Key Russian exporters, including metals giant Rusal and oil producer Gazprom Neft, have cut planned volumes of commodities transported by rail. According to internal documents from Russian Railways reviewed by Reuters, shipments of metals and oil products are declining. This reduction highlights weaker demand as Russia’s economy slows amid ongoing challenges.
Rail Spending to Drop in 2025
Russian Railways, the state monopoly, plans to reduce its spending by 32.5 billion rubles ($408 million) in 2025. This cut represents about 3.5% less than originally forecast, bringing total planned expenditure to 858.4 billion rubles. The revision follows lowered freight volume forecasts outlined in a report dated March 20. The company had already planned to cut investments by 40% in 2024 due to rising interest payment costs.
When asked for comment, Russian Railways declined to respond.
Freight Volumes at a 15-Year Low
Freight volumes in 2024 dropped to their lowest level in 15 years. This figure serves as an important indicator of Russia’s export-driven manufacturing sector’s health. The documents indicate that Russian Railways expects to move 36.7 million tonnes less freight in 2025 than the previously forecast 1.24 billion tonnes.
Among the companies contributing to the volume cut are major names such as Rusal and steelmakers Severstal and MMK. Although the total freight volume for 2025 is still expected to slightly exceed the 1.18 billion tonnes recorded in 2024, volumes fell 6.8% between January and April compared to the same period last year.
Reasons Behind the Spending Cuts
Vadim Mikhailov, Russian Railways’ first deputy CEO, submitted a report to the company’s board explaining the reduced investment plan. He cited five key reasons, all linked to external factors beyond the company’s control.
One major cause is the Russian Central Bank’s tight monetary policy. The benchmark interest rate has remained at 21% since October 2024, slowing construction activity. Additionally, high freight rates have forced steel producers such as Severstal, MMK, TMK, NLMK, and Evraz to reduce shipments.
TMK declined to comment on these findings. Evraz, MMK, NLMK, and Severstal did not respond to requests for comment.
Challenges in the Steel Industry
Russia’s steel sector accounts for nearly 5% of the national GDP. It has faced a sharp decline in export revenues since losing access to high-profit markets due to Western sanctions, according to Moscow-based consultancy Yakov and Partners. Both steel production and domestic demand fell in 2024, per the World Steel Association. Industry analysts at Chermet Corporation report that production continues to decline this year.
Impact on Aluminum and Other Sectors
The report also highlights weaker demand from aluminum producer Rusal. While Rusal confirmed it will follow previously announced plans from November, it provided no additional details. Those plans include cutting aluminum output by 250,000 tons annually because of rising alumina prices.
Further, increased sanctions on metals, forestry, and oil companies — including Gazprom, Surgutneftegaz, and Tatneft — have hurt freight volumes. None of these companies responded to requests for comment.
Decline in Trade with China
Reduced exports of wood, fertilizers, metals, and petroleum products to China have contributed to lower freight shipments. Since the start of 2025, trade between Russia and China has fallen by 7.5%.
External Disruptions
The report also refers to “third-party interference, mainly involving refineries,” a likely reference to Ukrainian drone attacks on Russian energy facilities, which have further disrupted logistics.
This latest update from Russian Railways illustrates the broad economic pressures weighing on Russia’s export sectors. Reduced commodity demand, high interest rates, sanctions, and security challenges are all contributing to lower freight volumes and cutbacks in investment.
