Freight transport and logistics
Market developments
The developments described below are based on preliminary data and data with partially differing time horizons, as during the preparation of this report complete findings regarding the developments in the first half of 2019 were not yet available.
German freight transport market with a positive start into the year
According to internal calculations, the overall freight transport market continued its positive development at the beginning of 2019. A rather differentiated picture emerged, however, when taking a closer look at individual modes of transport.
- Generally weaker, but there are still positive economic impulses from trading and domestic demand. Negative effects from downward developments, such as in steel, chemical and automotive production, had an adverse impact.
- Resource shortages continue to be a issue and contribute to the increase in general expenses. The competition remains intense.
- Special effects which are not caused by economic developments, such as trade diversions during the low-water period in 2018, structural changes as part of the ongoing energy transition or quality losses, have an impact particularly on the development of rail freight companies and inland waterway transport.
- After the continual performance decreases since May 2018 due to the extreme low-water period, inland waterway transport experienced a slightly positive volume growth at the beginning of 2019, but the volume sold in the first quarter remained below the previous year’s level. Increased transports in the areas of coal, ore/construction materials, and coal and petroleum products were offset in part by significant decreases in container, scrap metal, waste, chemical and steel transports.
Rail below previous year’s level at the beginning of the year
- Due to the renewed expansion of the reporting scope in the monthly surveys of the German Federal Statistical Office, from 57 to 72 TOCs, it is only possible to give an indication regarding the development in the rail freight transport market. According to previous publications, Germany appeared to experience moderate growth until April 2019 due to the expanded reporting scope, but on a comparable basis, volume sold decreased by about 4%.
- DB Cargo recorded a further performance decline in the first half of 2019, which, however, was lower than in 2018. The decline in performance is mainly attributable to the decline in the steel industry, but also in the chemical, quarrying and automotive industries.
- For non-Group railways, we expect a still positive, but also noticeably weaker development. In addition to weakening economic impetus, this assumption is based on the modal shifts at DB Cargo, for example for quality reasons or because of former cooperation partners in cross-border transport themselves entering the German line section.
Road with stable growth
- Truck transport continues to benefit from foreign trade impetus, positive consumer sentiments and demand from the construction business.
- According to in-house calculations, volume sold was about 3% above the previous year’s level until May 2019. ◊ This development is also reflected in the toll statistics of the German Federal Office for Freight Transport, according to which performance on German Federal motorways increased by 3.1% in the first five months of 2019. Due to the increase in truck tolls on all German Federal highways on July 1, 2018, it is not possible to account for them in a year-on-year comparison.
- While trucks registered in Germany increased by 1.2%, foreign vehicles continued to experience above average growth, with an increase of 4.5%. The largest growth was recorded by trucks from Poland, Lithuania, Slovenia and Romania which together make up about 70% of the total growth.
European rail freight transport market at previous year’s level
The volume sold in the European rail freight transport (EU 28, Switzerland and Norway) rose by about 1% in the first quarter of 2019 compared to the previous year’s period. Demand for transport is supported by robust European internal economic growth with rising consumption, which has a positive impact on imports. Exports were also better than expected in the first months of the year. Positive impulses came primarily from transports via the North Sea ports of Antwerp, Rotterdam, Hamburg and Chinese transports on the “New Silk Road.” The ongoing declining development in coal transports had a continuing negative impact.
- Rail freight volume sold in Great Britain increased considerably in the first quarter of 2019, by 4.5% compared to the same period in the previous year. Specifically, construction materials and international transports developed positively, while coal transports decreased further – their share in the national rail freight transport market dropped from more than 30% to less than 10% in four years. At DB Cargo UK, volume sold increased slightly in the first half of 2019 and was able to hold on to its leading market position.
- Rail freight volume sold in Poland declined slightly (–1%) in the first quarter of 2019 compared to the same period in the previous year. Here, the strong decline in construction materials, ore and metal transports were offset in particular by a dynamic development of intermodal transport (+18%) supported by China transports. The share of intermodal transport in national rail freight transport is currently about 11%. DB Cargo Polska volume sold declined moderately in the first half of 2019, in line with the market trend.
- The rail freight transport volume sold in France decreased by 1% in the first quarter of 2019 compared to the same period in the previous year, but should return to a positive development in the coming months, taking into consideration the massive strikes in 2018 in the context of the French railway reform. Euro Cargo Rail (ECR) was also able to significantly increase its volume sold in the first months of 2019 and strengthen its market position.
European land transport market starts positively
The European land transport market started 2019 with a positive development, even if prices increased only modestly compared to 2018. The reason for this is mainly the expansion in capacities compared to the slower growing demand for shipping space. In contrast, the trend towards a shortage of drivers continues, which tends to increase the pressure on costs.
In the first half of 2019, the volume of shipments in the European land transport at DB Schenker rose.
Air freight market declining after strong growth in the previous year
The global air freight market was significantly weaker in the first half of 2019, at –0.5% compared to the same period in the previous year. The reason for this is the slower development of global trade and global industrial production, which are impacted by political uncertainties resulting in trade obstructions. This affects all significant trade routes, only the trade lane from Europe to North America recorded growth.
The excess supply in capacity in the current market environment generates pressure on purchasing and sales prices, with a current downward trend.
In the first half-year, DB Schenker recorded a significant 11% decrease in volume.
Ocean freight market losing momentum
The ocean freight market still recorded solid growth during the first months of 2019. The inner-Asian trade in particular continued to develop well. At the same time, the tariffs that were increased on both sides increasingly resulted in declining transports between the USA and China with the consequence that growth will be more moderate compared to the previous year.
The rates are expected to grow throughout the year, which is partially caused by better capacity management by the most important carrier alliances and the effect of the implementation of new environmental provisions on the shipping business.
DB Schenker recorded a volume increase in the first half of 2019.
Contract logistics market remains vigorous
The positive market development in contract logistics continues in 2019. A particularly important driver is the vigorously growing e-commerce sector. However, intense competition is simultaneously putting pressure on margins, so revenues and profits do not grow to the same degree.
DB Schenker realized above average growth in the Europe and Americas regions; DB Schenker continues to expand its business particularly in the USA and Latin America. The most important market segments include industrial and consumer goods, healthcare and the automotive industry, but most particularly the strongly growing electronics industry.