France Rail Freight Transport Market - Growth, Trends, COVID-19 Impact, and Forecasts (2023-2028)

The France rail freight transport market is anticipated to register a CAGR of more than 5% over the forecast period.

Key Highlights

• By the introduction of an energy savings certificate (ESC) program accessible to shippers, France has strengthened its effort to hasten the changeover of freight transport modes. The announcement of the proposal was made in November 2022 by the Ministries of Energy Transition and Transport, highlighting the fact that rail transportation uses six times less energy than driving.
• The French government will now assist in mitigating the additional transportation expenses incurred when converting from road to rail freight to encourage shippers to convey products by train. The energy cost "break" comes out to be almost 13% of the average cost of a tonne-kilometer (t-km), which is calculated at 3.3 cents per t-km.
• The goal of France's national rail freight development strategy is to double the country's modal share of goods, from 9% in 2019 to 18% in 2030, and then to 25% in 2050. The methods for doing this centre on increasing the appeal of rail, both practically by upgrading the calibre of freight train slots and financially by establishing help programs to make up for the higher prices compared to road transport. Since 2021, France's rail freight industry has been growing again after three years of stagnation, particularly at the national railroad utility and operator SNCF. Rail accounted for 10.7% (2021) of surface freight transport, up from 9.6% in 2020, and is likely to continue growing.
• A representative of the Alliance 4F (Fret Ferroviaire Français du Futur), which brings together major rail freight operators in France, demanded the Ministry of Transport emphasize the critical role of rail freight in the decarbonization of the economy and green planning and consider its targeted and effective promotion, especially in the current energy crisis. First, a system to aid rail freight businesses in coping with skyrocketing energy expenses needs to be developed. The performance and dependability of the rail network should also be improved. The Alliance has requested from the Ministery a specific State mandate for SNCF Réseau.

France Rail Freight Transport Market Trends

High fuel prices pushing transporters shift towards rail freight driving the market

In comparison to their neighbours in Europe, French consumers have so far been incredibly fortunate and have experienced little to no increases in their electricity costs. This is so that the government's price controls on gas and electricity, which were both set to expire at the end of 2022, will not be able to raise rates over 4%. Gas rates can increase by a maximum of 15% starting in January 2023, while electricity costs can increase by a maximum of 15% starting in February 2023. This will cost the typical home an additional 20 euros (USD 20.70) every month.

Although it will be a challenging winter in all of Europe, international European road freights reached a new high in Q3 2022. However, as volumes start to decline, freight rates start to soften through September and October 2022. In Q3-22, all costs for the 1,270-kilometer trip between Paris and Madrid rose to a new record high. Contract rates have increased 2.7% Q-o-Q and 21.8% Y-o-Y to an average of EUR 1,570 (USD 1624.93) per voyage (EUR 1.24/km (USD 1.28/KM)) on the head haul from Madrid to Paris.

Due to the increase, diesel expenses may now make up 50% of operating transport costs, compared to their typical 1/3 share. Up until the end of 2022, there will likely be a growing driver shortage, with an estimated 40% increase in open truck driver employment. The European economy is characterized by weaker demand and consumption when seen from the perspective of global inflation. Although the rise in road freight rates is slowing down, as a result, the trend is still upward. Road carriers are experiencing a labour scarcity that is reducing the amount of capacity that is available and driving up their overall expenses.

Increase in rail freight demand supported by government driving the market

Since 2021, France's rail freight industry has been growing again after three years of stagnation, particularly at the national railroad utility and operator SNCF. From 9.6% in 2020 to 10.7% last year, rail's share of surface freight transit increased, and it is anticipated that it will continue to do so in 2022. The goal of France's national rail freight development strategy is to double the country's modal share of goods, from 9% in 2019 to 18% in 2030, and then to 25% in 2050. The strategies for accomplishing this centre on increasing the appeal of rail, both operationally by boosting the calibre of freight train slots and financially by establishing help programs to offset the increased expenses compared to road transport.

Supply networks are being increasingly impacted as the situation in Eastern Europe persists. Some production processes are no longer as easily accessible due to the absence of raw materials like crude, or are no longer commercially feasible as the price of oil and gas, as a result of the decision to exclude Russian oil and gas supplies. Other expenditures increase together with the cost of diesel. The planet will be affected by this ripple effect. Heat, gas, and fuel prices are projected to increase for European consumers. Fuel supply chain disruptions may also have an impact on food costs, leading to a rise in economic protectionism and insecurity in the world's poorer regions.

France Rail Freight Transport Market Competitor Analysis

The France Rail Freight Transport Market is partially fragmented and highly competitive with the presence of major international players. Major players include SNCF Logistics, NVO Consolidation SAS, Martin Bencher Group, Ace-Trans Transportation and Logistics, Med Europe Terminal, and many others. The market is mainly dominated by regional and global players providing maximum services to their customers. The shifting of transporters towards rail freight in European countries due to fuel price surge is driving the market and attracting new players to enter the market.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support