Train Strike Off the Rails

The record train strike in Germany this weekend halts rail freight, hitting the backbone of the German economy, small- and mid-sized companies, hard.
Car transports put on hold by Germany's train strike.

Claus Weselsky, chairman of the German Train Drivers Union, is absolutely convinced the strikes against the German railway company Deutsche Bahn (DB) serve a just cause. He fancies himself an advocate of the little man against the mighty and powerful.

Since Wednesday afternoon, when the strikes began, the reality looks far different. It is the powerless who will be hit hardest by the strikes in freight and commuter rail transport, which are supposed to continue until Monday.

“Whoever has a small business will hardly be able to deliver in the coming days,” said Gunnar Gburek of the German industry association for materials management, purchasing and logistics (BME). “There will be a loss in production and the assembly lines will come to a stop.”

There are two reasons for small- and mid-sized companies to worry.

First, the largest customers have priority with Deutsche Bahn, though the railway’s press office has withdrawn the statement that DB will definitely be serving its 80 largest customers regardless of the strike. During the last work stoppage, the railway did everything possible to get BMW’s exports to China and Volkswagen’s to Russia across the German border as quickly as possible. After all, they didn’t want to upset their biggest customers.

Second, small- and mid-sized customers will also get the short end of the stick with the alternative form of transportation – trucks. “At the moment, companies with huge buying power are reserving as much capacity as possible,” said Mr. Gburek, noting that things will get tighter for smaller firms.

Even suppliers who snatch sufficient rental vehicles will face significant difficulties. There’s an acute lack of truck drivers in Germany, largely because the military hardly trains heavy vehicle chauffeurs anymore, while drivers are required to renew their certification annually. Without certification, a driver is lost to the reserve pool.

Additionally, the volume of freight to be shifted to the roads is enormous. The coal industry transports over 60 percent of its production by rail, and so does the auto industry.

What is happening now at Deutsche Bahn is poison to Germany as a business location. Achim Dercks, Deputy managing director of the German Chambers of Industry and Commerce (DIHK)

Even after two days of the lengthy five-day strike, production supervisors and car industry suppliers are likely to have a headache. Automakers demand a penalty for non-performance of €200,000 ($250,000) for each hour production lines stand still due to a lack of parts.

Although carmakers such as BMW proved to be generally accommodating and fair during the last strike – trying not to thrust smaller firms into bankruptcy – companies still face unpleasant consequences. Those who don’t deliver on time see their suppliers’ rating downgraded. If it happens again, they can lose their customers.

The Deutsche Bahn strikes are also affecting the chemical industry, wich transports an estimated 30 percent of its cargo by train, and steel companies, which deliver 20 percent of their products by rail. Thirty-six percent of all coal shipped in Germany is freighted by rail with some coal-fired power plants supplied entirely by the railway.

The influx of imports through the Hamburg harbor threatens to stall as well. Every third shipping is sent from the harbor to its destination by rail. “What is happening now at Deutsche Bahn is poison to Germany as a business location,” said Achim Dercks, deputy managing director of the German Chambers of Industry and Commerce (DIHK).

Compared to previous strikes, the Deutsche Bahn at least has one bright spot. The new European control center at the Frankfurt airport allows for considerably more efficient crisis management. In addition, the company has assembled a team that’s been preparing for the strike, according to sources at the logistics subsidiary, Schenker.

A small consolation is that even if all GDL train drivers strike, thousands remain to keep alternative ways of transportation moving. Of Deutsche Bahn’s 20,000 active conductors, some 4,000 were previously with the old federal railway and therefore are civil servants, which means they’re forbidden to strike. Another 5,000 drivers belong to the rival railway and transportation union, EVG. This means any strike by GDL will idle only about 10,000 to 11,000 conductors, and the DB insists only half of all freight trains will be cancelled.

Meanwhile, competing private rail freight companies covering a third of the German market are rolling as usual. “We are registering some spontaneous queries from customers,” said Frank Lehner, chief sales and marketing officer at TX Logistik, adding the company is currently checking on the availability of trains on short notice for those enquiries. So far, he said, Deutsche Bahn hasn’t asked TX Logistik for help.

Still, it’s uncertain whether there will be no disruptions on the rails.

“Our train drivers are not joining the strike,” said a source at Enercon, a wind turbine manufacturer that manages its own railway company. “But we are concerned that our rail traffic will be hampered by the strike at Deutsche Bahn.”

With so many trains standing idle on the tracks, rail traffic will be hindered, said Ingo Hodea of the German Association of Freight Forwarding and Logistics (DSLV). “Private railway operating companies will only be able to work to a limited degree.”

Even when the strike ends Monday, the bad news will not. A spokesperson for Deutsche Bahn said: “With the last strike, it took two to three days until everything was running smoothly again.”

 

Dieter Fockenbrock is the chief companies and markets correspondent at Handelsblatt. Christoph Schlautmann writes on logistics for Handelsblatt in Düsseldorf. To contact the authors: f[email protected] and [email protected].