In total, around 52,700 freight wagons were produced (-29.5%). Notable declines took place for gondola (open) wagons (-28%) and hopper wagons, the production of which declined by 5.3 times.

The production of locomotives also fell rather dramatically. Russia produced 22.2% fewer electric mainline locomotives, 15.3% fewer mainline diesel locomotives and 44% fewer diesel shunting locomotives.

Declining business and financial challenges

The contraction in rolling stock production is at least in part caused by the declining rail freight business in Russia. Russian Railways is transporting fewer and fewer goods each month, which reduces the demand for new rolling stock.

However, Russian wagon keepers have also been writing off their assets much more than previously. Around 16,000 freight wagons were decommissioned from the Russian Railways network in the first half of 2025. This was a 66% increase compared to the first half of 2024. The decommissioning trend was expected to continue at a lower pace throughout 2025.

Domestically produced locomotives are too expensive for many Russian companies, the president of the Russian National Research Centre for Transportation and Infrastructure had stressed earlier. This could also contribute to the decline in locomotive production – especially considering the levels of wear and tear among the fleet.

Luuk von Meijenfeldt makes clear that this is far from an exhaustive list of the locomotive’s benefits. The CEO is highly enthusiastic about the new model, which is set to bring significant changes and cost-savings to the rail freight market.

Savings into the hundreds of thousands

To start off with the hard-hitting improvements: the EURO9000b model features a modern interior design which is expected to consume 10% less energy than the commonly used Vectron locomotives. A welcome change in Europe, where energy prices have risen dramatically in recent years. In addition, the battery can recuperate brake energy and serve as a start-stop system.

These electricity consumption savings can easily translate into some hundreds of thousands of euros per locomotive per year in cost-savings, depending on the distance driven.

The new locomotive boasts a unique innovation too. It has a device on board that can track energy prices, which allows the operator to leverage flexible energy prices to minimize the purchase price by charging the battery at favourable moments. “This simply does not exist right now”, says Von Meijenfeldt, whose company NEXRAIL is behind the development of the device in cooperation with railway engineering firm GEZ Rail Solutions Gmbh.

Handling diversions as if you had a diesel locomotive

The battery-electric nature of the model opens up quite some possibilities, the CEO continues. “It will have a huge impact on, for example, the networks of DB InfraGO and ProRail. The need to electrify is dramatically reduced and electricity imbalances are easier to manage. We hope that this will lead to more favourable treatment by the networks.

The impact of construction works on operators also changes. Today, construction works are a thorn in the side of rail freight companies that need to diverge along exceptionally congested routes. With the new locomotive model, companies can divert along less busy, non-electrified routes where you would otherwise need a diesel locomotive. That saves time and, as the saying goes, time is money.

The addition of the battery also improves traction performance. “If you are getting your power from a DC line, your capacity is limited by definition”, explains Von Meijenfeldt. “When driving a heavy train, you’ll have difficulties accelerating. With a battery, you could boost your power, accelerate faster and get a better train path in that way.”

Increased power output also eliminates the need for a second locomotive to cross mountains. An important advantage on the busy corridors between the northwestern European ports and Italy, where saving money on a second traction vehicle could provide a competitive advantage.

Return on investment

Innovations come with a price tag, but Von Meijenfeldt assures that there is a certain return on investment with the potential for savings compared to earlier generations of locomotives. “This locomotive has the best total cost of ownership for many use-cases”, he says.

The expectation is that the locomotive will soon be approved for the majority of European rail networks. The first locomotives will be certified in Germany, Austria, Switzerland, Italy, the Netherlands and Belgium as of 2029. The “usual” EURO9000 locomotive is already in an advanced stage for approval for eastern European markets, and the -b variation will likely follow suit.

The tender ends on 22 September, and ZSSK Cargo wants the first locomotives in its arsenal by March 2026, according to the Slovak publication Railpage.net. The company currently operates a fleet of 430 locomotives.

A slice of the cross-border pie

ZSSK Cargo explains that its search for new multi-system locomotives is “a direct response to current challenges and trends in the European rail transport market.” For one, the company hopes to keep up with other state-owned operators in cross-border rail freight.

