Study: Germany’s run-down transport system is hamstringing companies

Germany’s dilapidated roads and railways are increasingly putting the brakes on the economy, according to a study published by the German Economic Institute (IW) on Thursday.

Of around 1,100 companies consulted, some 84% said their operations were hampered by infrastructure deficiencies, compared with 67% in 2018 and 59% in 2013.

“Transport infrastructure has become a stumbling block for the German economy,” said IW expert Thomas Puls.

The number of companies that consider themselves hampered by transportation problems is almost five percentage points higher than it was in 2022, when the economy was still struggling with the consequences of the coronavirus pandemic and the Russian invasion of Ukraine.

The deterioration is evident across all company sizes, but smaller businesses in particular are increasingly struggling. According to IW, the burden on this group rose by around seven percentage points in the same period.

Companies most frequently cited dilapidated roads as a problem, with 92% naming this as an obstacle to their business.

Rail transport is another source of frustration, classified by 71% of respondents as a problem, with more than half reporting significant restrictions – an eightfold increase since 2013.

Around one third of the companies reported problems with air and sea transport.

Puls noted that the special investment fund totalling €500 billion ($580 billion) approved by the federal government could help.

Around €19 billion are to be invested in rail transport in 2026. However, at the same time, almost €14 billion will be cut from the core budget.

“The billions should not be used to plug holes in social security funds,” said the expert. “The money must also go where it is needed. Otherwise, we will miss the boat.”