The second stage of the Railway Reform provides for the transformation of individual business units of the Deutsche Bahn AG into independent stock corporations: long-distance passenger traffic, short-distance passenger traffic, freight traffic and track infrastructure. This process should be completed by the end of 1999 at the latest. Coupled with this restructuring is the urgently needed modernization of the vehicle fleet and the railway stations (”Project 21″). Long-term plans have been made to convert the major terminal stations (Stuttgart, Munich and Frankfurt am Main) into through stations.

In 1994 the Federal Government resolved to build the Transrapid magnetic levitation train from Berlin via Schwerin to Hamburg. In the future, Transrapid service on this route is to be provided six times per hour in each direction, covering the 284 kilometers in just under one hour. The Transrapid began undergoing endurance testing on an experimental stretch in Emsland in 1989, and after the conclusion of testing in 1995 it was approved for public passenger transport. Due to its speed and environmental friendliness, the Transrapid represents a promising alternative to the automobile and the airplane. Construction of the new stretch of track is scheduled to be completed by the year 2005, whereupon the Transrapid will shuttle between Berlin and Hamburg at a speed of up to 500 km/h with only one stop in Schwerin.