With international transit traffic becoming the norm in the EU, those multi-system locomotives are key, the company says. The EU’s rail liberalisation and interoperability rules are making border transshipments and locomotive changes less common.

The result is that rolling stock needs to be operational in more than one country to participate in the growing cross-border traffic. ZSSK Cargo says that it does not currently have enough locomotives for that business. “Without modernisation, we would risk losing our business to other carriers who are prepared for cross-border transport.”

Preparations in time

There seems to be a sense of urgency at the company. Slovak rail freight is growing, but not necessarily on the local level, explains the freight operator. “We expect growth in freight transport volumes primarily in the area of cross-border transport. Growth will not be automatic for everyone, but those carriers who prepare for it in time will benefit from it.”

As of September 2025, ZSSK Cargo sees itself as less competitive than other state-owned carriers in neighbouring countries. “We need to address the renewal of our electric locomotive fleet, as we are currently the only company that has not yet begun the process of modernisation with multi-system locomotives”, the company says. It will only be able to profit from new international freight flows with suitable rolling stock.

Austrian opportunity

An example of a new international rail freight opportunity is the completion of the electrification of the Devínska Nová Ves – Marchegg railway. It will open the door to cross-border services to Austria, but without multi-system locomotives, ZSSK Cargo would not be able to jump on that opportunity.

“Our conclusion is clear: growth in freight transport volume in Slovakia will depend directly on carriers’ ability to handle this growth. Therefore, our investment in new locomotives is not only a sign of expected growth; it is also a necessary prerequisite for us to participate in this growth and avoid becoming only spectators in our own country while foreign carriers dominate the international market”, the operator says.

Private companies in Russia own between five and eight thousand locomotives. In total, 20% is owned by industrial railway enterprises. Those are separate companies that provide transport services for mines or manufacturing plants, usually transporting products to nearby RZD stations.

In other words, they are a critical part of Russian logistics and the national economy. But it is exactly those companies that are not able to renew their fleet. “Updating the industrial railway fleet happens rarely, the situation is approaching an emergency”, the ROLLINGSTOCK Agency representative writes. “Soon, industrial railway locomotives will not be able to get access rights to mainline tracks.”

Chinese replacements?

The president of the Russian National Research Centre for Transportation and Infrastructure points out in local media that those industrial railway companies do not have a whole lot of money. “Even with a 50% discount, only a few would be able to acquire locomotives.”

Russian locomotives are too expensive for the industrial railways, and the sky-high central bank interest rate does not help in that regard either. The companies cannot get the necessary funding to keep operations going in the long run.

As a result, some companies are now looking to Russia’s neighbour China. A representative of an association uniting 194 companies visited a Beijing expo to express interest in Chinese locomotives. Companies from China offer locomotives at prices that Russian manufacturers could never hope to match.

“Taking into consideration that we have chosen a course of technological independence over the past three years, the presence of Chinese rolling stock on industrial tracks is, probably, not the most optimal thing”, the research centre president commented on the development.

The situation creates a dilemma for Russian rail companies. Chinese locomotives may be cheap, but setting up long-time maintenance and spare part imports is an additional investment. In the long run, it may not pay off to rely on Chinese rolling stock after all, but “home-made” locomotives are out of reach in the short term.

Russian manufacturers cede ground to China

It is not just the operators that are feeling the heat. Whereas Russian locomotive manufacturers have plenty of production capacity, according to Russian media, they are being out-competed by the Chinese in the broad-gauge world: Kazakhstan, Uzbekistan, Georgia and more.

The Kazakh private rail freight association lists a number of factors putting Russian manufacturers at a disadvantage. On the top of the list is the risk of secondary sanctions, which was the primary reason for Georgian Railways to opt for Chinese rolling stock, rather than Russian locomotives.

In second place comes the high interest rate in Russia, which makes it impossible to acquire funding against competitive rates. And lastly, Chinese companies get considerable state support, allowing them to offer locomotives at very low prices.

For Russian companies, relying on Chinese rolling stock is a long-term risk that is unlikely to get support from the political establishment. To break the deadlock, there needs to be high-level coordination and (financial) state support, say local experts. The question only remains where that money is supposed to come from amid Russia’s tightening budgetary constraints.

