Russian loading shrinks by 6% in August, but not due to lack of demand

Loading on the Russian rail network has shrunk by six per cent in August, when compared to the same month last year. The cause of the drop is likely not a lack of demand, but rather Russian Railways’ (RZD) overextension due to issues with locomotive and staff shortages.

“Loading on the Russian Railways network in August amounted to 97,5 million tonnes. This is six per cent less than in the same period of 2023”, RZD says in a Telegram post. Moreover, loading between January and August also decreased by 3,7 per cent compared to the same period last year.

Whereas RZD notes some positive trends, namely that loading grew among fertilisers (7,9 per cent), industrial raw materials (6,6 per cent) and coke fuel (5,1 per cent), the development is generally not positive and has been ongoing for a while.

Underlying reasons

The underlying reasons for the loading drop could be manifold. RZD is struggling with a locomotive shortage due to western sanctions, infrastructure capacity limitations and empty wagons clogging the rail network.

At the same time, demand for rail transportation is sky-high in Russia. Because of that, it seems unlikely that that is the reason for the drop in loading. To the contrary, Russian Railways is reportedly unable to meet its obligations to transport a certain amount of coal to the east for export to China and through its ports. Russian publication Kommersant writes that RZD cannot meet those quotas and coal companies are struggling to empty their storages. Due to RZD’s lack of capacity, they are threatened with the need to shut down partially.