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France to Spend $1.5B to Boost Rail Freight

National rail line wants to increase container freight and high-speed package delivery. Shift could mean significant relocation of distribution demand.

By John McCloud | Updated on November 17, 2009

PARIS-In a move that could greatly alter the nation’s logistics business and open new opportunities for development of distribution centers, SNCF, France’s state-owned railway, will invest $1.5 billion in a plan to boost market share for its freight operations. The plan is the first step in an $11.8 billion effort to boost rail’s market share to 25% by 2022 from its current level of 14%.

The plan includes programs to sharply increase container traffic and offer high speed express services that will enable the railroad to better compete with air and truck freight alternatives. The programs will entail redesign of SNCF’s freight business, investment in new truck shuttle trains and increasing international services. SNCF chief executive Guillaume Pepy says the changes will make logistics one of France’s greatest assets. The company, which is expected to lose $885 million this year on top of $2.8 billion from 2003-08, saw its share of the nation’s freight market plunge to 14% last year from 22% in 1996. The market is Europe’s second largest.

Significantly for industrial property owners, the plan will also put greater focus on port traffic and transfer some freight operations to quasi-private subsidiaries with greater flexibility. The railroad plans to double the number of containers it carries to and from Le Havre and Marseilles, France’s largest container ports. Trucks currently handle the greatest share of the container traffic.

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