of years. Simultaneously, DB Cargo has sold 60 locomotives to Beacon Rail and around 6,000 wagons to GATX in sale-and-leaseback agreements. The share of leased and rented wagons in the overall wagon fleet has seen an uptick in 2025 – despite volumes declining.

The increase in the share of leased and rented wagons during the pandemic years coincided with a growth in volume. That is not the case now. If DB Cargo continues to pursue this path of operational flexibility, its owned wagon fleet could keep shrinking in size.

As a result, the provision of locomotives and wagons should become more flexible. This creates financial flexibility as well – DB Cargo won’t need to pay for their maintenance. The operator also gained 300 million euros from the sale.

Together, the termination of unprofitable contracts, reduction in volume and decline in maintenance costs (along with some other things) helped to shrink material costs by 292 million euros, DB said.

Will it be enough?

The DB restructuring proceedings will continue going forward. Decentralisation in several business units that have their own rolling stock and personnel at their disposal should help improve operational efficiency. Further workforce reductions, bonuses for long-haul drives for train drivers and far-reaching SWL remodelling (going to four central shunting hubs) should also aid financial performance.

DB Cargo will need to “clarify details” on its restructuring plan in the summer of 2026. Only then, gradual implementation of the newly proposed plan will begin. With -7 million euros in EBIT in 2025, the company is close to achieving a positive operational performance. However, its net financial result was around minus 40-60 million euros, according to CEO Bernhard Osburg. There is some way to go to profitability by the end of the year.

In Germany, the freight operator’s earnings grew thanks to several factors. These included higher revenues from compensation payments for locomotive supply contracts and infrastructure-related train cancellations. Additionally, government subsidies for single wagonload traffic, infrastructure, and track access charges contributed to the increased earnings.

On the other hand, DB Cargo saw a revenue decline of 434 million euros (-8%). This was driven primarily by performance in Germany and the United Kingdom (including metal transport), as well as in Spain (partly due to the sale of subsidiaries). Price adjustments, however, partially mitigated this reduction. When adjusted for negative currency effects, the decrease in revenue was slightly less significant, says the DB report.

Positive cost developments

At the same time, DB Cargo underwent some significant positive changes in the cost picture. Material costs shrank by 292 million euros. Lower activity levels, particularly reduced expenditure on maintenance services, energy, and purchased transport services, were the main contributors to the decline. The drop in maintenance costs was primarily a result of lower volumes.

Personnel costs were 149 million euros lower than in 2024, primarily due to reductions in the German and Spanish workforces. Depreciation also declined by 95 million euros – a result of an extension of the useful lives of locomotives and freight wagons in the balance sheet, as well as the sale of rolling stock.

Sale-and-leaseback

The latter point (at least partially) relates to the sale-and-leaseback of some 6,000 wagons (GATX) and 60 locomotives (Beacon Rail). “The sale and subsequent leaseback of part of the rail vehicle fleet is a contribution to the transformation of DB Cargo, making the provision of locomotives and wagons more flexible. The proceeds from the sale also contribute to improving the financial situation of DB Cargo”, the 2025 report specifies.

The Swiss freight operator SBB Cargo recently undertook a similar step, indicating that it improved operational flexibility. In the long term, the sale-and-leaseback will help reduce depreciation write-offs and reduce maintenance costs.

“Positive one-off effects from sale-and-leaseback transactions served as a bridge in 2025 until the implemented operational measures took effect”, explains DB. In total, DB Cargo got 300 million euros from the sale of the wagons and locomotives.

New CEO Bernhard Osburg told the German press agency dpa that the company is planning to reduce the workforce by 6,200 by 2030. The current workforce consists of some 14,000 people. The measure will affect almost all areas, including train operations, dispatching, planning, administration, sales, and IT, writes Die Zeit.

Osburg had explained that DB Cargo recorded a 2025 loss equalling “a mid two-digit million amount”, meaning around the 40-60 million euro area.

The CEO said that he presented a restructuring strategy with a medium-term focus extending to 2030. Experts are expected to complete their evaluation of the plan by the end of February.

