Deutsche Bahn sells DB Schenker freight division to Danish giant DSV

Danish logistics company DSV has announced acquiring freight carrier DB Schenker from German rail company Deutsche Bahn for 14.3 billion euros.

The companies expect to complete the transaction next year. Once the deal is finalized, after the German government gives it the go-ahead, DSV will become the world’s largest freight forwarder.

One of the industry’s heavyweights

The Danish company, headquartered west of Copenhagen and currently the third largest in the industry, was founded in the 1970s by 10 Danish truckers and then grew through acquisitions.

DSV, which recently placed a mega-order of 300 Volvo electric trucks, has a reputation for integrating its acquisition targets well. DB Schenker has 72,700 employees in more than 130 countries.

DSV and DB Schenker, present in more than 90 countries, have a combined turnover of nearly 40 billion euros and some 147,000 employees. They will be among the industry’s heavyweights alongside DH, UPS, and FedEx groups.

Colossal debt for DB

State-owned Deutsche Bahn is facing financial difficulties. The sale of DB Schenker, the group’s most profitable business, should help reduce the rail company’s colossal debt of more than 30 billion euros and improve its financial sustainability.

German Transport Minister Volker Wissing welcomed the deal, saying the rail company should focus on its core business, especially passenger transport in the homeland. For the same reason, Deutsche Bahn also sold its subsidiary Arriva, which provides regional public transport in the Netherlands, among other countries.

With the money from the sale, Deutsche Bahn can further refurbish Germany’s neglected railroads: there are over 103 billion euros worth of overdue maintenance on its books.

The Danes also emphasize that they will invest 1 billion in Germany over the next three to five years and that the number of employees there will also grow during that time. However, the German services union Ver.di fears that 5,300 of Schenker’s 15,000 jobs in Germany will eventually be lost because DSV has a reputation for cutting jobs quickly after a takeover, although the deal is said to include a commitment to protect jobs until 2027.