US shippers optimistic despite river closure

18 June 2008 22:49  [Source: ICIS news]

HOUSTON (ICIS news)--Despite the closure of the upper Mississippi river due to flooding, shipping executives on Wednesday said they were optimistic about the short-term prospects for chemical and crude transport on the river and in the Gulf of Mexico.

Recent flooding in the US midwest should not have a serious impact on profits at  Houston-based inland barge operator Kirby Corporation, according to Joseph Pyne, Kirby president and chief executive. "Short-term we're not concerned about it," said Pyne, speaking at a conference in New York City.

Kirby operates 912 barges and 260 towing vessels.

Pyne said only about a third of Kirby's barge traffic is on the Mississippi river system. He added that Kirby still expects at least a 23% increase in second-quarter earnings and possibly as much as a 32% jump, due to modest rate increases.

"The barge business is hanging together in relatively tough times," Pyne said. "A relatively modest single-digit rate increase translates into double-digit earnings growth."

Another executive, Michael Ryan, president and chief executive of American Commercial Lines (ACL), called the river flooding "significant" but said it was too soon to make predictions. Ryan said it will probably take two weeks to see the result.

"We're optimistic that we'll have a good recovery," Ryan said.

ACL operates more than 3,000 barges and 120 tow boats on inland rivers and waterways. Ryan said that, despite the run-up in fuel prices, his firm still finds it profitable to transport chemicals and liquids.

"We see great demand in it," Ryan said. "We're going to continue to build and reinvest in that end of the business."

OSG America president and chief executive Jonathan Whitworth said he expects his company to generate sizable profits in offshore shipping via shuttle tankers that transport crude from the Gulf of Mexico to the US.

The tankers, being built due to OSG's recent deal with Petrobras, will take oil from floating storage and offloading vessels in deepwater areas without pipeline access and transport it to refineries on the Gulf coast.

"There's going to be much, much more of this," Whitworth said, adding that the reason is because of the time it takes to get permitting for pipeline expansion projects.

"Permits are incredibly difficult to get," Whitworth said. "You're looking at a 3-4 year process."

($1 = €0.64)

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By: Lane Kelley
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