DB Schenker Sale: Dog-eat-dog, so what?

The dust has not yet settled around “the logistics sale of the century” in which DSV has acquired DB Schenker from Deutsche Bahn for €14.3 billion ($15.8 billion). The close second in the bidding war CVC is still protesting the sale. German media are reporting that the railway and transport union EVG is planning to vote against the deal, and leading DB Schenker figures are already jumping ship.

The deal was confirmed on September 13 by both DB Schenker and DSV, who fended off competition from the CVC-led consortium. “With the acquisition we bring together two strong companies, creating a world-leading transport and logistics powerhouse that will benefit our employees, customers and shareholders,” Jens H. Lund, Group CEO, DSV said when confirming the deal.

But what is the aftermath of such a deal, should it receive all the necessary approvals? Who needs to fear, and who smiles confidently awaiting new client inquiries?

The battle for position

DB Schenker employees and management seem to be the ones on the chopping block, as “the transport and logistics powerhouse” enters a period of transition. Commenting on what comes next, Michael von Loesch, Executive Chairman at Qi World Networking, said, “Now follows the battle of the current management with the acquired management, in which the current management wins automatically.”

One of Germany’s largest worker unions Ver.di, who backed CVC in the process, expects some 5,300 jobs to be cut following DSVs win. The Danish juggernaut did make commitments to keep the job cuts between 1,600 and 1,900. This still means plenty of qualified workforce will hit the market soon.

In addition to workforce, clients will be looking for more efficient solutions. It is probably a perfect storm for smaller companies that can provide service with a personal touch. “Now, many clients are looking for more efficient solutions, and it’s a good wave for smaller companies that can offer higher personal service rather than treating clients as just numbers,” Jacob Ravn, VP, Agents and Network Relations at Comodality Group, commented.

So, is this “transport and logistics powerhouse” a threat or a welcome sight for small and medium-sized forwarders?

“I do not see this as a threat, more like an opportunity,” Thomas Vestergaard, Co-founder and CEO of the UPF Group said. Vestergaard has seen such a cycle happen previously, with his company benefiting from a recent acquisition of Martin Bencher by Maersk. “The Martin Bencher case has been great for us,” he said briefly.

Survival of the flexible

Von Loesch added that small and medium-sized freight forwarders have survived similar scenarios due to their flexibility, communication advantage and adaptability to the market. “The big ones, as expected and surely not unique to just the logistics industry, just take an extra few steps to move “their machine”. As long as that parameter doesn’t change, I don’t see the S/M forwarders going away,” he said.

Large companies often stick their chest out when talking about seamless processes and automation offering advantages to their clients unmatched by other players in the market. “That just means that when I call to resolve an urgent issue, I am directed to an automated response system,” says Peio Bastida, Managing Director of Euroamericas.

Van Loesch adds that shippers always ask for automation, but the story is completely different when it comes to the number of times they used it. “When I am a logistics manager at a manufacturing site and organise some meaningful cargo for the company, would I entrust that process to the “automated response system” or a forwarder who answers the phone and directly answers the questions I have,” he stressed.

“We take pride in the fact that when you call us, it is a person answering, and not a machine,” Bastida stresses. He repeated his answer on the sidelines of the recently held Project Cargo Summit in Bilbao, adding that the position of a small freight forwarder is still secure.

Shifting workforce

So if the small and medium freight forwarders don’t have too much to fear, what happens with the workforce that will imminently be departing DB Schenker?

“In the logistics industry, this wave always opens up opportunities for people seeking a career path in a people-focused business model rather than being just an employee number,” Ravn adds.

It seems that the switch is already beginning, with Natco AG, a Trans Global Projects Group company, bringing Antonio Secreti to its ranks. Bringing over 20 years of experience in logistics, Secreti recently led the Ocean freight export and Projects department at Schenker.

Many more similar appointments can be expected in the future. However, Frankfurter Allgemeine Zeitung reports that the railway and transport union EVG is doing its utmost to stop the deal and prevent the job cuts at DB Schenker. The union has the voting right as part of the Deutsche Bahn supervisory board, however, it is highly unlikely its vote against the deal will have much impact unless it convinces other members of the board to swing their way.

CVC’s failed appeal

CVC has also attempted to stop the deal before it is confirmed by the supervisory board by lodging an appeal to Deutsche Bahn, the parent company of DB Schenker. However, Deutsche Bahn said in a media release that the tendering process was non-discriminatory for all participants and that indeed, DSV’s offer on August 22, 2024, was by far the highest, and that a subsequent increase in offer price, which was made “in a permissible manner after August 22, 2024,” did not change the ranking of the bids.

“The evaluation of the binding offers resulted in a clear ranking. This is why DB was only allowed to sell its logistics subsidiary DB Schenker to DSV. A sale to CVC, on the other hand, would have been illegal on the basis of the submitted offer,” Deutsche Bahn said in its response.

The company added that it had submitted the report filed by CVC to its legal advisors for review on September 26. “The legal advisors commissioned by DB have come to the conclusion that the report incorrectly mixes EU state aid law and procurement law requirements and incorrectly assesses economic facts, thus reaching incorrect conclusions.”

So the deal is set to go through, and a “transport and logistics powerhouse” is being formed. One big player has bought out its competitor out of the race, and it is up to small and medium freight forwarders to wave the flag of free competition.