Off the coasts of Europe, LNG tankers prefer to wait for higher prices than to unload their cargo. The greed for profit of the traders is enormous. But normal shipping companies are also playing with the crisis – with the approval of the EU Commission. In the end, the consumers pay the price for the cartel behavior.
If our state were a human being, it would urgently need to be on the couch with Sigmund Freud. The founder of psychoanalysis would – politically incorrect as he was – probably diagnose Father State with a serious congestion of instincts. For he is constantly urged to do the people good and to ingratiate himself with the masses.
He wants to give gifts to the poor and take from the rich, which is why he finds an increase in the top tax rate just as attractive as an excess profit tax and—if all else fails—any kind of credit. Perpetual need, as Peter Sloterdijk put it, has become second nature to our state. His true heraldic animal is not the federal eagle, but the very hungry caterpillar.
At the same time, and this is what makes the case so interesting for Sigmund Freud, the state has an oversized heart for the super-rich. During the day, the Bundestag speaks to the left, but at night, those cartels that generate their speculative profits by keeping gas prices artificially high for the citizens are helped on their horses.
The facts in brief: More than 30 tankers with liquefied natural gas are currently swimming off the European coast, they are traveling at three to eight knots, i.e. less than half power. You drive in circles. You are playing for time. you speculate. The LNG currently being withheld on the ships could power around 2.7 million homes for a full year, but gas prices have fallen too much for traders.
Traders are waiting for the next price hike before unloading their cargo in European ports, telling shipping companies to wait patiently off Europe’s shores.
The result: according to the Handelsblatt expert Christoph Schlautmann, the value of a single load is currently calculated at 114.5 million US dollars. A price premium of six percent would bring in additional revenue of almost seven million US dollars per ship. If the gas price rises again by 30 percent, the gas traders could pocket as much as $34 million.
The big picture: The state, which has ordered and secured these increased quantities of LNG gas in bilateral agreements with the USA, Canada, Qatar and others, is watching how the raw material it procures becomes the plaything of private speculators :
At the same time, these conscious trips drive up freight rates. A not inconsiderable part of the worldwide 693 ships LNG fleet is not available for new transports. LNG is also becoming a scarce commodity, especially for customers in Asia.
But that’s not all: In addition to the LNG ships, the normal shipping companies such as Hapag-Lloyd are also playing their game with the crisis – and again the state plays a dominant role. With a net profit of EUR 18 billion, Hapag-Lloyd is expected to be Germany’s most profitable company this year. Without the state, these super profits would be unthinkable.
The background: 13 years ago, the EU Commission allowed shipping companies to form consortia, contrary to all antitrust laws. In the slang of the bureaucrats, this operation was called the “Consortia Block Exemption Regulation”.
The companies involved could hardly believe their luck: in the years that followed, the shipowners formed three alliances, with which they shared 80 percent of the world market among themselves.
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The consequence for the cartel brothers: The artificial shortage of cargo ships forms the perfect design for super profits in times of torn production chains and the resulting supply bottlenecks. Hapag-Lloyd therefore more than doubled its profit in the first nine months of the year.
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The crazy thing is that the 18 billion euros in net profit forecast by the end of the year will be taxed at a tax rate of less than one percent. There is no excess profit tax. There isn’t even a normal tax. Instead, there is a state-sanctioned cartel that is shamelessly exploiting the supply shortages caused by the war and pandemic and driving up its own freight rates.
The economic consequences for society: With their market power, the largest container shipping companies are damaging the entire German economy. “The shipping companies have pressed the terminals together against the wall,” said Frank Dreeke, CEO of the Bremen port operator BLG, recently at the German Logistics Congress in Berlin.
Important to know: Joe Biden sees it the same way. In his State of the Union address in March 2022, the US President had already announced a “crackdown” against the “Ocean Carriers”. O-Ton Biden: “Foreign companies have raised their prices by up to 1000 percent and made record profits.” And: “I hereby announce that I will crack down on these companies who are ripping off American companies and consumers.”
Biden signed the Ocean Shipping Reform Act in June, which, however, cannot unfold its beneficial effects without the help of the Europeans.
What needs to happen now: The EU regulation – which has empowered these cartel members for 13 years now – expires in April 2024 and must either be repealed or renegotiated.
Conclusion: One might think that this state has become schizophrenic in the age of being overwhelmed. He wants to be helpful to his citizens and is constantly aggravating their problems. In a crazy way, the three instances discovered by Freud keep getting in each other’s way in the government headquarters of all places: the id attacks the ego and both together set a trap for the superego.
Perhaps the media should accompany the state on the road to recovery by doing something outrageous and reporting critically on the government.
In any case, Sigmund Freud encouraged us to love the truth: The human intellect is not as powerless in comparison to human instinctual life as it often seems. “The voice of intellect is low, but it does not rest until it is heard.”
Gabor Steingart is one of the best-known journalists in the country. He publishes the newsletter The Pioneer Briefing. The podcast of the same name is Germany’s leading daily podcast for politics and business. Since May 2020, Steingart has been working with his editorial staff on the ship “The Pioneer One”. Before founding Media Pioneer, Steingart was, among other things, Chairman of the Management Board of the Handelsblatt Media Group. You can subscribe to his free newsletter here.
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