But he went on to make it clear that in the event of DB Cargo reducing staff numbers in Germany, the French unit would not be affected in turn. “We had anticipated a decline in the volumes entrusted to us by our (German) colleagues, and they now represent only 25% of our business.

“The decline in staff numbers in Germany logically follows the decline in traffic volumes. These same volumes to and from the French and Spanish markets have been declining for four years (due to a combination of economic factors and the situation of DB Cargo in Germany). In France, we have offset the impact of a downturn in international volumes with domestic volumes and are thus able to maintain stable staffing levels.”

French subsidiary is in the black

In his interview with German media, Osburg also revealed that DB Cargo had recorded a 2025 full-year loss in the mid two-digit million euro range. An operating profit for the second half of last year had followed a 96-million-euro operating loss in the first six months.

However, it was likely that DB Cargo France had finished 2025 in the black, Gallo noted. “We are currently auditing the accounts for 2025, but I can already tell you that we are in positive position.” While admitting that it would be a major challenge, the DB Cargo group was aiming to post a net profit in the double-digit millions for 2026, Osburg added.

One thing that Gallo did not play down was the current economic climate DB Cargo France was operating in which he described as ”not very favourable.” This explained why the company was postponing the launch of its combined rail-road service between Paris and Daventry, Northamptonshire, England, in partnership with UK logistics company John G. Russell, from the first quarter of 2026 to later in the year.

Traffic was at a near-standstill on the route over a period of around a fortnight, stretching from late January to early February. This followed the closure of the Rubí Tunnel, near Barcelona, as a result of extreme weather conditions which caused damage to rail infrastructure.

At the time, Gallo told RailFreight.com that the company had six trains parked and waiting in France and four in Spain since because of the closure. A number of its scheduled train departures from Germany were also put on hold. DB Cargo France normally operated 20 round trips per week between Germany and Spain, with half of the train loads carried made up of new vehicles and spare parts and the other half being combined transport shipments.

Most trains using Perthus Tunnel

Gallo explained that the track gauge in Spain is different from the standard gauge in Europe. Before the Perthus Tunnel and the standard-gauge line to Barcelona were built, trains on the route changed their axles at the Cerbère border crossing, on the French side.

“Most trains now use the Perthus Tunnel (in preference to the original line), especially since the introduction of significantly lower tolls. But as recent events have demonstrated, as soon as there is a problem on this line trains are stopped. It’s a highly vulnerable situation making it imperative that both lines be maintained.”

Train parking shortage

He also highlighted the inadequacy of upstream rail infrastructure provision in the vicinity of Perpignan, which did not allow trains heading to Spain from France to be parked, even for a short period, if there was a disruption to services through the Perthus Tunnel and downstream.

During the recent near-standstill in services, there were reports of“dozens” of immobilised trains loaded with new vehicles and containers being stored on the French side, notably at Le Soler, near Perpignan. The seven tracks dedicated to train parking at the site soon reached full capacity and trains had to be diverted to Perpignan-Saint-Charles station.

Lobbying government ministers

Gallo revealed that industry associations are in the process of lobbying transport ministries in France and Spain to set up working groups to plan for the future of freight train services between France and Spain.

“If we want to create the necessary flexibility on this rail freight corridor then consideration should be given to building a third rail path on the line between Cerbère and Girona, as well as a connection to the standard-gauge line to enable traffic to be diverted if necessary. It’s having the possibility of taking one route or another in the event of congestion or unforeseen circumstances”, he added.

Separately, Gallo drew attention to the disruption to rail services in France caused by the recent Storm Nils. “It was chaotic last weekend in terms of operations with traffic stoppages across much of France,” he said.

Rail services in western and south-western France were particularly affected with some coastal areas battered by winds that reached speeds up to 140 kilometres per hour, leading to rail infrastructure manager SNCF Réseau taking preventive ‘Stop Circulation’ measures.

Steady combined transport growth

As for combined transport specifically, it has been growing steadily for 15 years, with volumes doubling between 2010 and 2025. It now accounts for more than 40% of French rail freight, expressed in tonne-kilometers. “In 2025, a new traffic flow was opened almost every month, with 10 new connections provided by eight different operators, enriching an already structured network of 60 existing connections. These services cover the entire territory.” These new ‘combi’ services made it possible to avoid 60,000 lorry journeys and save nearly 40,000 tonnes of CO₂.

