Railway strike in Germany threatens new bottlenecks for businesses | Business | Economic and financial news from a German point of view | DW


The German train drivers’ union GDL has been criticized for calling for a second two-day strike from Monday, just days after the latest walkout caused misery for millions of rail travelers.

Only 25% of long-distance rail services from rail operator Deutsche Bahn (DB) will operate until Wednesday; regional rail services will only run 40% of their regular schedule.

A strike by freight drivers began on Saturday and will also last until Wednesday.

What will be the economic impact?

The walkouts come as the country reeling from the COVID-19 pandemic. The first walkout earlier this month left much of the rail network paralyzed at a time when many employees were returning to the office after working remotely for months.

The second strike is expected to have an even wider economic impact, as the freight drivers’ action will last four days and hit supply chains harder.

DB typically transports around 1 million tonnes of goods per day, or around 43% of all goods carried by rail. Economists have calculated that the strikes cost the German economy up to 100 million euros ($ 117 million) per day.

DB also faces the prospect of further loss of passenger and freight traffic in the fourth wave of the pandemic expected this fall.

Deutsche Bahn’s long-distance rail services have been hit hard by the COVID-19 pandemic

Why now is not the best time for the industry

Industry and logistics associations notably criticized the freight strike.

They say supply chains are already strained due to staff shortages caused by the pandemic. The walkout is also likely to exacerbate import delays caused by massive congestion at container ports around the world.

Due to bottlenecks, the German industrial sector is struggling to source the raw materials and parts needed to manufacture vehicles and machinery.

The country’s retail sector is also affected, with shortages of many imported products reported.

“All [other] mode of transport is totally overbooked and prices are skyrocketing, ”said Carsten Knauer of the Association for Supply Chain Management, Procurement and Logistics (BME). “It is practically impossible in the short term to move traffic on the road. “

Last week, a survey of 3,000 companies by German Chambers of Commerce and Industry DIHK found that 83% of companies were concerned about price increases or supply chain bottlenecks for raw materials, intermediate products and goods.

The logistics industry is keen to avoid a repeat of the long rail strikes seen in 2014/15 which left the rail freight industry crippled both in Germany and across Europe.

The Institute for German Economics (IW Köln) predicts that the chemicals, automotive and steel sectors, which rely heavily on rail freight, would be hit the hardest this time around.

An empty railway platform

Strike cut more than three quarters of high-speed rail services

Why now is not the best time for Deutsche Bahn

The drop in passenger numbers at the height of COVID-19 lockdowns has left the national rail operator with heavy losses.

DB’s losses reached 2.9 billion euros in 2020 and 1.4 billion euros for the first half of this year. As a result, the company was forced to seek a € 500 million bailout from the German government.

DB’s long-haul rail business was hit the hardest, while the company’s freight subsidiary, DB cargo, saw total freight carried fall more than 8% from 2019.

DB’s finances are also strained due to a commitment to huge rail infrastructure upgrades. Last year, net investments rose 4.3% to 5.9 billion euros. That figure is expected to be even higher this year, according to the company.

Several parts of the railway infrastructure were destroyed or several damaged by the unprecedented flooding of the last month, adding further to the financial pressure on DB.

What does the GDL union want?

GDL is asking for a 3.2% salary increase this year and next, as well as a coronavirus bonus of € 600.

The rail company wants to split the wage hike into two parts, with 1.5% paid in January next year and 1.7% in March 2023.

The dispute also revolves around pay rates, the duration of current pay rates and pensions.

How long could strikes last?

Although DB said over the weekend that it was ready to make concessions, these were rejected by GDL, which carried out the second walkout.

The 2014/15 strikes extended to nine rounds, with a full week’s walkout, a record for DB.

“GDL is used to being tough,” said DW business correspondent Chelsea Delaney. “We could definitely see this [strike] go further if Deutsche Bahn does not give in to the demands. “


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