News / August numbers mark new low for Russian Railways amid new sanctions

© Dmitrii Melnikov |

Russian Railways has experienced its weakest month of growth, with Estonia looking for a way out of a rail freight quagmire caused by the invasion of Ukraine.

August figures were not pretty for Russia’s leading rail freight operator, according to reports, RZD recording just 0.1% growth, mirroring May’s low, after the carrier appeared to have turned things around with a 1.4% and 1.1% bump in June and July, respectively.

This latest setback is in marked contrast to the carrier’s early showing this year, after a Q1 8.5% year-on-year improvement in box trade displayed surprising versatility at coping with EU sanctions.

And despite the May slowdown, the carrier seemed to have got things back on track – although still someway short of recouping last year’s full-year volume decline of 15.8% – before these numbers, reportedly influenced by new sanctions.

Now in its eleventh package, the EU’s new volley of sanctions has sought to restrict financial services for rail operators and proposed stricter policies on dual-use goods transiting Russia.

As a result, RZD has been left reliant on its eastward reorientation, having signed MoUs with operators in Turkmenistan and Kazakhstan, added India and UAE services and received approval to start construction on a China-Russia bridge to cut 2,000km from current routes.

Sources told The Loadstar Russia’s railways were banking on this reorientation offering volumes comparable with those lost through sanctions – but were sceptical.

In the aftermath of its August performance, RZD announced it was increasing food transport from Moscow to Chengdu, as part of its joint Agroexpress project with Kazakh carrier KTZ Express.

RZD CEO Dmitry Murev said: “Today our cooperation has been elevated to a new level, which has allowed us to increase volume of shipments of food products to China. Russian food items are highly demanded, ice cream and confectionary are in special demand on the Chinese market.

“Thus, the export potential of this area is high. Logistics needs grow in parallel with development of ice cream production.”

While Russia may be the target of sanctions, its European neighbours are also feeling the heat, with Estonian state-owned rail freight carrier Operail’s volumes all but wiped out – 83% down on 2022.

As reported by The Loadstar, the collapse to 1.1m tonnes, left Operail considering privatisation to resolve the downturn, recording similarly weak ebitda for the period of just €200,000, a net loss of €3.1m. And it seems privatisation remains on the cards, with the carrier saying it is developing a “comprehensive strategy” to restore profitability.

It said it expected this strategy to be finalised by autumn, and that “once the company’s economic position improves” there was potential for privatising Operail, should this chime with the owner’s [the state’s] belief that it offered the best route for future success.

Amid all the chaotic rail results, it also appears Russian saboteurs may have turned their attention to Europe’s rail freight sector.

According to Associated Press, Polish security agencies are investigating disruptions to the country’s railway traffic after signalling faults in which the Russian national anthem could be heard in the background.