SNCF Réseau said growth was fully in line with the ambitions of the Ulysse Fret programme, developed jointly with the French government and the rail freight body, Alliance 4F, which plans to invest 4 billion euros by 2032 to modernise and adapt rail freight infrastructure. More than half of this programme is dedicated to increasing the capacity of the rail network and terminals to accommodate new traffic. In 2026, the new flows will represent an increase of 2%-3% in traffic, expressed in train/kilometers.

‘Need for a leap in quality’

However, SNCF Réseau has also received criticism from a senior industry source on its service levels. Speaking at the recent annual conference of lobby group, Objectif-OFP, the head of DB Cargo France, Alexandre Gallo, said that while it was true there had been a significant improvement In train path allocations, the operational performance of the network for rail freight traffic in France was still not up to scratch based on his observations from day-to-day.

“I’m the first to support SNCF Réseau and for the work that its CEO Matthieu Chabanel and his team are doing. But the network is getting worse and worse from an operational point of view and this at a time when rail freight is showing its potential and demand is strong.” In an interview with RailFreight.com, Gallo highlighted “the need for a leap in quality to generate a sufficient shift from road to rail. Beyond the issues specific to railway companies, we are currently suffering from a failing infrastructure in France.”

He pointed to the difficulties in obtaining additional train paths on certain routes (particularly on the ‘Atlantic’ one); labour issues at SNCF Réseau, which led to strikes throughout 2025, particularly in northern Paris; operational management on the network that does not always meet required standards; and the systematic penalisation of freight trains in favour of passenger trains. “Remember, freight doesn’t vote”, he highlighted.

Gallo also drew attention to the impact of France’s ageing rail network which has led to traffic speeds on many sections being reduced. “As a result, when we (DB Cargo France) request a 120 km/h train path between Forbach, (in eastern France) and Bayonne, (on the French border with Spain) ,the actual speed is 64 km/h. This makes us far less competitive in terms of speed, our assets are under-utilised and we have to hire more drivers, which increases costs.

New investments after years of under-funding

Responding to Gallo’s criticism of the rail network’s operational performance, SNCF Réseau chief Chabanel told attendees at the Objectif-OFP conference: “I’m not going to pretend that everything is fine on the network. But there has been progress (in performance). If we look back a few years, we can see that there was a crisis situation with train paths which in no way can be compared with what we are experiencing today. We have gained more than 20 (percentage) points in the allocation of train paths to freight companies. There has also been progress in punctuality.”

He alluded to the “excellent” barometer of punctuality issued by French rail industry association, AFRA, which indicates that (only) 30% of freight trains are late because of SNCF Réseau. “This means that 70% are late for reasons other than us”. Chabanel added that the planned investments in the network after years of insufficient funding will start to pay off, enabling SNCF Réseau to offer its customers and its customers’ customers, the best possible service to attract more freight to rail.

In all probability, after passing on a disjointed budget bill to the Senate, it is highly likely that the government will have to proceed by decree to avoid a deadlock, he noted. “In this context, we know that the Ministry of Finance will propose cuts, including those on rail freight operating subsidies. However, I will very be watchful to ensure fair treatment is respected.” His comments on the outlook for subsidies are a good deal less optimistic than those of Alexandre Hanache, deputy director of Rail Services at France’s Directorate-General for Infrastructure, Transport and Mobility (DGITM).

Addressing attendees at an assembly of combined rail-road freight transport body, the GNTC, last month, he acknowledged that the current (political) context had created a certain amount of uncertainty. However, the MoT was strongly advocating for the continuation of the efforts being made as part of the national strategy for the development of rail freight and whose goal was to increase its modal share in relation to road, he explained.

SWL traffic in decline

According to Gallo, there will be “a strong temptation” to preserve subsidies for single wagon loads (SWL), which mainly benefit HexaFret (SNCF’s new rail freight subsidiary) and reduce aid with regard to track access charges and combined transport In 2025, annual state subsidies to the sector totalled between 200 million euros and 215 million euros with SWL activity accounting for around half of the total.

“‘Traditional’ rail freight transport – block train and single wagonload – is stable and combined transport is growing. However, we know that the SWL segment is in decline,” he said, an allusion to where financial support to the sector should be focused in future.

