Bruce Barnard | Sep 16, 2009 2:11PM EDT
The French government unveiled an $11.8 billion plan Sept. 16 to significantly increase rail's share of Europe's second largest transport market over the next 10 years.
The biggest ever rail freight investment program will involve the government spending $10.3 billion on infrastructure projects, including cargo corridors and high speed freight services, modeled on the country’s passenger network, TGV.
SNCF, the state-owned railway, will invest $1.5 billion in the next five years to develop new rail truck shuttles, express services and improved facilities to transfer containers to and from ships at major seaports.
"It is vital to develop [rail] freight," Jean-Louis Borloo, the ecology minister responsible for transport, said after the cabinet approved the investment plan today.
"It is indispensable to increase the [market] share of rail freight compared with air and road transport," Borloo said.
The investment program, which will run through 2020, is part of a master plan by the center right government to boost the flagging competitiveness of SNCF which is steadily losing traffic to trucking and foreign rail firms on international routes.
Earlier, the government introduced reforms in French ports, including the privatization of container handling, to boost productivity and win back the significant volume of French imports and exports which pass through foreign hubs, including Rotterdam and Antwerp.
"We must open new rail [truck shuttle] routes … create high speed rail freight services and develop rail freight operations in our leading ports," French president Nicolas Sarkozy said last week.
The government wants to boost rail's share of France's freight market from 14 percent at present to 25 percent in 2022. Rail's market share has fallen from 21 percent in 1996, with most traffic going to trucks, and it is still shrinking despite an injection of around $5 billion of state aid since 2003.
SNCF is scheduled to present plans to reform its money-losing freight unit next week. The plans reportedly involve between 4,000 and 6,000 job losses from the 14,000 payroll and a major downsizing of its unprofitable wagon load business.
Freight accounted for $475 million of SNCF's $729 million first half loss, the first in six years, but just over $1 billion of its $16.5 billion revenue. The freight unit is expected to post a full year loss of $882 million against a $500 million deficit in 2008.
Contact Bruce Barnard at brucebarnard47@hotmail.com.