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.

“This is very good news for the company”, commented PKP Cargo Vice President Paul Miłek, “meaning it will be possible to implement restructuring measures.”

The plan allows PKP Cargo to propose arrangements to creditors. “Following this decision, based on the restructuring plan, we will be able to present final arrangement proposals to creditors. Once the arrangement proposals are finalised, we hope to conclude an arrangement with creditors this year.”

Back to normal

Once the rail operator succeeds in doing that, it can again apply for external funds and “become a full-fledged market participant”. It will also remove the “in restructuring” suffix from its name. PKP Cargo has officially carried the name “PKP Cargo in restructuring” since the start of the proceedings.

“We have a period of intense work ahead of us, but today’s decision by the Judge-Commissioner is a very important step towards completing the restructuring process”, concluded Miłek.

As expected, trade union EVG will not support the massive job cuts at the freight operator, which would see nearly half the entire workforce leave DB Cargo in the coming years. “For us at EVG, one thing is clear: the last word has not yet been spoken!”

A last resort

The trade union adds that it will put forward proposals to strengthen DB Cargo while mitigating job losses. All alternative options must be exhausted before the company resorts to firing workers, says EVG. To that end, it will seek negotiations with the DB Cargo Board, which “will have to make concessions.”

Additionally, EVG does not believe that DB Cargo can remain a market leader with the remaining workforce if the plan goes ahead. The company would be left with 8,000 people among its personnel.

Besides the workforce reduction, the restructuring plan focuses on expanding into international markets, restructuring the single wagonload segment, and improving corporate culture. Despite EVG’s criticism, DB Cargo aims to remain a leading European rail logistics provider. However, success remains uncertain as details are finalised only by the summer of 2026.

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.

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.

LDz Board Chairman Artis Grinbergs explained that the LDz Group has experienced significant changes in recent years. Those relate to a decline in freight transportation and market changes caused by “geopolitical events”.

“In order to adapt to these new circumstances, we have both focused on reviewing our operating processes and actively carried out various optimisation measures”, Grinbergs said.

Freight collapse in the Baltics

“One of the important steps is also the reorganisation of subsidiaries – by combining the forces and resources of the three companies, not only will cost savings be created and administrative processes will be facilitated, but most importantly – in all types of commercial activities offered by the companies, we will strengthen our business positions and become more efficient.” The long-term goal of the newly expanded LDz Cargo is to operate profitably and to contribute to the national economy, says Grinbergs.

A restructuring at LDz became necessary following the collapse of rail freight in the Baltic states. The overall volume between the three countries dropped from over 130 million tonnes to 52 million tonnes over the course of only five years.

Earlier, LDz had said that the merger should lead to a total reduction in operating costs of approximately 1,4 million euros in 2025. Other measures were said to include a significant reduction of the workforce from 1,017 employees (as of January 2024) to 595 employees in December 2026. By 2030, the merger should lead to savings amounting to 25,9 million euros. LDz said that it expects the newly expanded freight branch to have a turnover of 120 million euros and a 7,5 million euro profit by 2029.

The second quarter, by contrast, was positive all across the board: Operating profit was 75,1 million złoty (17,6 million euros), and net profit amounted to 30,7 million złoty (7,2 million euros).

“These results are significantly better than a year ago, when both net profit and EBIT for the first half of 2024 were over minus 450 million złoty (-105 million euros)”, writes PKP Cargo. “The positive impact of the restructuring and optimisation measures undertaken, which are an integral part of the restructuring plan, is also noticeable in the results for the second quarter of 2025.”

Customer contract revenues and asset write-downs

Despite the positive quarterly results, the company remains in a fragile position. PKP Cargo lost some 500 million złoty in customer contract revenues between H1 2024 and H1 2025, for a total of 1,821 billion złoty (428 million euros). That is partially offset by a reduction in employee benefit expenditures (an improvement of around 200 million złoty).

