(MOSCOW, RUSSIA) – Russia’s state owned rail monopoly, Russian Railways, is facing a deepening financial and operational crisis that is now spilling into the wider economy, the labour market and the country’s war logistics, according to leaked financial plans, industry data and transport analysts.
Russian Railways, known as RZD, is burdened by an estimated debt of about 4 trillion roubles, roughly 44 billion US dollars at current exchange rates. In an effort to stay solvent, the company has begun selling some of its most valuable assets, a move that has raised concerns about long term capacity, employment and national security.
Sources familiar with the company’s plans say RZD is preparing to sell a 49 per cent stake in the Federal Freight Transport Company, one of Russia’s largest freight operators, which manages more than 134,000 wagons. The stake has been valued at around 44 billion roubles, or about 490 million US dollars, a figure widely viewed by analysts as far below the company’s underlying value.
The sale is intended to provide short term liquidity rather than resolve the structural problems facing the rail network. RZD has also put major real estate assets on the market, including Moscow Towers, a landmark skyscraper complex, which is reportedly listed for about 193 billion roubles, or roughly 2.1 billion US dollars.
Financial strain is already visible in operations. RZD’s freight capacity fell by about 30 per cent during the first nine months of 2025, according to internal figures cited by industry sources. Rail traffic disruptions have been reported across Siberia and along key routes linking Russia to Asian markets, including China.
The decline reflects a combination of equipment shortages, technical failures and labour problems. Modern freight wagons that carry heavy loads rely on specialised roller bearings previously supplied by Western manufacturers such as Sweden’s SKF and US based firms. Following Russia’s full scale invasion of Ukraine and subsequent sanctions, these suppliers exited the Russian market.
Replacement parts sourced domestically or from China have failed to meet required technical standards, according to engineers and leaked documents. Bearings that once lasted up to 800,000 kilometres are now reportedly failing after as little as 80,000 kilometres, leading to overheating, automatic safety shutdowns and long delays. In cold regions, a single halted train can block dozens of others behind it.
To cope with spare parts shortages, RZD has resorted to dismantling functioning wagons and locomotives to keep others running, a practice known in the industry as cannibalisation. About 50,000 modern wagons, representing up to one fifth of capacity, are believed to be affected. Transport safety experts warn that reusing worn components sharply increases the risk of derailments and serious accidents.
Locomotive availability has also become a major constraint. Industry assessments suggest that around 93 per cent of the recent decline in freight loading is linked to locomotive shortages. Many modern engines depend on Western made electronic control systems and fuel injection technology that are no longer available due to sanctions.
The operational crisis has been compounded by reported acts of sabotage targeting railway signalling infrastructure inside Russia. According to figures cited by international media, more than 145 incidents involving the arson of relay cabinets and signalling equipment have occurred since the start of the war. Such attacks force trains to operate at drastically reduced speeds or stop altogether, further disrupting logistics.
The impact is being felt on the battlefield as well as at home. Russia’s military logistics rely heavily on rail transport to move ammunition, fuel and armoured vehicles over long distances. With capacity constrained, military shipments are increasingly crowding out civilian freight, creating shortages of coal, construction materials and industrial inputs.
RZD data indicate that overall freight volumes fell by 6.7 per cent, while shipments of construction materials dropped by 10.5 per cent. Transport of iron ore and scrap metal declined by about 32 per cent, affecting defence related industries that depend on steady steel supplies. Analysts say delays in raw material deliveries are slowing production and repair of armoured vehicles.
The financial stress has also translated into higher costs across the economy. To offset losses, RZD raised freight tariffs by up to 20 per cent, adding pressure to businesses already facing inflation. Some regional producers have reportedly been forced into bankruptcy as transport costs eroded margins.
Russian Railways is one of the country’s largest employers, and the crisis is triggering a severe labour shortage. Skilled drivers, engineers and maintenance workers are leaving for higher paid jobs in the defence industry, where wages have surged due to wartime demand. In response, RZD has called retired staff back to work and lowered qualification standards, moves that safety specialists say raise further risks.
Investment has been cut sharply. RZD reduced its investment programme by about 20 per cent, equivalent to roughly 713 billion roubles, or nearly 7.9 billion US dollars. Expansion projects on key eastern routes, including those linking Russia to Asian markets, have been postponed or cancelled.
The international implications are significant. Russia’s pivot towards China as its main energy and commodities customer depends on reliable rail links such as the Trans Siberian and Baikal Amur lines. Disruptions and security concerns have undermined confidence in these routes. China has increasingly favoured alternative corridors through Central Asia and the Caucasus, reducing Russia’s role as a transit hub.
Neighbouring countries, including Kazakhstan, are also developing routes that bypass Russian territory, citing reliability concerns. For Moscow, this erosion of transit status threatens future export revenues and geopolitical influence.
Analysts say the crisis at Russian Railways illustrates the broader strain on the Russian economy under the weight of war, sanctions and technological isolation. The rail network, once a symbol of state power and integration, is now struggling with debt, ageing equipment and workforce instability.
For the Kremlin, led by the Russian dictator Vladimir Putin, the situation presents a difficult choice. Continuing the war places further pressure on rail infrastructure that is already near its limits, while stabilising the system would require resources and policy changes that could constrain military operations.
