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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

Why the White House's call to pump more oil is oddly timed

Illustration: Aïda Amer/Axios

The White House’s call for OPEC to pump more oil in an effort to contain gasoline prices has experts puzzled.

Why it matters: While consumers would always love to see lower prices at the pump, they aren’t exactly sounding alarms as confidence remains high and spending has surged above pre-pandemic levels.

The Delta variant brings a midsummer pause for airfares

Data: Bureau of Labor Statistics; Chart Axios Visuals

Airfares are edging lower as international travel is increasingly being discouraged by the Centers for Disease Control and Prevention.

Why it matters: The Delta variant of COVID-19, is casting a shadow over the economic recovery. A dip in airfares that had been surging could be a signal that consumers may pull back in the months to come.

The hard math behind America's labor shortage

Data: Bureau of Labor Statistics, Congressional Budget Office; Chart: Axios Visuals

Yes, the pandemic has created unusual temporary labor market dynamics. But in the bigger picture, the 2010s were a golden age for companies seeking cheap labor. The 2020s are not.

The big picture: In the 2010s, the massive millennial generation was entering the workforce, the massive baby bo0m generation was still hard at work, and there was a multi-year hangover from the deep recession caused by the global financial crisis.