“Transportation Matters”
The CEO Podcast of Daimler Trucks & Buses
Welcome to our new episode of Transportation Matters.
My name is Martin Daum. I’m the CEO of Daimler Trucks and Buses.
I hope you’re all well and healthy.
I’m delighted to welcome you back to another of our podcast episodes.
Our topic today is the transport of the future.
There’s no doubt that the volume of transport will continue to grow, both globally and in Europe.
So it’s also clear that we need two things in order to sustainably and efficiently cope with this increasing volume:
we need strong road freight and strong rail freight transport services.
That’s why I’m pleased that today we have road and rail, trucks and trains joined together at one table.
I'm delighted to welcome Sigrid Nikutta here today.
Since January this year she has been an Executive Board member of German Railways - Deutsche Bahn.
She’s responsible for the goods transport department and is the chairman of DB Cargo.
Before that, she ran Berliner Verkehrsbetriebe, Germany’s biggest local transport company.
Ms Nikutta, welcome to our podcast. Thank you so much for joining us today.
Sigrid Nikutta: Thank you, Mr Daum! I'm looking forward to our podcast here together.
Martin Daum: What did you think when I contacted you and said as a truck manufacturer I’d like to chat with Deutsche Bahn.
Was it... I’m about to step into the lion’s den.
I know you’re very active in the initiative “pro-rail”. And your opponent is most likely the truck on the road.
Sigrid Nikutta: Mr Daum, to be honest, I wasn’t at all surprised.
You said it yourself in your introduction. Both are important!
The railroad is important, and I would always put it first, but obviously road transport is important too.
And I firmly believe that we both have to work to ensure that
the most environmentally friendly way of transport is chosen for the respective freight.
And that could mean one or both.
It’s not a case of either-or. Both will have great legitimacy in an expanding transport market.
Martin Daum: Looking over the transport market in the long term, it seems 
the balance between road and rail hasn’t really changed at all through the ages.
You’ve invested a lot, we’ve invested a lot. The total volume of goods has increased. That means we have both expanded over time.
But the balance between road and rail has hardly changed. What is the reason for that?
Sigrid Nikutta: Yes, hardly changed... it always depends when you’re looking at it.
If you go back, say to 1950, it’s quite clear: in 1950 most goods were transported by rail, today most are transported by road.
Rail only accounts for around 18 per cent of freight transport in Germany at the moment. 
Inland waterways have six per cent and the rest goes by truck.
And that figure has remained stable in recent years.
Why is that so? In the 70s there was massive investment in making everything car-friendly or truck-friendly.
Everyone was concentrating on the advantages of the road. The environment wasn’t really an important factor then.
Nor were traffic jams and suchlike.
It’s only now that attitudes are changing. And for some time that change has been political.
But it hasn’t yet manifested itself in a change in traffic patterns. That needs to be stated quite clearly.
I think it will take a really big effort if we’re seriously going 
to shift more transport onto the railroad. And not just in glossy brochures.
In my opinion there’s no alternative to moving more goods by rail 
because the volume is going to increase. 
That means more has to go by rail, more by ship. And more will go by road in any case.
And what if we don’t want to build any new highways?
I don’t think many people in Germany want that.
Then we’re going to have to accept that we’ll be transporting much more by rail again.
Martin Daum: I have absolutely no problem with that. 
My view on that is: I’m only a supplier of trucks for the freight forwarding business.
I know that our customers’ decisions are always very much driven by efficiency.
Our customers offer freight transport and that’s a business, that’s really tough 
because the difference between sales and costs really only comes down to a matter of a few cents per kilometer.
And they’re looking for the solution that’s best for them.
At the moment, it’s often the truck that wins over the train, as you said yourself.
That means it’s cost-effective to use trucks. And the time issue also plays a key role for customers.
How is Deutsche Bahn reacting to that? What feedback are you getting? 
Sigrid Nikutta: You mentioned it yourself. It’s a really tough market. 
The environmental aspect of the railroad should be paramount.
But it often isn’t, because compared with road transport, rail is still more expensive.
How is that possible?
The railroad basically has to meet all the costs itself
whereas with the roads there’s a big share of the costs that we all pay for through various charges, etc.
