Rail Corridor Asia - Europe Challenges of International Logistics

Deutsche Bahn AG | Uwe Leuschner | DB Cargo AG | Odessa | 08 September 2017 With its eight business1 units DB is active in all segments of the transport market

Passenger Transport: Transportation and Logistics: Infrastructure: Domestic and European-wide mobility Intelligent logistics services via land, Efficient and future-oriented rail infrastructure services air and the sea in Germany

 DB Long Distance  DB Cargo  DB Netze Track Long-distance rail pass. transport2 European rail freight transport Rail network  DB Regional  DB Schenker  DB Netze Stations Regional/urban pass. transport (GER) Global logistics services Traffic stations  DB  DB Netze Energy Regional/urban pass. transport (EU)3 Traction current

1 The former business unit has been dissoluted and its activities assigned to different divisions; 2 Within Germany as well as cross border traffic; 3 In UK with Arriva-affiliate ‘CrossCountry’ also long-distance passenger transport; 2 AG | Uwe Leuschner | DB Cargo AG | Odessa | 08 September 2017 DB Cargo offers its customers a comprehensive European network with its close connection to partners 1520 DB Cargo Your personal performance: Over 30.000 employees in 16 country- DB Cargo UK DB Cargo Scandinavia organizations Doncaster Tåstrup in Europe DB Cargo Polska DB Cargo Russija DB Cargo Nederland RBH Logistics Zabrze Moscow are at your service Utrecht Gladbeck RBH LogisticsMEG COBRA DB Cargo Czechia Schkopau Brussels DB Cargo DE MEG Ostrava ECR France Mainz DB Cargo Hungaria DB Cargo1 Paris Györ DB Cargo Schweiz Frankfurt DB Cargo Romania Glattbrugg Bucharest DB Cargo Italia Transfesa Milan Madrid DB Cargo Bulgaria DB Pirdop Abu Dhabi

1 European Headquarter 3 Deutsche Bahn AG | Uwe Leuschner | DB Cargo AG | Odessa | 08 September 2017 Cooperation between DB and Eurasian Partners is customer oriented on different levels based on diverse products

Product character Volume distribution on European network by DB Cargo

Container A. Block trains Transport B. Wagon groups - volumes brought by partners C. Single Wagon Load Mamonowo / Brenievo Conventional Rail Transport Brest / Malaszewice

Oversized Shipments

Newest crossborder point with 1520

Final door to door services offered by DB Schenker

4 Deutsche Bahn AG | Uwe Leuschner | DB Cargo AG | Odessa | 08 September 2017 Since 2011 DB offers weekly container train services together with international partners ILLUSTRATIVE

RU

UK PL BY DE CZ UA KAZ FR MN RO ES TR TM KR JP Northern route CN Southern route IR no Tested routes Short Sea connected Gauge change (1435/1520/1668) Regular services Tested services

5 Deutsche Bahn AG | Uwe Leuschner | DB Cargo AG | Odessa | 08 September 2017 Challenges of international logistics are a good team work between many market players: DB is present on all levels

Europe (D/PL) Transit (BY/RUS/KAZ/MNG) China

Customer Consigners (industrial companies)

Forwarder DB Schenker Logistics / DB Cargo Logistics / TEL / DHL / Panalpina / K&N / GEFCO / Hellmann/… Logistics WAE, YXO, ZZLP, Minsheng (u.a.) platforms Operator TEL / FELB / InterRail / Belintertrans (u.a.)

Carrier DB Cargo / PKP (u.a.) BC, RZD, KTZ, Eurosib, LG (u.a.) CR (CRIMT)

6 Deutsche Bahn AG | Uwe Leuschner | DB Cargo AG | Odessa | 08 September 2017 On Southern routes, the same success factors and expectations are highlighted by stakeholders –A bigger gap will have to be closed Success factors on Southern routes

Operators are open for Southernroutes…

To bypass capacity or When they offer a compe- To target new O/Ds or goods political constraints of 1 titive service level and price 2 along theroutes 3Northernroutes

> Operators and shippers named > More potential is seen for new > Important factor of Southern routes same success factors as for O/Ds along the routes (Central is the ability to bypass potential Northernroutes Asia, Iran, Turkey and constraints on one/some routes, > Southern routes face challenges connections to Southern Asia) making shippers more flexible concerning time, reliability and that offer new markets > Examples are constraints for price through many border > For this traffic, rail has a stronger goods transported e.g. fresh food crossings and/or transport mode competition from truck and or dangerous goods changes short/deep sea transport in > Development for this reason is > Southern routes need high comparison to existing Eurasian probable due to strong political efficiency gains to fulfill client rail cargotransport will requirements leading to low expectations of shippers for Asia- Europetransports

Source: Expert interviews, Roland Berger Southern routes' share of the traffic potential for 2027 is projected to reach 19,000 TEU corresponding to 3% of Eurasian rail traffic Trade volume distribution 2027 ['000 TEU] Methodology > Countries identified as preferred partners for Eurasian rail freight through Southern Routes: Bulgaria, Greece, Romania, > Calculated share of 3% of forecasted EU 28 GDP for 2027 617 Preconditions for upside expansion case > Higher infrastructure capacity is needed to make Eurasian rail freight possible in bigger quantities and requires 19 further investments on Southernroutes > Shorter transit times as well as lower rail prices for international transit is necessary to make Southern Routes competitive, especially in Turkey, and requires a clear politicalwill

Origin and destination (O/D) countries

Source: Oxford Economics Global Economic Database, Roland Berger The traffic on the Southern routes would reach 389,000 TEU, if other expected international traffic is accounted for asupside

Upside scenarios 2027 ['000 TEU]

Forecast Upside forSouthern +2047% routes > India, Pakistan and Bangladesh rail freight traffic was forecasted based on same 64 389 method as O/Ds through Eurostat database 226 > Turkey and Iran traffic calculated in both directions to Europe and Asia1) Preconditions for upsidescenario > Ensuring price competitiveness with sea transport as time advantage decreases with closerproximity 80 > Addressing issues of security and trans- border shipments, customs and bureaucracy 19 > Economic growth and political stability in Iran, Turkey, as well as between India and Base case EU-SouthAsia EU-Turkey/Iran Asia-Turkey/Iran Total Pakistan southernroutes

1) Rough Turkey-Asia forecast based on data in USD provided by Turk Stat and applying average values identified through Eurostat Source: Eurostat, Turkstat, Roland Berger Thank you for your attention

10 Deutsche Bahn AG | Uwe Leuschner | DB Cargo AG | Odessa | 08 September 2017