The move into the Ukrainian rolling stock market could be seen as a surprise. Earlier reports from Ukraine suggested that the wagon lease market is oversaturated, with rental prices for a wagon between two and four euros per day.

Yet, LTG Cargo is positive. “Looking ahead, we view the Ukrainian market with a long-term perspective. The rolling stock in the country is worn out and has suffered significant damage due to the war. Ukraine’s reconstruction will undoubtedly require robust rail logistics and rolling stock”, a company representative explains.

Wagons and shunting locomotives

The head of LTG Cargo Ukraine, Saulius Stasiūnas, went on to explain that rolling stock in the country is needed. “At the beginning of the war in Ukraine, freight traffic fell by half – from 314 million tonnes in 2021 to 151 million tonnes in 2022 – but in recent years it has been gradually increasing.”

“The industry in the country has adapted and is operating, so rolling stock is needed for freight transport and work at terminals. Most of the wagons we plan to lease are covered wagons, which can be used to transport various cargoes, from construction materials to food products, and platforms for transporting containers.”

The majority of LTG Cargo Ukraine’s wagons are already leased, and discussions are currently underway regarding the leasing of shunting locomotives of type ChME3. Those have been modernised in Vilnius last autumn.

Future expansion

LTG Cargo Ukraine plans to expand its rolling stock fleet to better serve Ukrainian businesses, says LTG Cargo. Over the next two years, the company will acquire an additional 120 wagons and it expects to add 2M62K mainline locomotives to its fleet. Furthermore, the arrival of new electric locomotives in Lithuania could also lead to the addition of Siemens diesel locomotives to LTG Cargo Ukraine’s fleet.

The portfolio of LTG Cargo Ukraine’s customers for freight forwarding services is now managed by LTG Cargo Polska, LTG Cargo’s Polish subsidiary.

Now, the picture looks vastly different: you can rent a grain wagon for as low as 100 hryvnia, or 2.12 euros. More commonly, the price is around 150 to 200 hryvnia, so up to around four euros. The fall from 300 euros to single-digit prices is a massive crash, and a problematic one for wagon owners. Four euros per day does not cover administrative or maintenance costs, and so their business has become loss-making.

Volodymyr Ivashchenko, CEO of TAS-Logistic, a Ukrainian wagon leasing company, tells Ukrainian publication Rail.insider that some operators are forced to transport freight for free. By doing so, their wagons do not stand idle and they do not need to pay additional fees for fleet storing – more financially beneficial arrangement than leaving them unused.

There is oversupply especially in the grain hopper and gondola market segment, which makes up the majority of Ukraine’s rolling stock fleet. There are around 27,000 grain wagons in Ukraine, but in peak season, it does not need more than 19,000. In the off-peak season, the need does not exceed 13,000.

The underlying reasons

How is such a quick turnaround in the market and its profitability possible? Rail.insider identifies a number of underlying reasons. First, Ukraine acquired thousands of Russian wagons that were left on its territory after the start of the war. Moreover, the war has shrunk freight volumes. Many grain shipments now also take place via the road.

Besides that, Ukrainian Railways has improved its infrastructure in recent years. It has sped up wagon turnover and reduced waiting times in ports and at border crossings. The more efficient operations have reduced the quantitative need for wagons. Lastly, operating costs have grown: Spare parts, repairs, and storage fees have become more expensive.

Or is Ukrainian Railways at fault instead?

On the other hand, Yuri Shchuklin, director of logistics company Vantazh and committee member at the European Business Association, has a different reading of the situation. In an opinion piece for publication ZN.ua, he points the finger straight to Ukrainian Railways. The rail operator is allegedly the architect of both the market boom and the following bust.

Shchuklin argues that Ukrainian Railways (UZ), as a market regulator and commercial player, artificially reduced the availability of wagons. As a result, auction and rental prices soared, which was beneficial for both UZ and wagon owners. In reality, Shchuklin says, there has been a wagon surplus since 2020.

