A crisis in fundamental economic sectors often signals deeper issues. Russian Railways (RZD), the state monopoly operating the world’s third-largest rail network (85,000 km of track, 20,000 locomotives, 700,000 employees), is now facing severe financial difficulties.
Recently, RZD requested urgent financial aid from Moscow authorities—200 billion rubles (roughly $2.3 billion)—just to cover operating expenses. The government refused, fearing a wave of similar requests from other state corporations.
In the first nine months of 2025, RZD reported its first net loss in five years—4.4 billion rubles. Cash reserves have dropped twelvefold, from 251 billion to 21.7 billion rubles. Total debt reached 4 trillion rubles ($47 billion), and debt servicing costs doubled from the previous year.
The main reason: freight volume has declined for the fourth consecutive year, reflecting a broader economic downturn. Cargo types are down significantly: grain (-35.6%), industrial goods (-19.4%), construction materials (-17%), and even fertilizers (-7%). Efforts to compensate with military cargoes have not been sufficient and are less profitable.
The company has cut its investment program by a third, postponing infrastructure modernization and new rolling stock purchases, including major transit expansion projects to China. Hundreds of thousands of railcars sit idle due to a shortage of locomotives and falling production of new engines.
Staff shortages are worsening: thousands of specialists are missing, employee turnover is up, young workers avoid the sector, and wages remain low. RZD has introduced unpaid leave for some managers, and a high-profile corruption scandal surfaced with the arrest of the energy division head for embezzling $18.5 million.
Government support options under discussion include raising tariffs (risking higher inflation), tax breaks, tapping the National Wealth Fund, or converting part of RZD’s debt into shares (transferring ownership stakes to state banks).
The RZD crisis affects the entire economy: slower and less reliable freight shipments, delayed exports, and manufacturing component shortages. Even Russia’s largest companies can no longer operate independently—their growing debts now burden the country’s economy as a whole.