And even the truck toll only covers a small proportion of it.
Martin Daum: But one principle at least of the toll is that the proportion
of all road traffic that goods transport makes up, pays the toll.
While goods transport then uses roads which are also there for private transport.
But I’m also thinking of a second point, one that’s a shortcoming of the railroad. You mentioned it earlier.
Below 100 km, obviously that’s local transport.
At 400 to 1000 kilometers things start to get more interesting, really interesting.
I’m very familiar with this from my second area of activity in the US,
where east-west transportation covers 3000 to 4000 km, and where almost all container traffic goes by rail.
This genuinely long-distance freight traffic covering thousands of kilometers 
often fails in Europe because we have a lot of borders along the way.
And in my view I think the railroad is still perceived as a national topic. 
How far have you gone into the issue of European transport?
Sigrid Nikutta: The coronavirus has just made it apparent, Mr Daum.
While we were watching TV pictures of traffic jams stretching back for miles at the borders,
the trains kept rolling throughout Europe with barely any restriction.
Our longest trains at the moment go as far as central China, around 10,000 kilometers.
And they too have been traveling without any restrictions.
In other words, the great strength of the railroad, which we’re now continuously developing,
is the European and international corridors, these really long routes across the whole of Europe.
Martin Daum: The big thing in our industry now is the Paris climate agreement, 
and at Daimler we're completely committed to it.
The Paris agreement means we have to limit global warming to 1.5 degrees Celsius by 2050.
In other words, we will have to have reduced CO2 emissions to near zero
by 2050 in those areas where we can.
And freight transport is definitely one of them. Air transport is much more difficult 
to fix than terrestrial freight transport.
So at Daimler we said to ourselves, a truck has a lifespan of at least ten years.
What we want to achieve is actually to have to sell our last diesel vehicle 
in 2040 and from then only sell CO2-free trucks.
I’ll go through this in a bit more detail, because there are further consequences.
We can’t start with this in 2039, we have to start much sooner.
Our customers have too, above all. We can’t force this on our customers
– the customer has to be able to make money.
If the customer can’t make money with CO2-free trucks he’ll go on using diesel.
We use diesel at the moment because it’s far and away the most efficient way
to transport goods at the moment.
That’s why I’m a very keen advocate of a CO2-based toll,
but also a keen advocate for us as an industry to offer attractive options
for CO2-free vehicles, powered either by battery or fuel cells.
How are things at Deutsche Bahn? You’ve been electric-powered for ages.
Sigrid Nikutta: Absolutely, for ages. 
Martin Daum: But how do you ensure that the power that comes out of your sockets
is green and not generated from burning coal,
which as far as I’m concerned is totally up there with diesel?
Sigrid Nikutta: I think the strategy you’re following with Daimler is really good,
because I think that’s what we have to aim at.
And putting a price on CO2 emissions is without a doubt the right instrument to achieve that. 
This is also part of the issue of moving from road to rail transport.
If road transport is so much cheaper, then the calculation is simply an economic one.
And I can only change that if I take the real emissions into consideration in that calculation.
At Deutsche Bahn we are moving towards being completely green.
So this issue of obtaining electricity from truly regenerative sources is top of our agenda.
And we offer it to every customer.
Now Daimler also really has to guarantee more or less exclusively to their customers
that the transportation effected by them, the customers, only uses CO2-free electricity.
Thankfully, more and more customers are buying into it. 
And that’s exactly the right way to get the issue noticed.
I would like to use only completely green energy,
and the customers also have to want it too.
Martin Daum: But wanting it means they’ll also have to pay for it at the end of the day.
Because green energy...
Sigird Nikutta: …is more expensive than other forms at the moment.
There is a small premium,
because as you said, rail freight is also a business
 which doesn’t have the sort of margins that let you splash out on anything and everything.
In fact, the current economic situation at DB Cargo is incredibly tight.
Even more so thanks to coronavirus.
And that’s why it’s so important to have this discussion with the customers here.
But it’s true, I notice it, I sense it, a much greater willingness to talk about rail transport again.
For a long time, decades almost, it was the in-thing to talk about access for trucks,
access to the highway from industrial areas, but not about access to the railroad.