What followed was a purchasing frenzy, continues Shchuklin. He claims that agricultural producers bought an additional 1,600 grain wagons and 6,000 dump truck trailers. When UZ then improved wagon turnover after a 2024 market crash, the inflated prices collapsed.

Future outlook

TAS-Logistic believes that the current situation will continue throughout 2025. That means a continued surplus, low rates, and no major growth triggers in sight. Economic recovery will remain constrained by war, limited port access, and western border bottlenecks. Rolling stock companies will gradually scrap outdated wagons, and rates will increase only slightly around the new grain season in late July.

From 2025 onwards, the company believes that the market will gradually move to a new equilibrium by 2028. It looks at the coming years as a “painful period” that is a necessary correction.

And so overall, in Q1 wagon production was up by only 2%. The big hit came in April, when production dropped by around a third. Those numbers are disappointing but expected for the Russian rail sector. Local experts predict that production may fall to 50,000 units in 2025. In 2024, Russia produced nearly 75,000 wagons – among the most productive years in recent history.

What’s behind the decline?

The underlying reasons for the decline are various. For one, very few Russian wagons are being retired. Then there is also the high interest rate, which prevents companies from investing.

Third, infrastructure is working at full capacity, so there is just not enough space for more rolling stock. And lastly, Russian Railways (RZD) is actively trying to get rid of wagons that it considers to be excessive on the tracks. In other words, there is little room for more rolling stock in RZD’s view.

As a result, local Ukrainian wagon owners have reportedly been lobbying for a ban on the use of foreign wagons. That would improve their market position by removing outside competition. There are 500 Estonian wagons in Ukraine right now with a total value of 20 million euros.

Estonian rolling stock owners express dissatisfaction with UZ’s ban, writes Postimees. They find it unfair that Ukraine is banning its wagons despite Estonia’s far-reaching support for the country.

The European Business Association (EBA) calls for UZ to revert course. It points out that foreign wagons managed by UZ are not subject to the restriction, which creates an uneven playing field on the rail freight market. Foreign rolling stock helped Ukraine cope with a shortage following Russia’s invasion of the country. UZ was not able to provide sufficient freight services at the time.

Competitiveness

Even if that situation has changed for the better during the past three years, UZ cannot count on businesses’ enthusiasm for the new restriction. It has “caused concern and confusion among freight shippers and wagon operators”, EBA says. “In their view, these measures lack sufficient justification and could lead to an artificial shortage of loading capacity, anti-competitive practices in the market, higher transportation costs, and a decline in the global competitiveness of Ukrainian goods.”

As a solution, EBA proposes an agreement on a standard contract for the operation of freight wagons in Ukraine’s domestic rail network and ensuring their interoperability.

Tariff increase

EBA’s protest against UZ’s measure is not the first time that the rail operator and businesses go head to head. Measures similar to the current rolling stock restriction were introduced in September 2024, but were suspended following strong opposition from businesses and industry associations. Businesses have also protested UZ tariff increase plans.

“Unforeseen restrictions” are the underlying factors for those serious risks. They include RZD’s measures against the excess wagons, limited infrastructure throughput capacity, a low volume of wagon write-offs, as well as the high 21 per cent interest rate. The latter has a negative impact on the lending and leasing of rolling stock.

The result, according to Semyonov, is a possible collapse of wagon production down to 25,000 annually. Wagon manufacturers could subsequently be forced to close their businesses. In 2024, Russian companies produced a total of 73,5 thousand wagons. If the situation develops slightly more favourably than what is now expected, up to 60,000 wagons could be built in Russia in 2025.

No registration for wagons

That seems rather unlikely with how things are going now. On top of the abovementioned factors, Semyonov says that there is no more capacity left for the registration of new wagons. “Under the old conditions, the owner had to register it to himself within two to three months, and accordingly deregister it from the plant’s registration station. Today, this period has been reduced to 45 days. But the problem is not the registration period. We have nowhere to register it, the owner of the public infrastructure [RZD] refuses to register these cars.”

“Owners will not be able to re-register their wagons already by April – May. Accordingly, the wagon will not be in demand. Not because there will be nothing to carry in it, but simply because it will not be registered. “And an unregistered wagon has no right to operate on non-public tracks,” Semyonov concluded.