Lanser is having a horrible time on the ship. He can't even remember how he got there. But he sure knows a lot about those German U-Boats. Then he sees one coming at them, but he can't find anyone to tell. So he picks up the binoculars, and who does he see but himself, looking at the boat, and then he remembers.
He remembers having a conversation with his second in command, who asked if perhaps they wouldn't be doomed to repeat the night over and over, for sinking a ship full of innocent people without so much as a warning. And the ship sinks beneath the waves. And then we see him back on deck as the dream starts over again.