The freight division of Swiss Federal Railways is to axe 590 jobs as part of a cost-cutting programme, with another 60 jobs set to go in the infrastructure sector.
Railway unions condemned the "unprecedented wholesale cuts" to freight transport.
Federal Railways, which doubled its first-half loss to SFr36.6 million ($29 million) mainly because of problems in the freight division, said no one would be fired.
In a statement on Friday, the railways said it expected this and other measures to result in savings of SFr85 million a year and the cargo sector breaking even in 2007.
The transport workers union and the Transfair union reacted angrily, saying the cargo division bosses should not be allowed to make unilateral changes to transport policy. It called for a public debate on the issue.
For its part, the transport ministry said it believed the cutbacks were justifiable and it would not provide a subsidy to maintain the cargo operation at its present level. However, it insisted that redundancies should be handled in a socially responsible way.
The job cuts had been signalled in August, when Federal Railways announced that despite carrying more passengers and goods it had doubled its loss in the first half - to SFr36.6 million from SFr18.2 million in 2004.
A total of 650 jobs will be lost between now and June 2006 as a result of structural changes. Most of the 60 positions to go in the infrastructure division will be at the centre in Biel.
Higher costs, lower revenue
The freight sector will scale back its operation by reducing the number of its centres from 650 to 323, the railway operator said in a statement.
"The cargo division is faced with a negative development in terms of revenue, owing to sustained price erosion and a simultaneous fall in demand," the company added.
"The causes of the fall in demand and the associated loss in revenue are on the one hand the result of structural changes and changing customer requirements," the statement said.
"On the other hand the competition between road and rail has increased more quickly than anticipated."
The Federal Railways said that given the drop in revenue, the freight division's costs were too high and it was expected to make a multi-million-franc loss this year.
Every year the company transports over 253 million passengers and around 58 million tons of goods.
swissinfo with agencies
Swiss Federal Railways' freight division is Switzerland's leading provider of rail freight services.
The company is based in Basel and currently has 4,800 employees.
Last year, it carried a total of 58 million tons of freight.
Most cargo traffic is transalpine freight on the north-south axis through Switzerland.
Rail accounts for 65% of transalpine traffic in Switzerland, the highest percentage in Europe.