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.

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.

Costly but necessary

“SWL systems are ones with high fixed costs, requiring the same structure for several hundred or several thousand wagons. There are multiple traction breaks, transit times are difficult to meet, and the high price that customers have to pay make the product uncompetitive compared to road transport,” Gallo said.

“However, some manufacturers, particularly those in the chemical industry, need SWLs because of the significant restrictions on the road transport of some of their goods.” He went on to explain that SWLs not only require more manpower, compared to other segments of the rail freight market, but also take up a large amount of track space in marshalling yards.

Dependent on public funds

A crucial factor is that the SWL segment is heavily dependent on public aid. “The State cannot require operators to maintain SWL systems without providing subsidies for them, especially if they are considered a service of general/public interest,” Gallo underlined. And if DB Cargo, Europe’s biggest rail operator, can’t make a go of SWLs, then who can?

“Perhaps lighter, more agile, smaller companies with lower overheads can manage to break even, but undoubtedly thanks to public subsidies,” he observed. Gallo revealed that for DB Cargo France specifically, its SWL activity had been heavily loss-making and that, taking into account the high risk of cuts in public subsidies, it agreed with its parent to considerably reduce its presence in the French market.

“We sub-contracted a significant part of our SWL activity to Hexafret (SNCF’s new rail freight subsidiary borne out of the discontinuity of Fret SNCF), which has integrated it into its overall operations, increasing its volumes. We had to close three hubs (Vaires-sur-Marne, Gevrey and Saint-Pierre-des-Corps) and cut 32 jobs. We redeployed two-thirds of the employees to other positions within the company.”

‘Only time will tell’

At the end of last year as the official dismantling of Fret SNCF approached, a study by management consultancy, Secafi, highlighted that with its focus on SWLs Hexafret would have a costly business model and likely rely on State subsidies to be a going concern. It concluded, somewhat ironically, given Fret SNCF’s fate, that without public financial support, there would be serious doubts over Hexafret’s long-term viability. “I can’t comment on Hexafret as I am not familiar with their strategy but it is clear that they benefit greatly from subsidies given their overwhelming market share of the SWL segment in France. Will Hexafret be able to survive without state aid? Only time will tell,” Gallo added.

DB Cargo France gaining ground

State-owned Fret SNCF (now Hexafret) had to give up all its combined transport contracts at the end of 2023. As mentioned, the company lost 6% of the market share between 2023 and 2024, from 48 to 42%. This downward trend is even sharper if compared to 2022, when Fret SNCF was a proper hegemonic force with 65% market share, as ART highlighted. As a consequence, the presence of private operators in France grew, especially DB Cargo France, which went from 13% market share in 2023 to 18% in 2024.

Combined transport is growing

The ART report added that major industrial actions and strikes did not significantly affect the French sector, which was mostly impacted by the closure of the Frejus Railway, the main axis between Italy and France closed for most of 2024. Despite the unavailability of an important combined transport corridor, most of the growth registered between 2023 and 2024 comes from here, with a 20% increase which brought it back near 2022 volumes. On the other hand, conventional transport continues to struggle, both in single wagonload and well as block train traffic.

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.

Trains will run five times a week in both directions. “Developing intermodality for our markets, particularly in France, is a priority for IKEA”, said Claes Lindgren , Head of Transport and Logistics Services at IKEA Supply Chain Operations. This is not the first time that IKEA opts for rail services in France. Back in 2023, the company partnered with CFL to introduce a connection between Poznan, in Poland, and Sète, making it one of longest intermodal services in Europe.

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.