Logistics And Frieght Forwarding

Dramatic losses at rail freight giant

Dramatic losses at rail freight giant The largest rail freight haulier in the UK has reported losses in excess of ?100m for a year when the industry was rocked by rapid and unprecedented challenges. DB Cargo (UK), which last month revealed it plans to cut almost 900 jobs in its latest restructure, posted a pre-tax loss of ?123m in the year to 31 December 2015, according to newly filed accounts.

The loss was made on turnover which slumped by ?61m to ?387m as market demand for coal transportation fell at a much faster rate than the company and its customers predicted. Plunging gas prices and the increase in the carbon price floor meant coal-fired power generation in 2015 fell to its lowest level since the 1950s. In response to this slump, Doncaster-headquartered DB Cargo, which changed its name from DB Schenker Rail UK in March, implemented a 7 per cent reduction in its workforce last year.

Alongside the job cuts, asset impairment charges of ?60m have been incurred to reflect the surplus capacity arising from the reduced coal transportation. In total, the business accounted for ?84m of one-off costs in 2015. Despite the initial restructuring undertaken last year, the coal market decline intensified into 2016, while the build-up and fallout to Britain’s vote to leave the European Union has led to investment and infrastructure delays among DB Cargo’s customers.

Earlier this month (October), DB Cargo proposed a potential further reduction of its workforce by 893 roles[1], a downsizing of its locomotive and wagon fleet, and a revision of the number and locations of its operational sites. Speaking at the time, Hans-Georg Werner, chief executive of DB Cargo UK, said: “Responsible and successful businesses must evolve and reshape as their markets change and sometimes this means making tough decisions. “Whilst this is a difficult time for all of us at DB Cargo UK, reshaping the company will enable us to build a business for the future and protect the majority of jobs.”

DB Cargo is the largest rail freight haulier in the UK, employing more than 3,400 staff across the country. It transports intermodal containers, metals, coal, biomass and aggregate, operating more than 5,000 trains each month including services to and from mainland Europe via the Channel Tunnel. The company was founded in 1996 as the English, Welsh and Scottish Railway (EWS) from assets of the former British Rail freight business.

It was initially owned by a consortium led by US regional railroad Wisconsin Central Transportation Corporation.

In June 2007, Deutsche Bahn AG acquired all EWS shares before the business was renamed DB Cargo UK in March 2016.

References

  1. ^ potential further reduction of its workforce by 893 roles (www.insidermedia.com)



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