Despite an ever-expanding train network, China’s Railway Corp (CRC) is in dire financial straits.

According to a first quarter audit report posted on the website of state-backed bond clearinghouse, ChinaClear, CRC is 4.1 trillion yuan in debt (around $637 billion), an increase of 10 percent from last year. Making matters worse, CRC reported a net loss of 8.73 billion yuan (around $1.343 billion) in the first quarter, up 35 percent from the same time last year.

The main culprit in CRC’s losses is a reduction in rail freight, which has fallen 10 percent from last year’s levels. Earlier this year, CRC general manager, Sheng Guangzu, blamed the company’s hard times on fewer shipments of bulk commodities such as coal and steel, two industries that have seen massive layoffs this year.

Despite sizeable debt, CRC is looking to expand service to its Beijing-Shanghai rail corridor by offering “red-eye” service beginning later this month. CRC also announced this past January that they will be spending upwards of 800 billion yuan on infrastructure upgrades this year.