On The Money — Shipping profits draw scorn amid supply woes

Happy Wednesday and welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. Subscribe here: digital-release.thehill.com/newsletter-signup. 

Today’s Big Deal: Ocean carriers are reporting record profits on the backs of skyrocketing prices that contribute to U.S. inflation. We’ll also look at January’s payroll decline and the GOP’s latest offer in government funding talks. 

But first, find out what Dolly Parton and Eminem have in common. 

For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom.  Reach us at slane@digital-release.thehill.com or @SylvanLane, afolley@digital-release.thehill.com or @ArisFolley and kevers@digital-release.thehill.com or @KarlMEvers. 

Let’s get to it. 

Shipping giants under fire for high profits, fees 

Shipping giants have come under fire from U.S. business groups and watchdogs for raking in record-breaking profits on the backs of skyrocketing prices driven by unprecedented port congestion.  

Each of the largest ocean carriers saw their profits more than triple over the last year, with one firm enjoying a nine-fold increase in earnings. Meanwhile, the industry is lobbying lawmakers to reject a bipartisan bill that aims to crack down on anticompetitive shipping practices.  

• New contracts with carriers to transport goods are roughly twice as expensive as they were in 2020, helping fuel soaring inflation as costs get passed down to consumers. 
• Congested U.S. ports that force ships to wait weeks to unload their shipments prevent enough carriers from being able to meet huge demand for imports, driving up prices. 
• The White House has expressed concern that just nine carriers control 80 percent of the global shipping market, giving them even more leverage over prices. 

The kicker: U.S. exporters say that carriers are hitting them with unfair fees for failing to return cargo containers that they physically are unable to deliver due to intense port congestion. They also claim that carriers are leaving U.S. ports without taking their goods back with them.   

They’re backing a bipartisan bill to remedy those issues that sailed through the House with bipartisan support in December. Ocean carriers argue that the measure wouldn’t do anything to remedy supply chain issues that are the root cause of rising prices, such as the shortage of truck drivers and truck chassis.  

Karl has more on carriers’ portly profits here. 

 

PAYROLLING WITH THE PUNCHES

Private payrolls lost 301K workers as omicron surged: ADP 

U.S. private sector businesses lost 301,000 jobs in January as the omicron variant of the coronavirus forced millions of Americans out of work last month, according to data released Wednesday by payroll processor ADP.  

• The ADP National Employment report showed sharp, broad declines in private sector payrolls for the first time since December 2020.  
• A record-breaking surge of COVID-19 cases upended the U.S. economy in January as businesses struggled with staffing shortages and a dip in consumer activity. 

“The labor market recovery took a step back at the start of 2022 due to the effect of the Omicron variant and its significant, though likely temporary, impact to job growth,” said ADP chief economist Nela Richardson. 

The ADP figures are released two days before the federal monthly jobs report, which also covers public sector employers. While the Labor Department and ADP jobs figures do not always move in the same direction, the steep decline in private sector payrolls is a foreboding sign ahead of the federal employment report.  

Sylvan has more on what to expect here. 

DEAL OR NO DEAL

Senate Republicans pitched a new offer to Democrats in government funding talks, signaling a step forward in negotiations as leaders face a time crunch with weeks remaining until current funds are set to lapse.  

Sen. Richard Shelby (R-Ala.), vice chairman of the Senate Appropriations Committee, told reporters on Wednesday that Republicans made an offer, which Democrats are considering as negotiations continue.  

• Shelby didn’t provide further details on what the offer entailed, but said negotiators could hunker down to make headway on a spending deal at some point in the afternoon. “We could meet later today,” he said. “We gonna be here tonight.” 
• Lawmakers have until Feb. 18 to pass legislation to fund the government for fiscal 2022, or opt for another continuing resolution, which would keep the current funding at the previous fiscal year’s spending levels.  

Aris has more here. 

 

META CURSE

Meta stock tumbles 20 percent after earnings report  

Shares of the newly formed Facebook parent Meta Platforms tumbled more than 20 percent in after-hours trading Wednesday after the company released its latest earnings and projections.  

Meta’s shares dropped from around $323 per share to $252. The company, which also owns Instagram and WhatsApp, predicted that first-quarter revenue in 2022 will be between $27 and $29 billion, below the $30 billion anticipated by Wall Street. 

• Wednesday’s report was also the first following Facebook’s rebrand to Meta and gave an early glimpse of the economic return on the company’s metaverse ambitions. 
• Meta attributed the lower estimate to a combination of factors including privacy changes to Apple’s iOS and supply chain issues. 

The Hill’s Chris Mills Rodrigo has more here.  

 

Good to Know 

More than 1,000 flights were canceled Wednesday as a massive winter storm makes its way across the center of the nation, bringing snow and freezing rain.  

A total of 1,527 flights within, into or out of the U.S. were canceled and 595 were delayed on Wednesday.  

Here’s what else we have our eye on: 

• Sen. Ben Sasse (R-Neb.) reintroduced a bill that would block federal lawmakers from trading stocks and becoming lobbyists after they leave office. 
• Professional minor league sports organizations are asking congressional leaders to provide federal relief to teams that have been hit hard by the pandemic. 
• Biden administration officials are asking the U.S. Postal Service to reconsider plans to purchase a predominantly gas-powered fleet of up to 165,000 trucks. 

 

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you Thursday.