russia’s Shipbuilding Is Sinking into Stagnation

The United Shipbuilding Corporation (USC) plans to put up for sale some of its shipyards that have been left without orders. This was announced by chairman of the board of VTB and the corporation’s board of directors Andrey Kostin, who stressed the need for “large-scale restructuring” of the entire industry.

Among the potential deals there is the Khabarovsk Shipyard, one of the largest enterprises in the Far East, specializing in naval minesweepers and anti-submarine warfare ships. The corporation has already laid off 70 % of the shipyard’s employees due to the “lack of production volumes”.

The main reason for the decline of russian shipbuilding is high production costs. Shipbuilding in russia is several times more expensive than in China. For example, the three largest grain exporters from russia plan to order more than 60 bulk carriers from Chinese shipyards, where the cost of one ship is about 3.5 billion rubles, compared to 12.5 billion in russia.

Note. The United Shipbuilding Corporation was established in 2007 by putin’s decree to consolidate scattered shipbuilding plants and fill them with orders. However, in 2023, the corporation was transferred to VTB Bank due to chronic financial problems.

VTB itself – russia’s second-largest bank in terms of assets – is also in crisis. A sharp increase in loan defaults, particularly those issued to finance military programs, has hit the state bank’s balance sheets. In the first six months of 2025, net profit fell by 49 % to 146.8 billion rubles – a decline of this magnitude is considered rare for large banks.

Official reports only partially reflect the seriousness of the situation: the real state of the loan portfolio is much worse, and opaque restructuring and military loans make it difficult to assess the risks. A full-scale banking crisis awaits russia on the horizon of the year. More and more corporate and retail borrowers are unable to service their debts; difficulties are being recorded in the construction industry, manufacturing, and even in the military sector of the economy.