Russian Railways (RZD), the state-owned rail giant vital to Russia's domestic transportation and logistics, has struggled to maintain operations as Western sanctions have cut off access to financial markets and restricted the supply of essential parts, including ball bearings, static converters, and electric transformers.
These restrictions, imposed after Russia’s 2022 invasion of Ukraine, have severely impacted RZD’s finances and worsened maintenance problems, contributing to an overstretched and deteriorating rail system.
These restrictions, imposed after Russia’s 2022 invasion of Ukraine, have severely impacted RZD’s finances and worsened maintenance problems, contributing to an overstretched and deteriorating rail system.
Several Western companies, including those supplying rail cars, locomotives, and other railway infrastructure, have ceased business with Russian Railways. Siemens, a major supplier of high-speed trains and signaling equipment, suspended its business activities in Russia, disrupting long-term projects and contracts.
To keep its operations running, RZD has increasingly turned to foreign suppliers and logistics firms to bypass sanctions. Companies based in China, Hong Kong and the UAE have played a key role in supplying critical railway components, enabling RZD to circumvent export restrictions imposed by Western countries.
Key Players in Sanction Evasion
Leading this effort are two prominent Russian business magnates, Boris Usherovich and Aleksey Krapivin, whose joint ownership of the Russia-based Gruppa Kompaniya 1520 OOO has placed them at the center of railway repair and construction in Russia.
Through their control of several companies, Usherovich and Krapivin have facilitated the import of common high-priority goods essential to railway maintenance, despite the sanctions.
Trade data and research by Kharon reveal several instances where subsidiaries of Gruppa Kompaniya 1520 imported key railway parts through third countries to bypass export controls:
To keep its operations running, RZD has increasingly turned to foreign suppliers and logistics firms to bypass sanctions. Companies based in China, Hong Kong and the UAE have played a key role in supplying critical railway components, enabling RZD to circumvent export restrictions imposed by Western countries.
Key Players in Sanction Evasion
Leading this effort are two prominent Russian business magnates, Boris Usherovich and Aleksey Krapivin, whose joint ownership of the Russia-based Gruppa Kompaniya 1520 OOO has placed them at the center of railway repair and construction in Russia.
Through their control of several companies, Usherovich and Krapivin have facilitated the import of common high-priority goods essential to railway maintenance, despite the sanctions.
Trade data and research by Kharon reveal several instances where subsidiaries of Gruppa Kompaniya 1520 imported key railway parts through third countries to bypass export controls:
Kharon users can explore these Insights in the ClearView portal.
Ongoing Challenges for RZD
Despite these efforts to circumvent sanctions, RZD continues to face significant operational challenges.
The loss of access to Western technology and parts has worsened existing issues within Russia’s railway infrastructure. Additionally, the ongoing war in Ukraine has placed immense pressure on RZD’s resources, as the company is tasked with transporting military supplies and personnel to the frontlines, often at the expense of domestic rail services.
As RZD seeks alternative sources of equipment and technology, its reliance on a complex network of foreign suppliers and intermediaries—at higher costs— underscores that Russia’s state-owned rail system remains heavily dependent on foreign supply lines to maintain operations.
For now, RZD has managed to keep trains running, but the system is under severe strain, and the company’s future hangs in the balance.
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More on Russia
Despite these efforts to circumvent sanctions, RZD continues to face significant operational challenges.
The loss of access to Western technology and parts has worsened existing issues within Russia’s railway infrastructure. Additionally, the ongoing war in Ukraine has placed immense pressure on RZD’s resources, as the company is tasked with transporting military supplies and personnel to the frontlines, often at the expense of domestic rail services.
As RZD seeks alternative sources of equipment and technology, its reliance on a complex network of foreign suppliers and intermediaries—at higher costs— underscores that Russia’s state-owned rail system remains heavily dependent on foreign supply lines to maintain operations.
For now, RZD has managed to keep trains running, but the system is under severe strain, and the company’s future hangs in the balance.
-—-—-
More on Russia
