The turnaround to the East continues, and the volume of freight transportation by rail is growing in this direction. Despite the insufficient throughput capacity of the Eastern polygon, rail transportation in Russia has great development prospects.

The strategic importance of railroad transportation in Russia is primarily due to the country's geographical location. When it is necessary to ensure uninterrupted year-round transportation of significant volumes of cargo, it is the railroads that make it possible to solve this undoubtedly important task. Below we will talk about the challenges and prospects of freight rail transportation in Russia.

Current challenges of the freight rail transportation market in Russia

In general, the Russian rail freight transportation market has overcome the consequences of the restrictions introduced in 2022. While at the end of 2022 the reduction in loading relative to 2021 reached 3.8% (to 1.234 million tons), in 2023 this indicator remained virtually unchanged compared to 2022, decreasing by only 0.2% (to 1.232 million tons). It should be noted that for some types of cargoes, loading increased in 2023:

// for grain by 37.1% (+8.9 million tons),
// for container cargo - by 12.8% (+5.8 million tons),
// for chemical and mineral fertilizers - by 5.4% (+3.2 million tonnes).

At the same time, the current year has seen a downward trend in the volume of shipments. Thus, at the end of July, the total volume of shipments decreased by 5.6% (to 97.4 million tons) compared to the same period of 2023. Loading of construction materials (-17%), cement (-15%) and ferrous metals (-12%) decreased most significantly. In total, as of January-July 2024, the volume of transportation on the Russian Railways network decreased by 3.4% (to 698 million tons). What is the reason for this trend?

The key reason is the change in the vector of transportation toward the east. Thus, for two years, the transportation of goods in this direction shows a steady growth. For example, in 2023, the largest increase in the loading indicator was demonstrated by the Transbaikal (by 14.2%) and Far Eastern (by 5.1%) railroads. The increase in eastbound traffic has significantly increased the load on the rail infrastructure, which was already operating at capacity, primarily on the Eastern polygon (which includes the Baikal-Amur and Trans-Siberian Mainlines). Due to the lack of throughput capacity, the infrastructure simply cannot “handle” the significantly increased volume of transportation.

Infrastructural problems also lead to an increase in railcar turnover time. Moreover, this has resulted in a surplus of railcar fleet, which, according to Russian Railways, is about 220,000 units. To put it simply, now our country has more railcars than it needs for transportation.

Interestingly, the volume of transit transportation from China to the EU countries increased by 44% in the first quarter of 2024. This is explained, among other things, by the growth of trade between China and Europe, the lack of alternative routes by land, as well as the aggravation of the situation in the Red Sea.

Undoubtedly, carriers together with consumers of services and authorities are constantly working out various options for solving the existing problems. For example, Russian Railways is actively introducing routing - a more efficient method of using the existing infrastructure. It involves the formation of full trains directly at loading points or at the stations nearest to them. As a result, trains pass through stations without having to rework their trains. Solutions involving the transportation of goods on the way are also being implemented, which reduces empty runs and the load on the infrastructure. The project of heavy-weight traffic (including in the Eastern polygon), which involves increasing both the weight and length of trains, thus increasing the volume of exports, has also passed the experimental stage.

Prospects for the Russian rail transportation market

Taking into account the current geopolitical situation and changes in the vector of foreign trade development, the key task is the formation of a new and modernization of the existing transport framework (including railway transport) in the eastern direction. This conclusion was reached by the experts of the National Research University Higher School of Economics.

Currently, China is the main foreign trade partner of the Russian Federation, as well as the largest consumer of various raw materials in the region. In addition, foreign trade with other Southeast Asian countries is actively developing. Accordingly, the development of domestic railway infrastructure should be coordinated and synchronized with the projects implemented by partners, and this applies both to the development of industry and the construction of new railroads and border crossings.

Synchronization and coordination of joint projects will make it possible to solve the main problem - insufficient throughput capacity of the Eastern polygon. In fact, a “bottle neck” has formed in eastern Russia, the expansion of which is the key task for the medium term. Experts believe that in solving this problem it is important to take an integrated approach to the construction of new infrastructure and renewal of the existing one.

This factor is emphasized by the leading expert of “Finam Management” company Dmitriy Baranov: according to him, it is important to ensure connectivity, as well as rhythmicity, stable financing and compliance with the work schedule. Dmitry Alexandrov, Head of Analytical Research at IBA Partners, emphasizes the importance of finding a compromise between the approaches of Russian Railways and industrial enterprises in the modernization of the Eastern polygon, as well as attracting additional sources of financing (including from the state).

In general, industry experts believe that the eastern direction remains the most promising for the development of rail transportation under current conditions. At the same time, we should expect further growth (even if less than in the current year) in transit traffic from China to Europe.

Another trend that will be relevant over the next few years is the digitalization of the industry. This applies to various aspects: traffic and logistics management, safety systems. For example, Russian Railways is actively implementing virtual coupling, which involves the exchange of traffic information between the locomotives of the leading and slave trains. It makes it possible to run up to 5 trains in this mode and halve the interval between associated trains - from 12 to 6 minutes.

Value of exhibiting at TransRussia | SkladTech 2025

Despite all the challenges, the rail transportation segment remains one of the most in-demand segments. In addition, given Russia's dynamically developing cooperation with Southeast Asia, we should expect further positive dynamics in terms of freight traffic and infrastructure modernization in the east of the country. Therefore, those companies interested in entering the Russian market or scaling up their own business should think about establishing partnerships now.

A great way to find new partners is to participate in the International Exhibition of transportation and logistics services, warehouse equipment and technologies TransRussia. This is the largest logistics exhibition in Russia and CIS countries. The value of the event is emphasized by the demand from the target audience: in 2024 the exhibition was visited by 30 217 specialists from 81 regions of the Russian Federation and 50 countries of the world.

At TransRussia | SkladTech:

// 76% of visitors are looking for new partners and customers,
// 68% of visitors are in management positions,
// 14,836 visitors are interested in freight rail transportation.

Challenges and Prospects of Freight Rail Transportation in Russia