That was the period when freight transport stations, 
in other words the places where a train could actually roll right into the factory 
or into an industrial zone, have been decommissioned on a massive scale.
That really was the spirit of the times.
Now things are changing.
We’re talking about new access points to the railroad again.
And technology is also helping us with this.
You can drive a truck a certain distance and then quite easily switch to the railroad.
You don’t always need you own sidings or a big terminal.
There are good opportunities for collaboration between truck and rail transport there too.
And obviously my dream is that in the foreseeable future it will be cost-effective for the freight forwarder to say:
"I’ll collect the goods by truck and bring them to a distribution point."
And they’ll be moved on by rail from there. The long run, the 1000-kilometer or 2000-kilometer stretch,
will be covered by rail and the final delivery to the end customer will be by truck again.
Martin Daum: Ultimatly, that really is a case of letting the customer decide. 
And we’ll have to be prepared for that. We’ll obviously have to adapt our engine sizes
and our cab design accordingly. But we are extremely flexible with that.
On the other hand there’s the issue for us of zero CO2 emissions, 
which I think technically will come relatively soon with the production of fuel cell
as well as battery electric drive systems.
So we’re getting into CO2-free transportation in that way too, 
but it will be considerably more expensive.
So when you say it will get somewhat more expensive for the railroad,
we would have to delete the word “somewhat” where trucks are concerned.
Purchasing costs will be considerably more expensive.
And if we’re talking about hydrogen, probably also as a fuel, then they’ll be as high as diesel.
Then there’s the question how legislation will come in to regulate all of this.
Martin Daum: Now Deutsche Bahn’s other subsidiary DB Schenker is one of our major customers, of course.
How do you at DB Cargo work with DB Schenker? 
Sigrid Nikutta: Mr Daum, that’s a good question. I often get asked whether we are biased with them.
We are not, we work together when we, as a rail logistics company, also happen to need truck transportation.
And as I’ve just explained, that is certainly the case. We collaborate very closely then.
We also work closely together outside Germany, when we want
to establish customer relationships or integrate logistics services.
But if it was a question of whether to transport freight over long distances by road or rail,
then I’d make it perfectly clear: I would only ever do it by rail.
Martin Daum: Yes, sure, as you said. The advantage will probably be
that you are better prepared than many companies
 to offer intermodal services like that from a single source.
Sigrid Nikutta: And I think that this combination is an amazing strength of ours. 
You can have the best of both worlds, so to speak.
But let me put it bluntly as always: Having the best of both worlds 
does mean that you always have to go from road to rail and rail to road.
This loading process has to be well organized and in terms of cost 
it mustn’t end up making it cheaper to do the entire tour by truck.
I don’t gain anything from that. 
So again I have to be able to cost it up so the freight forwarder also says:
"I like that because it’s all the same to me plus it protects the environment."
Martin Daum: However, you’ll have to accept tough competition from our side.
Because we’ll be doing everything we can to make sure road transport remains the most cost-effective way
and is completely CO2-free, which will be a tough challenge.
And then we have the second big argument in favor of the railroad,
namely the terrible congestion on our highways.
Sometimes the whole right-hand lane is just one truck after another.
On that I would say that digitization can be an important approach to relieving this congestion,
by having trucks on the roads at times when the passenger car traffic isn’t there.
When you can have trucks drive with greater levels of automation.
So there are lots of visionary ideas about what truck technology can do 
in the next ten or fifteen years.
How would the DB Cargo like to respond to that?
Sigrid Nikutta: I just had to smile at that. I think it’s great that the truck industry is having visionary ideas.
And I think it’s even better that the railroad had these ideas over 180 years ago, as it happens.
The idea of traveling in succession, as it were – in railroad speak we talk about block sections. 
I don’t know what you’d call it for trucks. This has been around for ages on the railroad.
Nevertheless, the situation on the roads is obvious: 
the right-hand lane is always full and the middle lane too, sometimes.
If the increase in freight traffic continues it will be almost impossible to model this 
or only manageable with great difficulty. 
People’s acceptance of this is declining as it is for trucks in inner city and suchlike.