Moreover, a big part of the improvement in the operational results comes from a change in depreciation and impairment losses. In H1 2024, the company wrote down a lot of assets, for a total balance sheet expense of 700 million złoty (164 million euros). In H1 2025, PKP Cargo wrote down just 85,5 million złoty (20 million euros) in assets in H1 2025. The rail freight operator likely won’t be able to count on such a “windfall” again.

PKP Cargo points out that it is seeing the first positive results of its restructuring efforts. The company has established new offices and departments dedicated to particular product groups. “These changes are aimed at improving customer collaboration and shortening decision-making processes in line with market expectations. A regional office was also established, with the goal of intensifying the acquisition of small and medium-sized regional customers”, the operator writes.

Market share increase

As a result, the company has managed to sign 84 new commercial agreements, which “also translate into stabilisation and a gradual improvement in market share in the third quarter of 2025.”

“The latest monthly data published by the Office of Rail Transport show that the PKP Cargo Group recorded a significant increase in its share of transported freight volume month-on-month – from 25.3% in July to nearly 26.7% in August”, the company concluded.

According to German press agency dpa, DB Cargo will eliminate 170 jobs alongside workshop closures. The upcoming changes will change the maintenance landscape in the country considerably. For example, the workshop in Mainz-Bischofsheim is slated for complete closure.

No more wagon maintenance

In other locations, DB will discontinue wagon maintenance. Those include Halle (Saale), Seelze, and Oberhausen, with these locations focusing solely on locomotive repairs in the future.

DB Cargo anticipates that this restructuring will enhance efficiency through the development of specialised teams, according to dpa. Negotiations with employee representatives are set to commence in September.

PKP Cargo was plunged into chaos last year due to grave financial problems. In turn, PKP CargoTabor also suffered from the misfortune of the parent company. Because PKP Cargo reportedly did not pay for maintenance orders, CargoTabor was left without money, leading to electricity cutoffs at maintenance plants.

Too much stress

At the same time, employees were reportedly leaving the company because stress got the better of them. Uncertainty about the future of their jobs prompted some to leave PKP CargoTabor on their own volition. The maintenance company planned layoffs numbering in the hundreds.

The ongoing restructuring efforts aim to preserve maintenance services across Poland. The acquisition of the Czerwieńsk plant could help achieve that.

Moreover, the freight operator achieved an operating profit (EBITDA) of the equivalent of 17,25 million euros. In terms of EBIT, the company recorded a 4,6 million euro loss.

New transport corridors

“The results for the first quarter of 2025 still show the effects of the group’s overscaling and mismatch to the current transport market”, board member Michal Lotoszynski explained. “We are currently carrying out restructuring activities that will change this situation in the long term and lead PKP Cargo to profitability and profits.”

Whereas previous restructuring measures have focused on reducing operating costs, PKP Cargo will now concentrate on obtaining new orders and stabilising sales revenues, according to Lotoszynski.

PKP Cargo is already working on a number of projects to make that happen. “We are intensively developing new transport corridors, expanding our resources to expand the Baltic-Adriatic corridor, as well as our presence on the routes to Hamburg and Rotterdam”, says PKP Cargo President Agnieszka Wasilewska-Semail.

“We are preparing a project for a central hub that will clear the north-south and east-west corridors”, she continues. “We are also in the process of finalising agreements to acquire modern multifunctional rolling stock, which is in line with our strategy for the development of intermodal transport and will allow us to develop our presence in corridors in Europe even more intensively.”

Adverse market conditions

The rail freight operator has recently signed a couple of new contracts to boost business. One of those concerns the transport of coal from the Bogdanka mine to the Połaniec Power Plant worth 11,16 million euros. PKP Cargo also signed agreements with the Azoty group, worth up to 53,59 million euros.

PKP Cargo will continue its restructuring proceedings and submit a final plan in June. However, it is not helped by unfavourable market conditions. The company explains that the rail freight market in Poland has declined by 3.6% year-on-year in terms of volumes. A reduction in coal transportation accounts for a big part of that decline. Within that context, PKP Cargo is looking to maintain its market share.