Paris-Daventry in Q1 2026

Turning to DB Cargo France, Gallo highlighted the company’s continued expansion. Following the success of its route between Metz, in eastern France and Paris for Ikea (the Swedish furniture and home furnishings retail giant), in partnership with Swiss Post/Portmann, it is now eyeing a launch date for its combi service between Paris and Daventry, in Northamptonshire, England, in the first quarter of 2026, in partnership with UK logistics company John G. Russell. “We are currently working on the final details. Since announcing the launch of this service, we have received a lot of enquiries.”

‘Mistrust’ of shippers

In 2025, DB Cargo France had maintained its volumes in a rather sluggish French market, even though activity in the combi segment had increased, Gallo revealed. “We are regularly approached by shippers to develop new products but there is still too much mistrust on their part, particularly due to the chronic instability of labour relations and repeated strikes within the SNCF group, and in particular at SNCF Réseau,” he added.

“In a normal world, the closure of the Mont Blanc tunnel would have been discussed well in advance with the railway companies and SNCF Réseau to give transport operators the option of avoiding congestion at the Fréjus Tunnel”, he told RailFreight.com. But this has not been the case and once again the government has turned to “a highly-subsidised and economically unprofitable system to accommodate HGV traffic,” he said.

Low hopes until the new Turin-Lyon opens

Earlier this summer, decade-long work was completed on a second tube through the Fréjus Tunnel. Running parallel to the first, the new tube separates traffic in each direction. “The real concern is that with road transport there are no taxes, beyond motorway tolls, for using the congested Alpine valleys. We should still be asking ourselves why road hauliers, transporting goods from Belgium to Italy, pass through France? The answer is because it’s tax-free!”

He continued: “Rail freight on the French-Italian corridor via the Alps, will only really take off when we have the Lyon-Turin tunnel in service, with the limited gradients and an extended gauge to P400, ” he observed. However, this rail tunnel is only scheduled to open in 2033, at the earliest. Gallo, who is also the President of French rail industry body, AFRA, went on to highlight that rail freight in general, continues to be burdened by extensive renovation and maintenance work on the railway network, which is “limiting the possibility of obtaining new train paths.”

DB Cargo France CEO Alexandre Gallo agreed with Doutrebente’s analysis but reckoned that current rail freight traffic volumes were probably closer to 40% of pre-closure levels (than 50%). At the end of last month, the line suffered another setback with severe weather and a mudslide leading to its closure. The incident brought into sharp relief the line’s apparent susceptibility to extreme meteorological episodes which, to a backdrop of climate change, could become a more regular occurrence.

Restricted traffic for a while longer

Passenger traffic resumed on 5 July, followed by freight activity on 7 July albeit with restrictions. Gallo revealed that freight trains were presently operating to limited schedules because not all of the service tracks had been restored after the mudslide. “

We are also having to deal with track works in the Maurienne Valley, so we can’t run trains when we’d like to. We have resumed traffic for our customer T3M (part of the Open Modal group), but are having to deal with a strike by Captrain Italia set to last until 11 July”, he said. SNCF Réseau, France’s infrastructure manager, is said to be expecting a full return to normal by the middle of this month but this has not been confirmed.

Reverse modal shift

The 19-month closure of the line saw some shippers transfer cargo to other rail routes to Italy via Switzerland or Nice and the French-Italian border at Vintimille. However, the vast majority switched to road haulage routing loads through the Fréjus and Mont-Blanc road tunnels. A major question now is whether these shippers that have switched to trucks will return to rail when their contracts with road hauliers, generally covering a period of one year, expire.

“For now, shippers are honouring their commitments to road hauliers and what combi operators are hoping for is a recovery of traffic by the end of the year and early-2026,” Doutrebente noted. Gallo, who is also president of rail industry association, AFRA, is certainly not under-estimating the challenge of convincing shippers who switched to road haulage during the line’s closure to return to rail. “They say it takes six months to attract a customer to rail and six days to lose them. But if I weren’t an optimist, I wouldn’t be in this business!”, Gallo concluded.

More jobs needed, not only in logistics

A study earlier this year by management consultant Kearney estimated that an increase in defence spending to 3% of GDP would require up to 760,000 new skilled workers in Europe – a clear indication of the size the industry could swell to. Indeed, recently, NATO announced plans to go much further, with member nations making a commitment to spending 5% of GDP on defence by 2035.