UPDATE:

The DB and DB Cargo Supervisory Boards seem to have endorsed Osburg’s restructuring plan. “DB Cargo should be able to live on its own again – and even more: we will be a rail freight operator with real European DNA”, Osburg wrote on LinkedIn.

DB Cargo’s four pillars of restructuring

Osburg wants to focus on four pillars: International markets, savings, a restructuring in SWL and corporate culture. In short, demand for rail transportation among Germany’s industries is weakening, so Osburg intends to focus on international markets instead. “We are significantly aligning sales, planning, scheduling, and production more strongly with European markets and are developing DB Cargo into the leading European rail logistics provider with clear, cross-border system solutions”, the CEO said.

In terms of cost savings, this is where the job cuts come in. DB Cargo wants to implement leaner administration and improve productivity. The restructuring in the SWL segment is also accompanied by severe job cuts of 2,000 positions. Osburg also plans to concentrate train formation operations at four main locations: Cologne-Bremberg, Seelze, Mannheim, and Nuremberg.

DB Cargo will continue to operate five additional shunting yards as flexible secondary locations. Of the current 27 maintenance depots, twelve are to be closed or sold.

In terms of corporate culture, Osburg said that he wants to stimulate responsibility among decision-makers at the operational level.

It is unclear if this plan will help DB Cargo succeed in becoming profitable by the end of 2026. The company still needs to clarify details, which it plans to do in summer. Gradual implementation will only start then. The single wagonload restructuring will continue into 2027.

“We are taking a decisive step towards a truly intermodal model in the Iberian Peninsula, whereby maritime, rail, and road transport no longer exist separately but operate under the Boluda brand in a single logistics chain”, company representatives commented on the deal.

After the sea and the road comes rail

Boluda already offers maritime and road transport services, but the Transfesa will immediately propel it forward to be among the major rail service providers in Spain. As of September, Transfesa was the fourth largest private operator (fifth when also counting Renfe) in Spain, behind Captrain, Medway and Continental.

The ‘new kid on the block’ Boluda hopes that the addition of rail to its portfolio will help achieve greater efficiency in the supply chain, boost the reliability of its services and reduce the company’s carbon footprint.

The question of Nikutta’s responsibility for DB Cargo’s situation aside, the rail freight operator has unquestionably fallen into a rather challenging position throughout the past years.

How it started

The story starts on 19 April 2018. A supposedly Belgian party filed a complaint with the European Commission (EC) on alleged state aid granted to DB Cargo. The identity of the complainant is confidential.

In the following years, an information exchange took place between the complainant and the European Commission and Germany and the Commission. On 31 January 2022, the EC informed Germany that it was starting a formal investigation procedure into the state aid allegations.

The allegations of state aid

The complainant accused DB Cargo of receiving competition distorting state aid through four mechanisms. First is the profit and loss transfer agreement (PLTA) concluded in 2012 between DB Cargo and its state-owned parent company Deutsche Bahn. The agreement obliged DB Cargo to transfer any profits at the end of the year to DB, and it obliged DB to cover any losses made by DB Cargo.

In practice, the European Commission said in 2024, DB Cargo never generated a profit during the years when the PLTA was in force. “As all losses generated have been transferred, DB Cargo has been shielded from having its losses affect its balance sheet, and hence from any negative financial impact of the accumulated losses”, it explained.

Since DB is a fully state-owned company, the complainant argued that it amounted to state aid that gives DB Cargo an unfair advantage over its competitors on the market.

Besides the PLTA, the complainant also argued that the provision of intra-group service at DB amounted to state aid. Those include analytics, accounting, real estate, IT services, personnel services and training that took place at the cost of the group, not the freight operator. The third point concerned alleged advantageous financing conditions of loans provided to DB Cargo by DB Treasury. Those intra-group loans were not collateralised, because DB, as the only shareholder of DB Cargo, operated as both the equity provider and lender. “Consequently, DB Cargo has been able to sign loans without using its assets as collateral”, the EC explained in 2024.

The fourth and last accusation of state aid concerns the partial remuneration of civil-servant staff that is assigned to DB Cargo by the Federal Railway Fund. DB has only paid a part of their costs since the introduction of the system, following Germany’ railway liberalisation reform in 1994.

