The substantial increase in excess pore pressure and plastic strain in subgrade soil due to faster and heavier trains is a major cause of track instability. Stresses that occur in track substructure during the passage of trains have not often been captured accurately due to insufficient rigour in dynamic analysis. This paper presents a numerical investigation into the plastic/dynamic characteristics of a saturated porous medium (capping and subgrade) subjected to moving axle loads. In this study, a detailed numerical analysis is described, whereby a coupled fluid-dynamic framework is developed for the saturated porous medium in conjunction with a generalized plasticity model, in order to examine the cyclic loading response of a soft subgrade soil. The constitutive model is calibrated by undrained cyclic triaxial testing carried out on a soft foundation soil retrieved from a coastal railroad site having a historical record of mud pumping. Kelvin elements are attached to the transmitting boundary to absorb wave energy and to prevent any back-propagation of waves into the saturated subgrade domain. This approach is then validated against a semi-analytical solution and wayside measurements. The results show that the stress path corresponding to the applied moving load exhibits a series of heart-shaped envelopes along which the deviator stress and mean effective stress gradually decrease with the successive loading cycles. The build-up of pore water pressure and the associated soil deformation (e.g. accumulated settlement) are exacerbated when the train speed approaches a critical velocity of the saturated subgrade. A relationship between the train speed, track settlement and drainage capacity of a sub-ballast (capping) layer is also established. As a practical guide, the influence of permeability of the capping layer is highlighted in relation to controlling track settlement for a given operational train speed.