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Logistics and green tax: the expert named challenges for the Russian economy

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Logistics and green tax: the expert named challenges for the Russian economy

The recovery of the global economy after the coronavirus crisis occurs in a difficult context. According to Aleksey Kalinin, Professor of Business Practice and Director of the Institute for Emerging Market Studies at Skolkovo Moscow State University, on the one hand a set of system imbalances in global logistics and on the other hand a climate challenge are having an impact. Read about how this affects Russia in the article "Made in Russia".

According to Kalinin, over the past few years the volume of traffic in all areas has been increasing and today it has become obvious that global logistics cannot cope with the flow of goods.

"The accident in the Suez Canal in March this year says that perhaps we have reached some kind of limit. This is the big challenge that the world is facing right now. In the moment we are seeing a very simple situation: shift rates are rising, panicked, paradoxical consumption is increasing, with people eager to stockpile that they didn't want to do before. Logistics is shifting from just in time (deliver on time) to just in case," said the professor.

He noted that this, coupled with border closures, is leading to the search for new transport corridors around the world. "China is now actively pursuing a strategy to create new routes as part of the One Belt, One Road program. Russia has also turned out to be a very interesting transit route, primarily because it is a single customs zone with one border with Europe. This made it possible to drag some part of the global flow," he stated.

As a result, many companies are shifting production to home markets or consumer markets to avoid potential risks, reducing their dependence on global logistics. "But this whole situation raises the question of how logistics has been organised before today and what imperatives have guided it. Now the new imperatives are reliability, predictability," Kalinin believes.

THE CLIMATE FACTOR

The emergence of new demands is a major challenge in itself, but the climate issue - the need to ensure low-carbon logistics, to reduce the carbon footprint that is formed in supply chains - is also superimposed on this, the expert believes.

"The starting point for this was the Paris Agreement, but it did not entail any specific action in supply chains, whereas the recently adopted European Green Deal and similar commitments by a number of countries to achieve carbon neutrality by 50-60 made carbon neutrality an issue of competitiveness," the professor said.

He reminded that the introduction of a cross-border carbon tax mechanism means that all carbon footprint accumulated by products imported into the European Union is taxed at rates.

"According to some estimates, Russian exporters will pay about 30 billion euros in the next 5-7 years due to this introduced tax. For pulp the reduction in profitability will be 65%, for crude oil - 20%. The figures are enormous. This can be seen as a serious duty or a reason to make our production and our supply chain less carbon-intensive," he stressed.

Measures aimed at shifting the economy to a low-carbohydrate track are now being actively developed at the Russian government level, Kalinin noted.

"Recently, the taxonomy of green projects has been approved, and a draft strategy for low-carbon socio-economic development is also under discussion, which is essentially ideologically, conceptually and even methodologically aligned with global views, although with features that the Russian government considers important to take into account to protect the interests of Russian business," the expert stressed.

Made in Russia / Made in Russia

Author: Maria Buzanakova

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