• Russian Railways (RZhD) cargo volumes dropped by 5.6 percent in 2025 to a 16-year low due to reduced shipments of oil, construction materials, metals, and coal, resulting from both the rising demands of Russia’s war economy and increasingly challenging global markets.
• Russia’s mounting debt places RZhD at the center of the country’s economic challenges, as the rail network’s historically lower debt levels have risen sharply amid plunging freight volumes, high interest rates, and a broader economic downturn.
• RZhD will face mounting serious financial difficulties due to the Kremlin’s war against Ukraine, increasing Western sanctions, and rising financing costs despite being considered “too big to fail.”

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As RZhD’s operations account for 2.5 percent of Russia’s GDP, the company is widely considered “too big to fail.” RZhD will inexorably face mounting serious financial difficulties due to the war against Ukraine, increasing Western sanctions, and rising financing costs. As the simplest cost-saving solution, ending the war against Ukraine is apparently still not under serious consideration. The government continues to consider all options, including increasing cargo tariffs and/or subsidies, cutting taxes, and/or converting RZhD’s debts to company shares. According to Russian Transport Minister Andrei Nikitin, the ministry is also going to start shifting cargo flows from road to rail transport to improve RZhD’s finances, even though the transportation of many goods is cheaper and more convenient by lorry than by railway.

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In what could be seen as either a desperate or a brilliant idea, RZhD is now testing global finance markets for investment capital. On February 6, Russian Railways press service announced, “This is the first issue in yuan [Renminbi (RMB)] for Russian Railways placed exchange-traded bonds in [RMB] on the Russian market for the first time [...] While RZhD’s RMB bond issue will provide the state monopoly with some interim economic relief, it is significant that it was issued in RMB rather than rubles. This is an apparent acknowledgement of Russian investors’ wariness of the ruble’s long-term stability.

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