I know that from the situation here in Berlin, 
where we have many intense discussions about it.
How many trucks do we actually want in this city?
I think these arguments will shift more and more in favor of rail transport.
Ultimately I’m very optimistic that we’ll have both, but a much stronger railroad network
and automated trucks would definitely be a solution.
Personally I find electrified highways a very difficult concept, 
as I say that the money you could put into electrifying the highways
could just as well go into developing the railroad network.
We already have a system and it works well.
But ultimately I think in 20 or 30 years we’ll see that both sectors have evolved.
And the important thing is to have reached an environmentally friendly 
joint approach by that point.
Martin Daum: Now it was my turn to grin when you mentioned electrifying the highways.
To my mind, an electrified highway is what I call a railway,
because what you get then is exactly the same disadvantage as with rail travel 
– the inflexibility, being tied to the predetermined routes.
The great advantage of individual transport is 
that there are many more roads than railroad tracks.
To me, it would be a waste of economic resources to electrify a highway.
Sigrid Nikutta: That’s something we can agree on.
Martin Daum: We can agree 100% on that.
If we are to develop a CO2-free solution it must be unrestricted 
because we’ve already got a CO2-free solution for fixed traffic routes.
As we have the railroad, and the railroad is the far better solution in that respect, 
it makes more sense to expand the existing tracks.
That investment in infrastructure is something I would gladly give to the railroad.
I would then rather invest in charging stations at service areas
or full coverage of hydrogen filling stations across Europe. 
That is our solution to this problem.
Sigrid Nikutta: Hydrogen is to some extent a solution for non-electrified sections of the local railroad network, for example.
We do have hydrogen solutions in the rail industry that work quite well.
But the hydrogen has to get to the service stations. How would you get it there?
Martin Daum: It’s the same as delivering diesel today, either by tanker truck or pipeline.
That’s not primarily a job for the automotive OEMs, it’s one for the oil companies, which also need a CO2-free future.
They already have a comprehensive infrastructure, from the large-scale industrial production of hydrogen 
through to a whole pipeline distribution system to the end consumer at the filling station.
Now you might say, road or rail would be easier, because as professional customers 
we don’t need the full extent of the coverage right down to every little village.
But it’s still a massive investment, at least as big as the one we will have to make 
to put it in a series production vehicle with regard to technology.
Sigrid Nikutta: Then you’ve got a whole new infrastructure to put together,
that will be necessary for that. We already have most of the infrastructure with Deutsche Bahn.
We have the electrified network, the marshaling yards, the sidings. In other words, 
we have an existing system that’s usable.
So I think that goods transport, rail freight transport, is well equipped for the 
transformation ahead and we can make an important contribution to it.
With the emphasis on an important contribution.
But ultimately both sectors have to function properly to achieve zero CO2 emissions,
 you need CO2-free road transport as much as you need CO2 rail transport.
Martin Daum: Absolutely. The second big buzzword in both our industries, applying to you as much as it does to us, is digitization.
If you were to ask an average student about digital companies I don’t suppose that either Deutsche Bahn or Daimler Trucks would be near the top of the list.
Nevertheless, there is a lot going on in digitization in our company and I expect it is the same with you, right?
Sigrid Nikutta: Yes, it’s a pity really that we’re not higher on the list. I expect that is going to change a bit. 
If the digital natives are looking for secure jobs they will start taking notice of us again, both Deutsche Bahn and Daimler.
For us, digitization is one of the keys. 
Deutsche Bahn has been around for 186 years and so have some of its technologies.
That sounds funny, but in practice it’s not, of course, 
because we can now make real quantum leaps in railroad technology with digitization.
Let’s start with safety technology for trains, for example 
– how do I make sure rail travel is really safe? How do I manage that? 
Well, trains always travel at a certain distance behind the one in front so nothing can happen.
And I have specified that distance for the route. I’ve aways got fixed sections 
and only one train can travel on each one at a time.
That’s how it’s been since the very start. Now of course, trains can communicate with each other.
One can tell me what time it set off. And when the next train can follow.
 I can have a greater density of trains on the network.
