After enduring months of supply chain chaos, a shortage of drivers and soaring fuel prices, the German trucking industry is facing a new crisis: a chronic shortage of the fluid that keeps its vehicles on the road.
AdBlue, a mixture of urea and demineralized water, is the cornerstone of logistics. But stocks are drying up after SKW Piesteritz, a company in the East German city of Wittenberg, which is one of Germany’s biggest sources of the solution, halted production to cope with soaring gas prices.
Dirk Engelhardt, head of BGL, a trade body for the transport industry, said he was beleaguered by anxious companies running out of AdBlue, which neutralizes nitric oxide emissions from diesel engines.
“Trucks can’t move without it,” he said. “There is going to be such an outcry in the population if supply chains break down and supermarkets empty out.”
The German economy is heading into recession, plagued by its worst energy crisis since World War II. Moscow’s decision to cut gas supplies pushed prices to levels four times higher than a year ago, prompting some energy-hungry factories to shut down even as the government hinted at the prospect generous subsidies to reduce costs.
SKW Piesteritz became one of the most publicized victims of soaring gasoline prices when it closed completely in August. It then brought one of its two production lines back to “minimum levels”, spokesman Christopher Profitlich said, but the second remains offline. “If we had continued to produce, we would have lost 100 million euros every month,” he said.
The closure of SKW has already had a huge impact on German farms’ fertilizer stocks and caused problems for slaughterhouses, food packers and breweries that depend on the carbon dioxide it produces – a by-product ammonia.
But the sharp decline in its AdBlue production should have even greater economic consequences.
Engelhardt said more than 90% of Germany’s 800,000 trucks need the solution and consume a total of 2.5 to 5 million liters per day.
“We are receiving the first calls from carriers who have run out of AdBlue and who are not stocking up,” he said at the end of September. “It could soon reach proportions that we can no longer contain.” Those who are still able to buy AdBlue complain that prices for the solution are up to seven times higher than a year ago.
Supermarket chains, battered by the shortages of basic products observed during the coronavirus pandemic, are already expressing their concern. A spokesman for Aldi Süd, one of Germany’s biggest discounters, said the company “takes the current situation very seriously”.
“We are of course in close contact with our suppliers and react to the latest developments,” she added.
It’s not just trucks that rely on the solution. “This concerns all vehicles with four wheels and weighing more than 3-4 tonnes,” said a transport operator in the southern state of Bavaria. “What will happen to all the ambulances, fire trucks and tractors that also run on diesel?” Transport companies increasingly have to rely on expensive imports from a select group of producers.
SKW is not the only chemical manufacturer to cut production. The Norwegian group Yara announced in August that it would reduce the capacity of its European ammonia plants by 65%. German chemicals giant BASF has cut ammonia production at its sprawling Ludwigshafen site in southwestern Germany and instead buys the compound on the global market.
The problems affect all industries that consume a lot of energy. Recent official data showed that production of glass and ceramics fell by 2.8% between July and August, chemicals by 3.1%, while coke ovens and oil refineries saw their production fall by 4.5%. Toilet paper maker Hakle filed for insolvency in September, citing rising energy and raw material prices.
The situation is also not expected to resolve quickly, despite the recent drop in gasoline prices from record highs over the summer. The IMF expects the German economy to contract next year by 0.3% – the worst performance of any major economy except Russia. Markus Steilemann, head of chemicals lobby group VCI, recently warned that Germany was in danger of turning from an “industrial country” into an “industrial museum”.
The government has sought to tackle the energy crisis with a 200 billion euro package of measures designed to protect consumers – private households and businesses – from higher fuel bills.
Berlin hopes the centerpiece of its package – a “gas price brake”, where the prices of a basic volume of gas and electricity will be capped, with usage above that at market price – will offer a respite.
But for energy-intensive plants such as SKW Piesteritz, the price of gas is still too high to justify a return to the status quo. “The price brake will only come into effect for the industry in January, and it’s too late for us,” Profitlich said.
Additional reporting by Harry Dempsey and Olaf Storbeck