Hamburg Hauptbahnhof

What is the state of railway competition in Germany?

While many regional train operators are active in Germany, many main railway stations still mainly colour red and white with DB trains, like here in Hamburg Shutterstock

“Where does the still unshakable political trust in Deutsche Bahn come from?”, associations Mofair and die Güterbahnen wonder. They recently published a report about the state of competition amongst rail operators in Germany, something they would like to see more of. While in regional transport and freight operations, the share is near and over 50 per cent respectively, long-distance passenger rail remains behind. “The highest track prices in Europe are a huge barrier to entry into the market”, says Martin Becker-Rethmann, President of Mofair.

“The success story that the competing railways have achieved in freight and passenger transport can and should be an incentive for politicians to take a close look at the reasons in light of DB’s poor balance sheets for years”, say the associations. When it comes to regional rail passenger transport, the value of competition is measured primarily by the massive expansion of services, they state. The market share of the competing railways in local rail transport is now well over 40 per cent. All of this despite adverse conditions caused by multiple crises, the dilapidated infrastructure and rising personnel, material and energy costs, Mofair – representing private passenger operators – and Die Güterbahnen – representing freight operators, note.

“The competition in regional rail transport has absolutely proven itself. In the quality rankings, the competing railways are still well ahead of the DB Regio, especially if they operate under old, directly awarded transport contracts”, says Martin Becker-Rethmann, President of Mofair. The numbers of quality rankings comparing DB to competitors are not stated in the report, however.

Despite being positive, Mofair thinks changes are also necessary. ”The awarding model must be readjusted: appropriate allocation of risks, more emphasis on quality and innovation in the awarding process, away from the reduction of transport companies to pure hired drivers.”

Market share DB Regio and other operators
The share of DB Regio and competitors in German regional passenger rail in September 2023, image: 8th Wettbewerber-Report Eisenbahnen

DB still dominates long-distance rail

While for regional transport the market share of DB competitors is gaining more and more ground, this is less the case for long-distance passenger transport. The Federal Network Agency, as the regulatory authority, reported a market share of 4 per cent for the 2019 timetable year for the companies besides DB Fernverkehr. It is also more complicated in comparison to short-distance transport, says the report. For example, the Mofair member RDC operates the German part of the night train between Berlin and Stockholm, which is marketed by the Swedish state railways SJ. The share of FlixTrain also remains small and its offer was reduced during the coronavirus pandemic, but the operator will expand its offer next year with 25 per cent more capacity.

The pro-competition associations hail examples of other countries in Europe, where more competition in long-distance rail is realised, such as Italy, Spain and now also France. “This had positive consequences for passengers: ticket prices are going down, services are increasing – something that “cooperation” between different state railways in cross-border transport has never been able to do so far.”

The main obstacle for new entrants in long-distance rail is the German track access charges, says the report. Operators have to pay these to the infrastructure manager to run trains over their tracks, and Germany has the highest charges in Europe, according to the report. Per kilometre, the costs for long-distance trains are stated at around €13,52 in Germany, compared to €9,77 in France and €1,42 in Austria for similar trains.

Next to high track access charges, the unclear path to the new nationwide integrated timetable, the Deutschlandtakt, makes potential donors hesitant to invest in a new fleet, says Becker-Rethmann. “And when it comes to ticket sales, the former monopolist Deutsche Bahn is hindering further progress for passengers. All of these are issues that the government coalition originally wanted to address, but that the Federal Ministry of Transport obviously no longer wants to address in this legislative period.”

Positive political developments for rail freight

Private competitors in rail freight transport have been able to further expand their market share compared to DB Cargo to 59 percent in 2022 over the last two years. Several political developments in Germany are positive for the railway sector, the association sees. “The truck toll amendment, which is due to take effect from December 2023, offers an excellent example of increased competition: it promotes true costs between the rail and road transport modes, reduces climate-damaging subsidies and ensures that the financing cycle of roads is dissolved and at the same time to strengthen the competitiveness of the previously neglected rail.”

“The success of the private freight railways has saved rail freight transport from insignificance”, comments Ludolf Kerkeling, CEO of Die GÜTERBAHNEN. “Quality and productivity are success factors that are too weak at DB Cargo in contrast to the private freight railways. The federal government should consider whether it should separate individual wagon traffic from the rest of the business in order to expose the lame DB excuse “Everything is based on single wagon traffic”.

DB Cargo shunting operations in Halle (Saale)
DB Cargo shunting operations in Halle (Saale). The freight operator has not had the largest market share in rail freight transport in Germany for a while, a trend that continued the last two years

Infrastructure reform

The report does not skimp on criticism of the integrated state-owned company Deutsche Bahn, which under the same umbrella manages both railway infrastructure through DB Netz and passenger and freight operations with other subsidiaries.

From January 1 2024, DB Netz AG and DB Station&Service AG will be merged to form a new infrastructure company, DB InfraGO AG. The GO in the company name stands for “oriented towards the common good”, the mission of the new company. Simultaneously, DB will renovate 40 heavily used routes by 2030 and expand them into high-performance corridors. This includes the entire infrastructure – from the switches to train stations and transport stations.

The government is making additional money available for this, 45 billion euros are promised by 2027. “There is an expectation that the DB will accelerate the renovation and, above all, the expansion of the network”, see the German rail organisations. However, they say the Federal Government has presented a hitherto “unambitious proposal” for the establishment of InfraGO, something they have “observed with astonishment” because two-thirds of the federal government coalition consists of parties that wanted to push ahead with decisive rail reform.

“The structural problems can only be solved through quantifiable targets and additional control by the federal government”, says Becker-Rethmann. “It’s not enough to hope for the umpteenth time that DB will get on the right path through more money alone.” The report therefore contains several chapters on the situation of the infrastructure, the structure of the DB Group and the expectations of the new ““InfraGO” company and its control.

Mofair also was one of the 8 signatories of a position paper demanding clear goals from the federal government about the InfraGO company. “The federal government must involve the Bundestag and establish legally binding central key figures that relate to very specific development goals” said the managing director of the Pro-Rail Alliance, Dirk Flege, on behalf of the eight associations.

“A reorganisation of financing is also crucial for this: the federal government must provide all the funds that InfraGO needs to fulfil its mandate, reliably and in a long-term plan, even beyond individual legislative periods. A fund solution like the one the Rail Acceleration Commission has already proposed is ideal for this.” The Rail Acceleration Law proposal, which aims to speed up rail infrastructure projects by lessening bureaucracy in the planning processes and simplifying financing, was recently adopted by the German Parliament, the Bundestag.

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Author: Esther Geerts

Former Editor RailTech.com

2 comments op “What is the state of railway competition in Germany?”

Joachim Falkenhagen|25.10.23|22:17

The denial of cheaper through-ticketing when passengers use a regional train for a section of their travel had posed a big hurdle to DB competitors. Today, the 49-Euro-Deutschlandticket makes an unfair competition for everything but high-speed travel, as it can be used on regional trains also for long distance travel. Cheaper standard fares for regional trains would be more helpful.

Anyway, most of the non-DB long distance travel is probably international, run by neighbor state’s incumbents.

Joachim Falkenhagen|25.10.23|22:19

Track access costs for long-distance trains in Germany depend on speed. On the few routes where speeds are about the same as on France’s LGV, costs are even higher.

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