The decision

On 29 November 2024, the European Commission issued a conditional decision on the state aid question. It sided with Germany on issues two, three and four. On the topic of profit and loss sharing, it found that the agreement – most of the time – was a legal financial instrument in line with what a private shareholder would have done, according to the EC. As such, there was no question of illegal state aid.

That changed at the end of 2021. By that point, DB Cargo’s financial performance had deteriorated so much that a private investor would have annulled the PLTA. “In the present case, de facto operating losses in 2021 and projected results for 2022 and thereafter that would have caused a market shareholder to give to DB Cargo notice of termination of the PLTA on 30 September 2021”, argued the Commission.

“In such case and as from that moment, DB Cargo would have almost certainly been condemned to going out of business in the short or medium term, with the predictable increasing depletion of its equity base”, from that moment onwards, the PLTA effectively amounted to illegal state aid.

Germany and the EU strike a deal

The PLTA continued, because the EC only decided towards the end of 2024 that the money transferred to DB Cargo after 2021 amounted to unlawfully granted state aid. Ultimately, Germany and the Commission came to an agreement: the European Commission approved the 1,9 billion euros of state aid granted after 2021, on the condition that DB Cargo would continue implementing its restructuring plan.

Despite initially having been unlawful, the aid was found to be compatible with the EU’s restructuring guidelines, considering that it now aimed at supporting DB Cargo’s transformation.

Germany proposed a number of additional conditions for DB Cargo, on top of the obligation to implement the restructuring plan: the operator would not be allowed to acquire any shares or exceed its domestic volume of 2023 in terms of tonne-kilometres. DB Cargo would also have to sell part of its locomotive fleet and purchase block train services from external parties, among some other measures.

The restructuring period lasts until 31 December 2026, during which period Germany can provide the company with financial aid. DB Cargo is therefore on a strict deadline to improve its financial performance.

Then comes 2025

With another 357 million euro operating loss in 2024, DB Cargo headed into 2025 with a gigantic task in front of it. One of the main loss-making business segments are the single wagonload operations, which consultants reportedly proposed to eliminate altogether. Many in the rail freight industry responded furiously to that idea, because it would cut off many companies from rail transportation services.

Ultimately, DB Cargo’s path to financial success resulted in the departure of former CEO Sigrid Nikutta. Many, including trade union EVG, blamed her for the problems at the freight operator.

The restructuring plan was drawn up under her watch, but the Commission’s decision and Berlin’s additional conditions tied DB Cargo’s hands. The idea is to make the rail freight market fairer and more competitive, but it also locked the German freight operator onto a path without much room for flexibility – only the Commission can approve changes to the key elements of the restructuring plan.

The new CEO, Bernhard Osburg, will take office on 15 November. He has held various management positions in the steel industry for over 20 years, says Deutsche Bahn. Osburg implemented restructuring and cost-cutting measures and thyssenkrupp Steel, but ultimately left the company over disputes about the needed extent of capacity cuts to reach profitability. He will now be tasked with overseeing the transformation process at DB Cargo.

Board reorganisation completed

Besides the appointment of Bernhard Osburg, the Deutsche Bahn Supervisory Board has appointed three new members, a new CFO (Karin Dohm) and a new head of DB Regio (Harmen van Zijderveld).

“I am very much looking forward to working resolutely with the new management team to drive forward the relaunch of Deutsche Bahn”, commented the newly installed Deutsche Bahn CEO Evelyn Palla. “With Karin Dohm, Harmen van Zijderveld and Bernhard Osburg, we are gaining experienced and responsible leaders who possess precisely the implementation skills and future-oriented approach that we need now.”

Before working as CEO at thyssenkrupp Steel, Osburg was board chairman, chief commercial officer and worked in various sales positions.

The leadership change is reportedly not yet definitive. According to news platform Table.Media, a Supervisory Board meeting is planned for 30 October, where the dismissal of Nikutta still needs to be approved.

Restructuring criticism

Nikutta faced criticism from both within and outside DB Cargo. On 20 October, DB Cargo finalised an internal report on Nikutta’s restructuring plans and whether or not it could continue.

