2017 Integrated Report – Departure into a new era

Positive general framework

German freight transport market is growing

Rail nearly at previous year’s level

  • Rail freight transport in 2017 remained nearly at the pre­­­­vious year’s level according to our own calculations.
    In the context of generally positive economic trends, this was due to intensive intermodal competition and quality-related restrictions, as well as operational restrictions.
  • DB Cargo recorded strong growth in paper and, above all, steel transports. However, the positive development in these segments was not sufficient to make up for the marked declines in areas like coal, stone/earth, mineral oil products and automotive, due in part to modal shifts. Combined transport was also unable to contribute to growth.
  • Growth among non-Group railways weakened compared to the previous year according to our own calcu­lations, but the development of volume sold remained above average. Growth was curbed not only by infrastructure-­related problems but also by the de­clin­­ing trend in the coal market, transport losses at DB Cargo, intensive competition from trucking, and the portfolio adjustments that this required.
  • Rail’s market share could not be maintained, and it fell to about 17.4%. The DB market share in rail freight transport was about 58% according to our own calculations.

Road continued its strong growth

  • The performance rise was heightened compared to the previous year and increasingly led to capacity bottlenecks over the course of the year.
  • According to the toll statistics issued by the German Federal Agency for Freight Transport, trucks registered abroad, particularly in the Central and Eastern European region, showed above-average growth once again.
  • Trucking benefited more than the average from the improved economic trends from international trade and strong domestic demand. In addition to the dynamic increase in the area of consumer and industrial goods, strong demand from the largely regional construction industry and modal shifts also contributed to the growth.
  • Road’s market position expanded for the fourth year in a row to about 71.7%.

Inland waterway transport slightly higher than in the previous year

  • Affected by persistent restrictions due to low water, especially in the first quarter of 2017, when performance declined by nearly 13%, the previous year’s level was only slightly exceeded. Rather steep performance declines were observed in particular in transport within Germany.
  • Growth in metal products, ores/stone/earth and other mineral products was offset by, in some cases, severe declines in the areas of agriculture, coke/mineral oil products and chemicals.
  • Market share fell for the fourth year in a row and was headed toward the 8% mark.

European rail freight transport market above previous year’s level

Volume sold in European rail freight transport (EU 28, Switzerland and Norway) increased in 2017. The performance increase is supported by the revival of production in Europe and foreign trade. Positive momentum came above all from the metal and construction materials industry. Combined transport remains a growth driver, with heavy traffic through the ports of Amsterdam, Rotterdam and Antwerp (ARA ports). The year was characterized by a dynamic first half, with growth of about 4% compared to the same period in the previous year. In the second half-year momentum slowed, with clear regional differences. Of the large European rail systems, the Austrian Rail Cargo Group and the Polish PKP Cargo increased their volume sold. In the European DB Cargo network, volume sold remained lower than in the previous year (–2.2%). There were adverse effects from the blocking of the Rhine valley route and the reduced performance volumes in Southeastern Europe and Great Britain, among others.

European land transport shows solid growth

The European land transport market experienced positive growth and DB Schenker has maintained its leading market position despite consistent intense competition. The parcel market is being progressively opened up through­­out Europe with GLS as a strategic partner. Risks remain, for in­­­­­­­­­stance due to persistent driver shortages and increasing competition among freight forwarders.

Strong growth in air freight

The international air freight market saw a marked upswing in 2017 with growth of 10%. The growth trend that began in the last quarter of 2016 extended through every month of 2017 without any notable letup. What set the market growth in motion was an unusual situation in the ocean freight market, where new alliance formation led to a shortage of capacity that had positive effects on the air freight industry. The economic environment and the continued e-commerce trend also had a favorable impact.

The markets in Asia and Europe showed particularly good trends, with the main driver being automobile and consumer goods transport, while other industries also recorded positive growth. The strongest growth was on the trade route between Asia and the USA. On account of higher demand and limited cargo space in the market, freight rates on some trade routes rose sharply, so that freight rates were also higher overall than in the previous year.

Ocean freight continues strong growth

Ocean freight saw global growth of close to 5% in 2017. Positive volume growth was recorded on all major routes. A recovery of demand and the formation of new alliances among shipping companies markedly improved the utilization of capacity.

The highest volume route, Intra-Asia, recorded growth of about 6%. The Asia – Europe route also grew by about 5%. The positive market trend overall also caused freight rates to rise again.

Persisting momentum in contract logistics

The positive performance of the global market for contract logistics also continued in 2017. As before, the dominant driver remained, above all, the persisting strong trend toward outsourcing in the key industries (especially electronics, consumer, automotive, healthcare and industrials).

Growing e-commerce business requires much more warehousing capacity than conventional retail and is stimulating the market for warehousing space, especially in the USA and China, or the Asia/Pacific region. Growth rates were high in the regions Asia/Pacific, the Middle East and Africa. India showed particularly strong additional growth, due in part to a comprehensive tax reform.