French Rail's Freight Losses Widen

London -- France's state railway, SNCF, on March 11 reported losses at its freight unit widened to a record $430 million in 2008 from $328 million the previous year as core traffic plunged in the final quarter.

SNCF said higher regional and international passenger traffic was offset by stagnating cargo revenue which it blamed on "the slowdown and then the collapse in volumes in the final quarter."

SNCF's cargo business, Europe's second largest after Germany's Deutsche Bahn, saw volume decline 25 percent in December with an even steeper fall in its steel and auto shipments, its main markets.

Arcelor-Mittal, the world's biggest steelmaker, halted French shipments for a month from mid-December.

Private rail freight operators fared better, with traffic retreating by just under nine percent, according to RFF, the state rail infrastructure operator.

Rail traffic, including containers, has continued to fall in the first two months of the year in France and across Europe.

Private companies, including Euro Cargo Rail, a Deutsche Bahn subsidiary, and France's Veolia, increased their share of the French cargo market to 8.7 percent last year from 5.5 percent in 2007, offering freight rates on average 10 percent below SNCF's tariffs.

SNCF had a monopoly of the cargo market until the European Union liberalized international cross-border freight traffic in 2003. Domestic markets have been open since 2006.

The freight losses halved SNCF's group profits in 2008 to $728 million on revenue seven percent higher at $32 billion.