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Illustration: Brendan Lynch/Axios

Consumer demand for goods grew voraciously during the pandemic, providing the perfect springboard for shippers.

Why it matters: The pandemic impacted services and goods economies disproportionately, and the recovery looks to be just about as uneven.

Driving the news: Global shipping and logistics giant Maersk on Wednesday reported record profit for the first quarter with no slowdown in sight.

  • Net income reached $2.7 billion, or 91% of Maersk’s entire 2020 net income.
  • “Maersk now expects these extraordinary conditions to last well into [the fourth quarter],” David Kerstens, with Jefferies’ research, tells Axios. 

What they're saying: "Consumer spending on goods surged during lockdown, for example, related to home office equipment and furniture, laptops for the kids to facilitate home schooling, increased spending on DIY, [and] gardening equipment," Kerstens says.

  • "[Meanwhile,] demand for services fell, as restaurants were closed and foreign holidays banned."

The big picture: Lockdowns led to services shutdowns — pushing income (fueled by stimulus and savings) into goods. That fueled unprecedented demand, exacerbating supply chain bottlenecks, pushing up transport prices and driving extraordinary results for cargo movers.

  • Evergreen Marine Corp, the company that operates the Ever Given, saw record sales in the first part of the year with $3.2 billion in revenue, more than double the prior year.
  • German shipping company Hapag-Lloyd saw its 2020 net profit grow more than 150% to $1.1 billion and will report first quarter earnings next week.
  • The demand spike also led to a global container shortage that is expected to persist through next year, which means companies that make or lease containers to shipping lines are also benefiting.

State of play: Maersk CEO Soren Skou told investors that its customers (retailers, car makers, etc.) are simultaneously trying to "cater to strong basic demand because of all of the stimulus packages and the savings that were going up over the last year and are now being consumed, and at the same time, replenish inventories that are too low."

  • “That is driving very, very strong demand to the point where the ports are really not able to meet all the demand and we get bottlenecks.”

What to watch: Customer inventories are “too low” and order backlogs are continuing at record-highs as of April, according to the Institute for Supply Management.

  • Respondents to ISM's monthly survey noted that they have never seen anything like these extended lead times and rising prices in 35 years, that market capacity is oversold, and that demand will continue to strengthen, leading to more disruptions.
  • If more savings from stimulus checks turn into disposable income, retailers may find it opportune to play with prices, passing on higher shipping and logistics costs.

Go deeper

Dion Rabouin, author of Markets
May 5, 2021 - Economy & Business

The new housing bubble

Illustration: Aïda Amer/Axios

Today's mortgage market is much more regulated and has much stronger fundamentals than during the housing bubble of the mid-aughts, but it's not a story that's as simple as rising demand and low supply.

What's happening: Unlike the environment ahead of the 2008 crash, housing prices are not being driven higher by a raft of underqualified borrowers getting mortgages they can't afford from unscrupulous banks.

Tina Reed, author of Vitals
May 5, 2021 - Health

Pfizer posts crazy good quarter with major assist from COVID vaccines

Pfizer vaccine bottles are pictured at a COVID-19 vaccine administration center on May 4 in Italy. That same day, Pfizer reported a 42% year over year increase in revenue, a jump driven largely by the vaccine. Photo: by Donato Fasano/Getty Images

Pfizer reported a super strong first quarter, saying it now expects about $26 billion in sales for its COVID-19 vaccine this year. That's up from an earlier projection of about $15 billion.

The big picture: That anticipated windfall comes as the Biden administration announced more ambitious U.S. vaccine goals and the world scrambles to get access to shots.

Tech's war for your wrist

Illustration: Sarah Grillo/Axios

Tech's biggest companies are ramping up competition for the real estate between your hand and your elbow.

The big picture: The next big hardware platform after the smartphone will likely involve devices for your eyes, your ears and your wrists.