Rail Reform or Repeat Mistake? Hexafret’s Future Hangs on State Aid

As France rewrites its freight rail playbook, Europe braces for the next state aid showdown. The fall of Fret SNCF and rise of Hexafret has reignited a deeper debate: who should pay to keep public-interest freight on track?

Following the liquidation of Fret SNCF, France is placing its hopes in Hexafret, a newly established subsidiary of SNCF, to keep single wagonload traffic alive. But without massive state subsidies, the model remains fragile — and the situation has sparked a broader dispute in Brussels over the future of public freight transport.

Leaks about Deutsche Bahn’s internal discussions to drastically reduce or even eliminate single wagonload traffic services due to poor economic performance prompted Alexandre Gallo, Managing Director of DB Cargo France, to reflect on the model’s challenges. In an interview with RailFreight, Gallo described single wagonload traffic as structurally loss-making and economically unsustainable under current market conditions.

"Single wagonload traffic systems have high fixed costs, requiring identical structures whether you’re running hundreds or thousands of wagons," Gallo said. "Operational challenges like inconsistent electrification and tight delivery windows make the product uncompetitive compared to road transport. Still, some shippers — particularly in the chemical industry — depend on single wagonload traffic due to road transport restrictions."

DB Cargo Retreats from France’s Wagonload Segment

According to Gallo, single wagonload operations are more labour-intensive and take up significant track capacity at classification yards and terminals. As a result, the segment is heavily dependent on public funding. "The state cannot demand that operators maintain wagonload services without offering subsidies — especially if this type of freight is deemed a public service obligation," he stressed.

Even DB Cargo, Europe’s largest rail freight operator, has pulled back. "Smaller, more agile companies with lower overheads might cope, but even they would still require public support," Gallo added.

DB Cargo France, facing persistent losses, agreed with its parent company to significantly reduce its presence in the French single wagonload market. Much of its activity has been handed over to Hexafret, the successor to Fret SNCF, established in early 2025.

Hexafret Inherits a Fragile Business Model

While Hexafret has absorbed wagonload operations and increased its volumes, it has also had to close three hubs — Vaires-sur-Marne, Gevrey, and Saint-Pierre-des-Corps — resulting in the elimination of 32 positions. Two-thirds of affected staff were reassigned internally.

Shortly before Fret SNCF's dissolution, consultancy Secafi issued a report warning that Hexafret’s wagonload-heavy strategy would rely on ongoing public subsidies. The study concluded that Hexafret may simply inherit Fret SNCF’s structural weaknesses one-to-one. "I can’t comment on Hexafret’s strategy, as I’m not familiar with it,” Gallo stated, “but it’s clear they benefit substantially from public aid due to their dominant position in France’s wagonload freight market. Time will tell whether they can survive without state support."

EUR 5.3 Billion in Subsidies Under Scrutiny

For years, Fret SNCF was indirectly subsidised by the French state. According to the European Commission, these subsidies totalled EUR 5.3 billion, granting the operator an unfair advantage over private competitors. Rather than allow the company to go bankrupt, the French government opted to dismantle it and redistribute operations to newly created entities.

Fret SNCF had argued that without government support since 2007, freight would have shifted to road, increasing urban congestion, traffic accidents, and air pollution-related illnesses.

French Politicians Clash with Brussels Over Freight Liberalisation

The collapse of Fret SNCF prompted political backlash in France. MEP Bardella, from the Patriots for Europe group, accused the Commission of endangering not only France’s public rail operator but the entire national freight sector. "Rail freight is a pillar of energy independence and industrial competitiveness," Bardella wrote. "Yet the Commission appears to favour deregulation, potentially undermining public operators in favour of private interests." Since freight market liberalisation in 2006, rail freight’s share of transport in France has halved, while Fret SNCF’s workforce has dropped by two-thirds.

EU Commission Vice-President Teresa Ribera responded by affirming the EU’s commitment to sustainable transport. Between 2008 and 2023, the Commission approved over EUR 13.5 billion in state aid for member states — supporting investments in rail terminals, wagonload operations, and track access charge reductions.

In 2024, the Commission proposed new state aid rules for land and multimodal transport, expanding options for funding sustainable modes like rail and inland waterways. "Liberalisation is not the root cause of France’s freight troubles,” Ribera stated. “All member states opened their markets, yet outcomes vary: while France saw a 14% decline in rail freight (2006–2022), Germany grew by 20%, Belgium by 18%, Denmark by 17%, the Netherlands by 14%, and Poland by 10%."

She confirmed that the Commission is still investigating Fret SNCF’s state aid. In the meantime, France has chosen to transform the company into Hexafret and Technis, which began operations in 2025 without disrupting rail freight continuity. Some services were successfully transferred to other operators, contributing to market competition and new opportunities.