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Huge profits – now Hapag-Lloyd wants to voluntarily pay more taxes

For every euro that Germany's largest shipping company, Hapag-Lloyd, earned in sales over the past nine months of the financial year, the Hamburg-based shipping group was left with 53 cents as pre-tax profit.

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Huge profits – now Hapag-Lloyd wants to voluntarily pay more taxes

For every euro that Germany's largest shipping company, Hapag-Lloyd, earned in sales over the past nine months of the financial year, the Hamburg-based shipping group was left with 53 cents as pre-tax profit. Cigarette manufacturers such as BAT or Philip Morris are just as successful with tobacco cigarettes. This profitability should quickly spark a discussion in another record year for Hapag-Lloyd with a profit of a good 14 billion euros after three business quarters.

In order to describe the relationship between profit and tax, you need to take a look at the past financial year: For 2021, Hapag-Lloyd paid a tonnage tax of around 61 million euros to the state on a net profit of around nine billion euros. The tonnage tax, which was introduced two decades ago, is a tax on company profits that is valid in Germany and the countries of the European Union and is specially derived for shipping.

The basis for this is the size of each individual merchant ship of the shipping company. At the time, the EU's guiding principle behind the special treatment was to strengthen its own container shipping companies in global competition, for example with state-owned companies from Asia. Over the years, this has actually resulted in European shipping giants: Maersk from Denmark, MSC from Switzerland, CMA from France or Hapag-Lloyd - these are currently four of the world's five largest providers of container transport across the seas.

"This regulation is not in order and also not sustainable," answered Rolf Habben Jansen, CEO of Hapag-Lloyd, to a question from WELT. Although the shipping industry has worked well with the tonnage tax in recent decades, it is now out of date. "In a few years we paid 30 to 40 percent tax on profits," the manager justified the regulation for the past. But at that time, the income from global shipping was much lower, and some companies made high losses due to large overcapacities and a ruinous price war.

All of this no longer applies since the outbreak of the corona pandemic. Container shipping is one or even the winner of the past two years. Disrupted supply chains and high demand for ship transport have led to billions in profits for all major shipping companies. The price per transported container has increased tenfold over time. Goods had to remain in the ports due to a lack of capacity, and those who spontaneously got a slot on a freighter paid up to five-digit dollar sums for it. The tax on the profit did not change, the tax on the size of the ship remained. “We have to change that. I think that's only fair," said Habben Jansen. The manager did not make any concrete suggestions. In an earlier conversation, the manager pointed out that changes to taxation should only be made "at an international level".

However, the business situation in global shipping is changing. Sea transport is largely running smoothly again, delays are the exception in Asia and Europe, freighters are only still backing up in the ports on the east coast of the USA. The relationship between supply and demand is increasingly balanced, as can be seen from the transport prices, which have been falling for weeks. Another number: The record profit for the first three business quarters at Hapag-Lloyd is based on an average freight rate of almost 3,000 euros per container transport.

The federal cabinet has allowed the Chinese state-owned company Cosco to enter the port of Hamburg. So that the Chinese have as little influence as possible, they are allowed to acquire significantly fewer shares than planned. And yet there is criticism – even the Federal President warns.

Source: WELT/ Sebastian Plantholt

This figure should halve by the end of the year. The situation will have normalized in three months at the latest and will be closer to the time before the corona pandemic, said the Hapag-Lloyd boss. The transport costs for the shipping companies are increasing parallel to the fall in prices. For example, bunker prices, the price per tonne of fuel, have risen by two thirds compared to the previous year. It all means profits will fall.

Hapag-Lloyd uses the high income to buy into port operations worldwide. The Hamburg-based company has SAAM Ports in Chile

"Everything on shares" is the daily stock exchange shot from the WELT business editorial team. Every morning from 5 a.m. with the financial journalists from WELT. For stock market experts and beginners. Subscribe to the podcast on Spotify, Apple Podcast, Amazon Music and Deezer. Or directly via RSS feed.

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