A number of defence industry firms are already pursuing a recruitment drive. Rheinmetall, in Germany, Europe’s largest ammunition manufacturer, is said to be increasing its workforce by approximately 29% (9,000 workers), by 2028. Moreover, waning demand in the automobile industry sees brands, such as Volkswagen and Daimler, eyeing growth in military vehicle production.

Kearney’s study did not evaluate the impact of increased defence spending on demand for logistics specifically. However, one of its authors, Guido Hertel, noted that in Germany, the authorities had drawn up documents outlining the concept of Drehscheibe Deutschland, which acknowledges the country’s new role as a logistics hub in the event of a large-scale defensive operation.

Challenges and opportunities ahead

The German government is allocating additional funds to transport infrastructure development spanning railways, airports, roads and bridges. One of the priorities is to strengthen overland transport, which faces the prospect of having to accommodate more raw materials coming in via the ports.

FreightAmigo, a digital supply chain finance platform, noted on its website that the emerging boom in the European defence industry was likely to have “far-reaching effects on the logistics sector.” There would be a greater need for cross-border specialised container shipping and freight transport services, while the industry’s stringent security measures would create new challenges and opportunities for service providers.

Towards a European rolling stock leasing company?

The management of complex and intricate supply chains, necessitating advanced logistics coordination, will become a much sought-after skill, it added. Increased demand for military-related rail freight transport and logistics will have implications for the development and composition of wagon fleets, Gallo underlined.

“It will probably be necessary to pool, at European level, a fleet of wagons capable of transporting the most bulky equipment, which is currently, and more often than not, the property of the incumbent operators. If we want to make this specific market more competitive and flexible, a European ROSCO (rolling stock leasing company) could be the solution.”

He said it was his understanding that in most European countries, the armed forces outsource their rail transport needs. “I think it would be complex for them to handle such operations in-house and certainly the market can respond. We saw this when companies met the challenge of sending humanitarian aid to Ukraine, with joint operations between SNCF and DB Cargo.”

DB Cargo France’s intermodal services on the route are likely to gradually resume with three weekly round trips instead of five previously, Gallo explained. As for the company’s trains transporting new vehicles, the number will be reduced mainly because of the downturn in the automotive market, he added. In an interview with Railfreight.com in January this year, Gallo said DB Cargo France had taken a significant financial hit from the closure of the France-Italy mainline, estimating the cost in lost revenue over the period since end-August 2023 at nearly 15 million euros.

New services postponed

After the news in November 2024 of the company closing hubs and handing over traffic to SNCF’s new rail freight subsidiary, Hexafret, this year the accent is on expansion. However, the launch of two intermodal services which were planned for early-2025 – one linking Metz and Nancy in eastern France with Valenton, near Paris and a second between Valenton and Daventry, in Northamptonshire, England, via the Channel Tunnel – were “a little behind schedule.”

He continued: “The Metz-Paris service starts on 30 June and it will be September for the other route.” Asked how the first quarter of the year had played out for DB Cargo France in particular and for the French market in general, Gallo replied: “I’d say in line with our forecasts. It’s still a bit early to get an idea of where the market is.”

Gallo: Last year, the market did not regain the momentum of 2021 and 2022. There are several reasons for this. First of all, we continued to recover from the catastrophic year that was 2023, with the strikes at SNCF in the Spring, rising energy prices, the economic crisis and the closure of the rail line between France and Italy via the Alps (following a major rock fall). As for 2024, I would qualify it as a year of stagnation. The line through the Maurienne Valley to Italy remained closed while the automotive, chemical and steel industries, which are major suppliers of rail freight volumes, entered a difficult phase.

Is the sector in a better position today than it was 12 months ago?

Gallo: Let’s just say that after the two years we’ve just been through, there’s a good deal of hope for 2025. The vitality of combined (road-rail) transport is asserting itself, and the market is buzzing with projects.

What are your expectations for 2025?

Gallo: The challenges remain the same and center on retaining and attracting shippers to train-borne freight. There needs to be stability in labor relations, optimal schedules for maintenance work on the rail network and the continuation of the government’s incentive policy in favor of rail freight.

One concern that the Polish presidency of the European Union (during the first six months of 2025) could reactivate the ‘weights and dimensions’ directive with regard to mega-trucks. We’ll be keeping a close watch on this issue through our trade associations.

