There's a new energy about Russian Railways. Its unprecedented dynamism and desire to foster new partnerships were symbolised by a return in 2006 to membership of the UIC (International Union of Railways) after an absence of 58 years. And it has already begun to make investment decisions that will have a major impact on Europe, in financial as well as transport terms. In May, for example, it declared an interest in acquiring a stake in German national railway company, Deutsche Bahn (DB), when 24.9% of the business was offered to the market.

Russian Railways (Rossiyskie Zheleznye Dorogi, RZD) became a state-owned, joint-stock company in 2003 with provision for open-access competition from independent operators. With 1.2 million employees and accounting for 3.6% of Russia's GDP, RZD operates 85,500km of track and handles 1.3 billion tonnes of freight a year. This represents about 83% of all freight in Russia by volume (excluding pipelines) but only 40% by value. Despite the slender margins of bulk freight, they are enough to cross-subsidise RZD's 1.3 billion passengers, but lucrative joint ventures have also been established.

RZD and DB have, this year, entered into partnership with Polzug in Poland, Germany's Kombiverkehr, and Transcontainer in Russia to form Trans-Eurasia Logistics, based in Berlin. Initially targeting freight between Europe and Russia, it was described by Norbert Bensel, a member of DB's transportation and logistics board, as "another important step towards developing competitive railway services to Russia and Central Asia. As a next step, we plan to establish a trilateral joint venture with our Russian partner RZD and the Chinese Railways, so that we will soon be able to provide regular services to and from China as well".

RZD has shared with China Railway Construction Corporation new contracts for railway construction in Libya, securing a contract worth around €2.2bn to construct a 554km railway line between Sirt and Benghazi along the Mediterranean coast. It is electrifying the 46km line between Tabriz and Azarshahr in Iran, upgrading a line through North Korea linking the container terminal at Rajin with Tumangang, and modernising suburban railways around Algiers. However, a $800m contract to build a rail line from Al Zabirah to the King Khalid International Airport in central Saudi Arabia was cancelled in May. RZD president Vladimir Yakunin said it "was not a problem relating to technology or RZD. It is a problem in international relations".

Last January a container train arrived in Hamburg after a 9,954km journey from Beijing through Mongolia, Russia, Belarus and Poland, following agreement between the six national railways to develop the Eurasian Land Bridge - regular services between China and Germany. Norbert Bensel says: "We're aiming to achieve a journey time of 15 to 18 days in the future - that's twice as fast as a seagoing vessel from Germany to China and Asia. At the same time, we're considerably cheaper than air freight for many types of cargo." As well as transportation services, the joint venture will also provide pre- and post-carriage feeder services, track-and-trace, and customs clearance. "The project will attract more international traffic to the railways, regulate the flow of container traffic and create good and convenient conditions for clients," believes RZD's Yakunin.

A handicap for such movements is the 1,520mm (5ft) gauge of Russian and former Soviet railway networks. (Most of Europe is 1,435mm [4ft 8 1/2in] gauge.) The use of gauge-changing axles can minimise the delay, even if they add to the costs, allowing a train to change gauge while on the move. In the case of Trans-Eurasia Logistics, freight will be exchanged on the border between Poland and Belarus at Brest, from where feeder services will operate to terminals in Western Europe. One solution being examined by RZD to deliver raw materials to industries in Slovakia and Poland is the construction of new 1,520mm lines to Vienna.

Says Yakunin: "The goal is to connect the railway system in central Europe with the regions served by the Trans-Siberian Railway. The project may extend later to provide broad-gauge track to the south, the Adriatic Sea and Italy. By extending broad-gauge track further west, we intend to attract greater volumes of freight on to the rail route between Asia, Russia and central Europe, and increase the competitiveness of rail transport across Eurasia compared to sea or road."

On the north/south corridor, yet another joint venture between RZD and Transsiberian Intermodal Service operates Baltic Transit container trains between the Baltic States and Kazakhstan.

Long-term growth will require a more consistent and realistic approach to tariffs and track access charges than has been the case in recent years. Both have been subject to sudden increases, as when the tariff on container shipments from China was doubled in early 2006; the collapse in business from 100,000 to 8,000 TEUs (Twenty-foot Equlvalent Unit) per annum forced a price cut.

Joint ventures are also behind accelerations of passenger services using new high-speed trains, though the present infrastructure limits maximum speeds to 200km/h; Russia's first dedicated high-speed line, between Moscow and St Petersburg, is still in the planning stage. However, Siemens' stylish Velaro RUS high-speed train should be transforming services between Moscow and St Petersburg from the end of 2009, with 250km/h an interim target until completion of the high-speed line, which looks likely to be engineered for up to 400km/h. Velaro trains will also operate services between the capital and Nizhni Novgorod from 2010, travelling at 160km/h and reducing the journey to just three and a half hours. The contract with Siemens includes 30 years' maintenance.

Meanwhile, three hours rather than five and a half is the target for tilting Alstom trains being built in Italy and funded by a 50/50 joint venture with Finnish Railways for St Petersburg-Helsinki services; running at a maximum of 220km/h, the new trains should enter service in 2010.

These trains are only a tiny part of the capital sums promised for Russian railways as part of a much-needed overhaul of Russia's transport infrastructure announced by former president Putin. However, this includes already allocated amounts for the construction of 17,000km of roads, despite the unlikelihood of oil ever falling below $100 a barrel, whereas Russia's railways are largely electrified. In April, shares in the largest Russian private-sector freight operator, Globaltrans, were offered on the London stock market, and RZD is expected to spin off Trans-containe later in the year following sale of a 15% stake in its freight operations. With investment in locomotives and wagons, and potential for very long-distance freight between Europe and the Far East, it's no surprise that RZD is planning a second Trans-Siberian Railway.

There is still much activity at home. In January, it was awarded a 30-year operating concession to manage Armenian Railways from the second half of the year. South Caucasus Railways (SCR), the wholly owned subsidiary of Russian Railways created for this contract, will pay the Armenian government an initial US$5, and 2% per annum of non-passenger revenues. SCR will invest €270m over the 30 years, including €115m on rolling stock.