More US ship regs dead ahead - Kirby chief

30 October 2008 20:09  [Source: ICIS news]

HOUSTON (ICIS news)--More stringent US Coast Guard inspection regulations are coming for barge operators, the chief executive of Kirby Corporation said on Thursday.

"The current Congress believes that regulation is a good thing and lack of regulation is responsible for some of the problems," said Joe Pyne said in an earnings conference call. "I think you're going to see more regulation in the business, not less."

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

Current Coast Guard regulations call for barges to have drydock inspections every five years, said Kirby vice president Steve Holcomb. "But the Coast Guard doesn't inspect towboats," Holcomb said.

However, an incident in July could result in drydock inspections of towboats, Holcomb said.

A towboat pushing a fuel barge collided with a chemical tanker near New Orleans and caused one of the largest oil spills ever on the Mississippi river.

A Coast Guard investigation found that the towboat operator was not licensed to steer the vessel. The towboat was not one of Kirby's.

But Pyne said he was not pessimistic regarding regulations.

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

Pyne also said he a tougher economy ahead, noting the latest US report showing a decline in the GDP, but added his company was positioned to ride out the hard times.

He noted that 80% of Kirby’s business is term contracts with two customers, Dow Chemical and ExxonMobil.

A more challenging environment appears to have begun in the third quarter, Pyne said, 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.

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

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

Despite the drop in ton/miles, profits at Kirby were up 21% in the quarter - $41.7m (€32.5m) compared ith $34.4m in the same quarter of 2007.

Kirby's stock on the New York Stock Exchange rose almost 15% in mid-morning trading, reaching a high of $34.99 before settling back to $33.21, compared with Wednesday’s close of $30.44.

($1 = €0.78)

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By: Lane Kelley
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