GERMAN RAIL FREIGHT UNIT RETURNING TO PROFITABILITY \ SYSTEM IMPROVEMENTS PUT ON FAST TRACK

GERMAN RAIL FREIGHT UNIT RETURNING TO PROFITABILITY \ SYSTEM IMPROVEMENTS PUT ON FAST TRACK

After years as a money-losing problem child, the freight division of Germany's national rail system, Deutsche Bahn AG, is finally back on a profitable track.

Johannes Ludewig, chairman of Deutsche Bahn, reported that the national railroad carried about 7.5 percent more cargo last year. The rail system's freight revenue increased by 1.3 percent, to about $3.8 billion.That upswing for the railroad's freight subsidiary, DB Cargo, followed a disappointing 1996, when its cargo volume had dropped by 4.1 percent, to 319 million tons, and its revenue declined by 6.3 percent.

Even though many German companies still complain about DB Cargo's service, Mr. Ludewig and German Transportation Minister Matthias Wissmann contend that the rail freight division has turned the corner.

''We have reoriented our freight services to bring them in line with the needs and demands of our customers,'' Mr. Ludewig said at a recent news conference in Berlin.

For example, he said, DB Cargo has set up a customer service center in Duisburg that will operate around the clock.

In all, Deutsche Bahn is investing about $1.7 billion in modernizing the equipment and freight transfer facilities of DB Cargo.

By year's end, the rail system will have seven new high-tech, intermodal freight terminals in or near Berlin, Cologne, Stuttgart, Karlsruhe, Leipzig, Erfurt and Basel to allow quick container transfer from road to rail and vice-versa.

Six additional terminals - in Bremerhaven, Frankfurt, Rostock, Magdeburg, Regensburg and Glauchau - are slated to open in 1999.

The goal is to attract shippers and shift rail freight to a faster track.

Mr. Wissmann has called improving the rail freight system ''the single biggest task'' for Deutsche Bahn. But he added that ''rail-freight developments are now showing a clear upward trend.''

Despite the recent wave of rail freight improvements within Germany, much of the anticipated future progress depends on the success of European Union plans to expand the network of ''rail cargo freeways'' across Europe that would allow freight shipments to bypass most customs inspections.

Such rail freeways would be attractive to businesses that require ''just-in-time'' delivery, which trucks often cannot offer because of road congestion and long border delays.

At the news conference, Mr. Ludewig called for ''a further liberalization of rail traffic in Europe.''