Consultants came to the conclusion that that was not possible, German publication Der Spiegel wrote. “The current restructuring plan is […] objectively unsuitable for eliminating the causes of the crisis and restoring competitiveness […].”

Trade union EVG also called for the dismissal of Nikutta, saying that she was leading the company “into the abyss” with her restructuring plans.

Nikutta faced criticism from both within and outside DB Cargo. On Monday, DB Cargo finalised an internal report on Nikutta’s restructuring plans and whether or not it could continue.

Consultants came to the conclusion that that is not possible, Der Spiegel writes. “The current restructuring plan is […] objectively unsuitable for eliminating the causes of the crisis and restoring competitiveness […].”

Just last week, German trade union EVG called for the CEO’s resignation, saying that Nikutta was leading the company “into the abyss”. EVG was highly critical of the path that DB Cargo had taken by selling off assets, laying off personnel and outsourcing services. “The consequences are dramatic: declining quality, poor punctuality, and growing uncertainty. [DB] Cargo urgently needs a strategy for business development, not for business execution”, EVG said.

Bad results since taking office

Sigrid Nikutta took over leadership of DB Cargo in 2020, after which Deutsche Bahn’s freight problems kept growing worse. DB Cargo’s market share fell from 43% to 34%, and the company made operational losses of around three billion euros.

Those losses have always been compensated by state money through DB Cargo’s state-owned mother company Deutsche Bahn. However, the enormous amounts of financial support were disproportionate, according to the European Commission, who labeled it as “market distortion”. DB Cargo was subsequently obliged to become profitable in 2026, which prompted Nikutta’s restructuring plans.

Earlier, the Deutsche Bahn Group also got rid of its CEO, Richard Lutz, for mismanagement and the bad performance of the German railways. He has since been replaced by a new CEO, Evelyn Palla.

The trade union is highly critical of the path that DB Cargo has taken by selling off assets, laying off personnel and outsourcing services. “The consequences are dramatic: declining quality, poor punctuality, and growing uncertainty. [DB] Cargo urgently needs a strategy for business development, not for business execution”, EVG says.

European Commission on the heels of DB Cargo

DB Cargo is currently trying to make ends meet – it is on a strict deadline to become profitable by the end of 2026. Otherwise, it might face further steps taken by the European Commission, which sees the level of state aid to DB Cargo as disproportionate. Such a fate befell French freight operator Fret SNCF.

For that reason, DB Cargo is trying to rid itself of unprofitable business segments and is scaling down operations: “Instead of growth, there has been regression; instead of improvements, chaos; instead of a strategy for the future, a policy of shrinking and fragmentation”, EVG characterises developments at DB Cargo.

A fresh start

The trade union worries that the failures of DB Cargo could impact the broader German economy, seeing the rail operator as its “backbone”. Rather than strengthening the rail system, EVG believes that Nikutta is “losing herself in self-promotion and social media appearances.”

The union draws a clear conclusion: DB Cargo needs a fresh start, both in terms of personnel and strategy. “We take responsibility – for the employees, for the company, and for the future of rail freight transport in Germany. There can only be a future for DB Cargo if Ms. Nikutta no longer has a future there.”

“She has guided the DB Regio AG business unit from the most challenging to calmer waters – together with everyone involved and, above all, with the colleagues who serve millions of customers every day. We are firmly convinced that with Evelyn Palla at the helm, DB will achieve a successful relaunch and that the agenda for satisfied customers on the railways presented by the Federal Ministry of Transport can be swiftly implemented”, Gatzer continued.

Trade union EVG opposed the plan

There was some confusion surrounding the appointment of Palla after rail and transport trade union EVG announced that it would vote against her. EVG was opposed not to the appointment of Palla, but rather to Dirk Rompf, who was proposed by transport minister Schnieder as the new CEO of DB InfraGO.

“Professor Rompf was responsible for infrastructure for six years. And with his obsession with austerity, he is partly to blame for the current situation”, EVG Chairman Martin Burkert stated. “This not only damages the new CEO, but also costs employees trust. It’s clear: the federal government has no grasp of personnel policy.”

In the end, EVG did not have the votes to block Palla’s appointment, nor did it manage to convince enough other Supervisory Board members to join its protest.