French freight carrier Fret SNCF will be split into Hexafret and Technis.

Fret SNCF, the cargo arm of the French national railroad company SNCF, will cease operations in 2025. The freight division will be replaced by two new companies: Hexafret for freight transport and Technis for locomotive maintenance.

The transformation also involves a 10% reduction in jobs. The changes are the result of proceedings initiated against the company by the European Commission in 2023.

Three-step dissolution plan

The French state is suspected of having paid some 5.3 billion euros in aid, which is considered illegal, to Fret SNCF between 2005 and 2019 to make up its deficit. Since 2006, however, rail freight transport in France has been open to competition. According to European regulations, aid must benefit the entire sector, not just one company, because in that case, you have a distortion of competition.

Consequently, the French state had only two options: wait for a court case, with the risk of losing it, and repay the state aid. In the latter case, the company would have to close its books, resulting in 5,000 redundancies. Either negotiate a ‘discontinuity plan’ with the EU to avoid prosecution.

So, it became the latter option, resulting in a three-step dissolution plan. The first step, ceding the equivalent of 20% of its revenue and 30% of its traffic to competitors, notably Belgium’s Lineas or DB Cargo France, Deutsche Bahn’s French freight subsidiary, was already completed in the first half of 2024.

The second phase involves dissolving Fret SNCF in favor of Hexafret and Technis. This should result in the disappearance of 500 jobs or 10% of the workforce.

The third phase will take place at the end of 2025 or the beginning of 2026: the opening of the capital of Rail Logistics Europe, the holding company that brings together SNCF’s freight activities (Captrain, combined transport, etc.), to the private sector, but with the difference that the SNCF group remains the majority shareholder.

No additional layoffs

In doing so, the SNCF and the French government also promise no additional layoffs. All affected railroad workers will be transferred to other companies in the group. Of the 4,500 employees retained, 10% will go to Technis and the rest to Hexafret.

The unions are not happy with the outcome, which they describe as a “social massacre.” They are calling for a moratorium and resumption of negotiations with the European Commission. They also call the decision an ecological aberration just because the climate emergency makes the development of rail freight a solution that benefits everyone.

The proportion of goods transported by Train in France (11% in 2023) is low compared to the European average (17%). However, rail freight also experienced a sharper decline in France in 2023 (-17% of goods transported) compared to its European neighbors.

However, Frédéric Delorme, the president of Rail Logistics Europe, believes that despite its weakening, the company can start again on a healthy basis. According to him, Hexafret and Technis should achieve the same turnover next year as Fret SNCF in 2023, i.e., 714 million euros.

In the meantime, the French government has decided to increase aid for single wagons, a train carrying loads for several customers, by 30 million euros in the 2025 budget. In total, aid to the sector will amount to 370 million euros.