2018 Integrated Interim Report – Departure into a new era!

Positive general framework

German freight transport market continues growing

Internal calculations indicate that the overall freight transport market grew significantly at the start of 2018:

  • Overall, positive economic effects from trading and domestic demand continued.
  • Despite existing difficulties with capacity and cost in­­creases, price and competitive pressure remain high. Significance of staff shortages increasing.
  • Non-cyclical special effects such as reductions in coal shipments as a result of an ongoing energy transition or quality losses dampen the development, especially in rail freight transport.
  • Following a significant drop in performance at the start of the previous year, inland waterway transport made a strong start in 2018. We expect this to tail off noticeably in subsequent months. This was also driven by extensive maintenance and repair work on locks on major waterways as well as adverse effects of low water levels in some regions.

Rail with below average development

  • Until the relevant reports are published, no quantified statement can be made regarding the performance development of the rail freight transport market in the first months of 2018.
  • Volume sold for DB Cargo decreased significantly. As well as some modest impulses in certain industries such as the moderate development in steel production or current difficulties in the automotive industry, the port­­­­folio adjustments of the energy producers continue to have a negative effect through the closure of coal-fired power plants and the conversion from coal to gas. Intramodal and intermodal shifts are also hav­ing adverse effects.
  • We are expecting non-Group railways to continue their positive, above-average development. In addition to strong economic momentum overall, this expectation
    is based on shifts in modal transport by DB Cargo and effects due to the extended reporting scope when the rail freight transport statistics are officially revised.

Road with stable growth

  • Strong momentum from the construction industry, foreign trade and positive consumer sentiment meant that the increase in volume sold to May 2018 was at the 2017 level based on internal calculations.
  • According to the toll statistics issued by the German Federal Agency for Freight Transport, the number of trucks registered in Germany remained approximately at the level of the previous year while trucks from abroad (in particular Central and Eastern Europe) recorded strong growth again.
  • The market is characterized by a shortage of hold capacity and increasing costs, particularly for fuel and personnel.

European rail freight transport market above previous year’s level

The positive development in volume sold in European rail freight transport (EU 28, Switzerland and Norway) in 2017 appears to have continued at the beginning of 2018 with markets growing in particular in Poland and Sweden. Development was supported by strong demand for capital goods and dynamic European trading. Positive momentum was generated mainly from transport through the North Sea ports of Antwerp, Rotterdam and Hamburg. While combined transport continues to be the growth driver of rail freight transport, the persistent decline in coal shipments is having an adverse effect.

  • Rail freight volume sold in Great Britain declined sig-
    nificantly in the first quarter of 2018. This affected all freight divisions, while the decline in coal transport continued, but slowed significantly. DB Cargo UK performance also declined; the leading market position was maintained.
  • Rail freight volume sold in Poland again showed a very strong increase in the first quarter of 2018. The positive development was supported by an increase in steel, building materials and intermodal transport. DB Cargo Polska also recorded dynamic growth, particularly in intermodal and steel transport.
  • We expect rail freight volume sold in France to have declined significantly in the first half of 2018 due to the massive strikes at SNCF connected with the French rail reformµ6. This has also had a severe effect on Euro Cargo Rail (ECR).

European land transport shows growth

Demand continued to develop positively in European land transport in the first half of 2018 with shipment figures increasing once more.

A Europe-wide price increase can be observed in 2018. Continuing shortages of drivers and capacity as well as more increases in the diesel price have maintained pressure on margins which could increase even further in the second half of the year.

Air freight with strong growth

Driven mainly by an increase in demand for transport of machinery and automotive supplier parts, chemicals, perishable goods and e-commerce, development in the global air freight market was positive in the first half of 2018.

This development was driven by volumes from North America to Europe and Asia/Pacific as well as trade routes from Asia/Pacific – Europe. With cargo space increasingly scarce, air freight rates have remained constantly high since the beginning of the year.

Ocean freight continues to grow

Driven by an increase in demand for transport of raw materials, consumer goods and chemicals, particularly on trade routes within Asia and from Asia to other regions, global ocean freight was positive in the first half of 2018.

The trend towards improved utilization of capacity is causing ocean freight rates to recover. The vertical integration and consolidation of shipping companies is continuing.

Persisting momentum in contract logistics

As in previous years, the global market for contract logis-tics continued to be characterized by dynamic growth. The Asia/Pacific region also recorded above-average growth. The strongest momentum was generated by the industrial, electronics, automotive and consumer goods sectors. The continuing strong growth in e-commerce business, particularly in the USA, also drove positive development.