Shipping faces more regulation - Kirby CEO

30 October 2008 18:06  [Source: ICIS news]

HOUSTON (ICIS news)--More regulation for the shipping industry is coming, specifically in more stringent US Coast Guard standards, Kirby Corp CEO Joe Pyne said on Thursday.

“The current Congress believes that regulation is a good thing and lack of regulation is responsible for some of the problems,” Pyne said in a conference call.

“I think you're going to see more regulation in the business, not less.”

Kirby, based in Houston, Texas, is one of the largest inland barge operators in the US, with a fleet of 915 barges and 255 towboats and other vessels.

Pyne said that, although the regulatory landscape might become more difficult, he's not pessimistic about more oversight of shipping.

“We don't think that necessarily is a bad thing for us,” Pyne added. “Kirby has always operated above Coast Guard standards.”

Pyne said he also saw a tougher economy ahead, noting the US Commerce Department's report on Thursday stating that gross domestic production (GDP) declined at an annual rate of 0.3% in the third quarter.

Kirby is positioned to ride out coming hard times, Pyne said, adding that 80% of Kirby's business is term contracts with two customers, Dow Chemical and Exxon.

“We're positioned well for a more challenging operating environment,” Pyne said.

Such an environment appears to have begun in the third quarter, said Pyne, describing a range of events that put Kirby “in uncharted waters”.

Those events ranged from the plunge in crude and gasoline prices to hurricanes Ike and Gustav in August and September, to the most recent credit crisis, he said.

“The world is a lot more uncertain now,” Pyne said.

Hurricane Ike's impact on the shutdown of refineries in the Texas Gulf coast, particularly around the Beaumont/Port Arthur area, was a huge factor in Kirby's 21% drop in ton/miles during the third quarter compared with the same period in 2007, Pyne said.

“Driving is down,” he said. “As a result, refined products demand is down.”

However, third-quarter profits at Kirby were up 21% to $41.7m (€32.5m) compared with $34.4m in the same quarter in 2007.

Kirby's stock shot up almost 15% in mid-morning trading, reaching a high of $34.99 before settling back to $33.21. The stock closed at $30.44 on 29 October.

($1 = €0.78)

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By: Lane Kelley
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