Market Trends of France Rail Freight Transport Industry
This section covers the major market trends shaping the France Rail Freight Transport Market according to our research experts:
High fuel prices pushing transporters shift towards rail freight driving the market
In comparison to their neighbours in Europe, French consumers have so far been incredibly fortunate and have experienced little to no increases in their electricity costs. This is so that the government's price controls on gas and electricity, which were both set to expire at the end of 2022, will not be able to raise rates over 4%. Gas rates can increase by a maximum of 15% starting in January 2023, while electricity costs can increase by a maximum of 15% starting in February 2023. This will cost the typical home an additional 20 euros (USD 20.70) every month.
Although it will be a challenging winter in all of Europe, international European road freights reached a new high in Q3 2022. However, as volumes start to decline, freight rates start to soften through September and October 2022. In Q3-22, all costs for the 1,270-kilometer trip between Paris and Madrid rose to a new record high. Contract rates have increased 2.7% Q-o-Q and 21.8% Y-o-Y to an average of EUR 1,570 (USD 1624.93) per voyage (EUR 1.24/km (USD 1.28/KM)) on the head haul from Madrid to Paris.
Due to the increase, diesel expenses may now make up 50% of operating transport costs, compared to their typical 1/3 share. Up until the end of 2022, there will likely be a growing driver shortage, with an estimated 40% increase in open truck driver employment. The European economy is characterized by weaker demand and consumption when seen from the perspective of global inflation. Although the rise in road freight rates is slowing down, as a result, the trend is still upward. Road carriers are experiencing a labour scarcity that is reducing the amount of capacity that is available and driving up their overall expenses.
Increase in rail freight demand supported by government driving the market
Since 2021, France's rail freight industry has been growing again after three years of stagnation, particularly at the national railroad utility and operator SNCF. From 9.6% in 2020 to 10.7% last year, rail's share of surface freight transit increased, and it is anticipated that it will continue to do so in 2022. The goal of France's national rail freight development strategy is to double the country's modal share of goods, from 9% in 2019 to 18% in 2030, and then to 25% in 2050. The strategies for accomplishing this centre on increasing the appeal of rail, both operationally by boosting the calibre of freight train slots and financially by establishing help programs to offset the increased expenses compared to road transport.
Supply networks are being increasingly impacted as the situation in Eastern Europe persists. Some production processes are no longer as easily accessible due to the absence of raw materials like crude, or are no longer commercially feasible as the price of oil and gas, as a result of the decision to exclude Russian oil and gas supplies. Other expenditures increase together with the cost of diesel. The planet will be affected by this ripple effect. Heat, gas, and fuel prices are projected to increase for European consumers. Fuel supply chain disruptions may also have an impact on food costs, leading to a rise in economic protectionism and insecurity in the world's poorer regions.
