ENGLISH WELSH & Scottish Railway could become Railion UK if DB's freight subsidiary acquires Britain's largest freight operating company. The two organisations confirmed on May 25 that they were 'in discussions about plans to develop a stronger European rail freight network', and that 'the full range of co-operation options such as joint projects or the acquisition of EWS shares by DB AG' was on the table.

A statement noted that 'the companies plan to intensify their business relationship in the future', adding that they will have a key part to play in Europe's increasingly competitive and liberalised rail freight sector. EWS said a further announcement was likely 'in the next few weeks', with some reports suggesting that takeover negotiations were well advanced.

Since 2001 EWS has been owned by a consortium of North American, New Zealand and British investors plus Canadian National, which in 2002 sought to dispose of its 42 5% stake now reduced to 31%.

Options for increasing the volume of freight moving by rail between the UK and Germany are one of the topics under discussion, but plans for expansion are hampered by the current problems surrounding transit through the Channel Tunnel.

Of particular interest to DB AG is Euro Cargo Rail, the EWS subsidiary which has a licence and safety certificate to operate in France. Acquisition of EWS would give DB a ready-made French operating company, opening up the prospect of competing with Fret SNCF on its home territory. On May 28 DB AG announced that it was in positive and 'wide-ranging' discussions with Spanish company Transfesa. This would offer Railion the opportunity to capture potentially-lucrative automotive traffic moving between Germany and Spain. ECR is already handling the French leg of automotive flows between Italy and Spain.