France-based rail freight operators managed to preserve their revenues in 2023 through raising rates despite traffic falling sharply in 2023 (-17 per cent in tonne-kilometres), but the sector’s profitability deteriorated against a backdrop of surging energy costs.
This is one of the key findings of the recently-published annual report into rail transport by French transport regulator ART. While the report focuses on last year’s activity, it is nevertheless the most comprehensive picture of France’s rail freight sector currently available.
Traffic
The decline in traffic in 2023 was explained by a number of factors, such as strikes at SNCF against state pension reform, the major landslide in the Maurienne valley in the French Alps, which led to closure of the major rail line between France and Italy, as well as energy price hikes and the economic slowdown.
Combined road-rail freight transport was particularly affected by the decline in traffic (-19 per cent), with the result that after a steep rise (+27 per cent between 2019 and 2022), actual traffic in tonne-kilometres fell back to the 2020 level.
H1 2024
The first half of the current year saw an upturn in rail freight activity in France. In fact, tonne-kilometres generated by the sector rebounded by 16 per cent compared to H1 2023. Nonetheless, global (domestic and international) tonne-kilometres generated in the first half of 2024 remain 11 per cent lower than in the first half of the year 2022.
The difference can be explained in part by the continuing closure of the France-Italy rail link throughout 2024.
Operators’ performance, market share
Turning to the 2023 performance of rail freight companies of the SNCF Group, operating under the Rail Logistics Europe structure, the report noted that their market share still accounted for just under 68 per cent of tonne-kilometres in 2023, but this was a fall of almost two percentage points versus 2022. This trend has continued in 2024, with Fret SNCF transferring 23 traffic routes to rivals.
Ranked second for market share was DB Cargo France at 12 per cent.
Operators’ average load per train fell to 560 tonnes, compared with 600 tonnes in 2021 and 2022. This drop puts an end to the continuous increase in between 2017 and 2021.
Punctuality of trains
In 2023, 16,7 per cent of trains arrived at their terminus more than 30 minutes later than schedule, representing a 0,8 point deterioration in punctuality compared with 2022, and by one point compared with the period between 2017 à 2021.
Revenues, profitability and costs
Despite the significant decline in rail freight transport last year, railway undertakings‘ 2023 revenues linked to rail traction were stable (+0,6 per cent) due to a strong price effect. As a result, revenue per kilometre rose substantially (+14 per cent).
Reviewing the performance of 10 railway undertakings, representing 97 per cent of tonne-kilometres, the report revealed that the sector suffered an operating loss of around 60 million euros, compared to a profit of 21 million in 2022 and just under 30 million euros in 2021.
However, the results mask major disparities. Despite the difficult environment, six of the ten companies made an operating profit in 2023. Meanwhile, energy prices weighed on profitability, with costs per kilometre more than doubling between 2021 and 2023, representing 15 per cent of revenue, compared with 8.4 per cent on average between 2019 and 2021.