How did DB Cargo France perform in 2024 in terms of tonne-kilometres transported, turnover and EBIT compared with 2023, and what are your operational and financial targets for 2025?

Gallo: I can’t go into the results in detail but I can say is that last year we exceeded 200 million euros in sales and ended the year with a positive net result. For the first time, we will activate our profit-sharing scheme for our employees.

In terms of tonne-kilometres transported (t/km/t) we recorded a very strong year-on-year increase. Traffic totaled 5.9 billion t/km/t in 2024 compared to 3.7 billion t/km/t in 2023. In 2025, we are targeting is 6.6 billion t/km/t.

Has DB Cargo France affected by the Group-wide cuts at Deutsche Bahn?

Gallo: Yes, in terms of volumes linked to wagonloads from Germany. We have decided to close our three hubs at Vaires-sur-Marne, Gevrey and Saint-Pierre des Corps and entrust these flows to Hexafret (SNCF’s new rail freight subsidiary). This has resulted in the loss of 30 jobs.

A word on the traffic flows handed over to you by Fret SNCF as part of its discontinuity plan?

Gallo: DB Cargo France has taken on a number of international routes as well as the rolling highway service between Le Boulou and Calais.

Have you been informed of a date for the definitive reopening of the rail line through the Maurienne Valley?

Gallo: We’ve just been officially notified that the line will reopen on Monday March 31, which is excellent news.

What impact has the closure of this line had on your business?

Gallo: We have taken a significant hit with some 40 forty trains taken out of our schedule each week, representing nearly 15 million euros in lost revenue (over the period of its closure since end-August 2023). With the re-opening of the line at the end of March, the challenge is going to be to convince shippers who have switched to road haulage during its closure to return to rail freight again.

“We’ve got shippers who want to work with us and there is a wide range of public aid available to the sector which is in place to restore a certain economic balance (with road haulage). For example, there are subsidies for operations, start-up grants and energy saving certificates for the purchase of equipment such as swap bodies and wagons. And I’m confident that at some point we’ll be able to obtain financing for locomotives, as is the case in Spain and other European countries,” he explained.

Rolling highway subsidies are already gone

“But if we do nothing, if we don’t develop anything, if we don’t show the public authorities that we’re capable of transforming these operating subsidies into real traffic growth, if we don’t take the risk, these subsidies may not be renewed.” He highlighted annual subsidies totalling 16 million euros for the launch of so-called “rolling highways” which were no longer on the table. “And why weren’t they renewed? No doubt because we, as a sector, were not able to justify the launch of such services and this amounts to opportunities missed.”

‘Look for new corridors’

Gallo underlined the need for a rail freight offering based on “innovation’ and “new solutions” for shippers. “Is reinforcing services on a north-south rail corridor between south-eastern and northern France really the direction we want to give to rail freight development today and for which there will always be the same shippers and the same transporters?”

He pointed to Brittany-based family-owned road haulage and logistics company, Lahaye Global Logistics who last year had “taken the risk” to launch a combined transport service running on France’s west-east rail corridor between Rennes and Lille and which today is carrying a broad range of consumer and industrial goods.

The service is pitched largely at ocean freight shippers in Brittany and the wider western France region with the inland port of Lille providing connections to Northern Europe seaports such as Dunkirk, Zeebrugge, Antwerp, and Rotterdam. But it is also catering for demand for goods bound for and originating in the region around Lille.

More recently, Lahaye has taken a further step on France’s under-used west-east rail freight corridor, with its subsidiary, Be Modal, in association with MGE Intermodal. Last month, they launched a weekly round-trip service between Rennes and Blainville-sur-l’Eau, situated in proximity to Nancy. “This is the kind of approach, a departure from the tried and trusted, that needs to be encouraged.”

Learn from shipping lines

Continuing his emphasis on innovation and thinking outside the box, Gallo said that rail freight operators could learn a lot from the ocean shipping lines, particularly in terms of the “visibility” of their services and the culture of co-operation and alliances. “As soon as they (the shipping lines) have the idea of launching a new service, they group together – two, three, four companies, each contributing one, two, three ships. The capacity is shared in proportion to what they bring to the service. This is an interesting model and one which we, collectively, as rail freight operators, should be able to implement.”