I can get the freight cars to talk to each other,
intelligent freight cars that more or less automatically announce their content and the 
temperature of the goods before they arrive, 
so that they can be integrated seamlessly into the customer’s logistics process.
I can hook my systems up to those of my customers so that the product is effectively collected automatically as soon as it’s finished.
And that sort of thing. I can make incredible leaps, all the way 
to whatever you care to imagine.
No doubt you’re also doing things with autonomous driving.
And the great thing for us is having aspects of digitization. 
You also have the practical application straight away 
and can see what it means in reality.
Martin Daum: And that works, because we’re on parallel journeys, always with one eye on the customer, of course.
We call them end-to-end processes, fitting seamlessly into the customer’s systems 
so they always know where the goods are and from the point of collection 
through to unloading the truck is transmitting and receiving data.
Looking ahead – when will the goods arrive?
Autonomous driving – a really important subject for us, including the safety aspects.
What I say is that the preliminary stage of autonomous driving 
is supporting the driver to prevent accidents as far as possible.
And it doesn’t happen often and as you said, your system’s been well monitored electronically for many years now.
We need to catch up there. But the electronics are a great help in that.
But I'm thinking of the collaboration too. And it's true, what you were saying before about intermodal transport, 
with trucks for short distances and the train for long ones 
– that really close networking is really, really important there.
Sigrid Nikutta: I believe we are on parallel journeys 
and driver support systems are also a massive safety issue that we’re seeing especially in towns now. That’s why this is so important.
Martin Daum: The thought we keep coming back to in company groups is: 
how do we achieve a culture like that, which is important for producing software, 
which is now more about trial and error?
What’s it like at Deutsche Bahn? Are there clashes of culture or how do you change that?
Sigrid Nikutta: Naturally we also have a very strongly engineer-oriented railroad culture. 
Engineer-oriented isn’t meant to sound negative, it’s a positive thing.
But as always seems to be the case, this research topic, 
this development topic was the same. It’s in the DNA of Deutsche Bahn.
So with IT it’s not really any different. What is different is this trial and error idea. 
Because the railroad industry doesn’t do trial and error.
At Deutsche Bahn you only try it when it’s really, really safe. 
It’s never a case of trial and error, because the error would be dangerous.
That’s a bit different. There are sometimes cultural differences
of course that come up in discussions, and it’s very, very exciting 
because ultimately we somehow have to find a way of trying out new IT solutions in 
the real world of the railroad.
So we have test sites. We have a big research center in Minden, our technology center.
At Cargo we have a small digital lab in Frankfurt, where they do exactly that: 
simulate what the effects would be in the real world of the railroad.
And that’s what I meant, what makes it so exciting.
With us you can simulate directly what would happen in practice 
and then actually try things out in practice when you’ve shown they’re safe.
Martin Daum: And I think perhaps you do have to make a distinction. And you addressed one point.
For us, when we’re dealing with safety issues, when we’re dealing with emission levels 
we do have to have that degree of accuracy and therefore the longer development cycles.
Whereas for things that are to do with processes, transactions, collaboration with customers,
 then we just have to be more flexible and have much quicker cycles.
 And I really like the direction things are taking in your company as well as in ours.
Martin Daum: Ms Nikutta, it was a great pleasure talking to you. Thank you very much indeed.
I wish Deutsche Bahn all the best, I really do, because I think there will be so many goods to transport in the future 
that there will be plenty for us to be able to work together well.
Sigrid Nikutta: Thank you very much, Mr Daum.
I wish you the same for your truck business and for the bus business too,
a former passion of mine, and of course a successful and swift transition to emission-free transport.
Martin Daum: Thank you very much.
That was “Transportation Matters”, the CEO’s Podcast from Daimler Trucks & Buses.
If you enjoyed this episode, please share it and follow Transportation Matters on the podcast platform of your choice.
Press the “Follow” or “Subscribe” button next to the name of the podcast.
Our next episode will be out on Wednesday, September 2.
Martin Daum will be talking to Claudia Nemat.
She is an Executive Board member at Deutsche Telekom, where she is responsible for Technology and Innovation.
In the meantime, have a listen to the Daimler Podcast Headlines. 
Here Daimler employees give unique insights into their working lives.
