US barge and towboat owners can expect a stronger inland marine transport market this year and steady business from coastal operations
Strengthening demand for dry and liquid bulk cargo, agricultural products and other goods in North America is raising volumes of inland waterways trade.
According to one of the largest owners of barges and towboats, Kirby Corp, utilisation of barges, pusher tugs and towboats will rise and so will charter rates in 2023. It expects vessels working on Jones Act coastal trade will remain positive, but not lead to higher utilisation.
“Overall, we expect our businesses to deliver improved financial results in the coming quarters,” said Kirby president and chief executive David Grzebinski.
“We exited Q1 2023 in a solid position, and we anticipate improved results in marine transport as we progress through the remainder of 2023.”
He expects favourable market conditions for inland marine transport with demand growth, steady volumes from refinery and petrochemical plants and only modest new barge construction in the industry – all leading to further improvements in the spot market.
Term contracts are also expected to continue rising to reflect improved market conditions for the duration of 2023.
In coastal marine, Kirby expects modestly improved customer demand through the balance of 2023 and barge utilisation to remain in the low to mid-90% range.
Rates are expected to continue slowly improving, though meaningful gains remain challenged by under-utilised barge capacity across the industry. Coastal operating margins are expected to be near breakeven on a full-year basis.
Mr Grzebinski is aware of the potential challenges affecting the inland and coastal markets in terms of inflation, delays at key infrastructure and rising costs.
“We are mindful of challenges related to an economic slowdown and associated headwinds from higher interest rates,” he said.
“With these uncertainties in mind, we will continue to focus on costs and drive strong cash flow from operations.”
Kirby expects to generate net cash from operating activities of US$480M to US$580M in 2023, including from its distribution and services to the energy and manufacturing industries, which it also expects to be boosted by higher demand.
“As we look long-term, we are confident in the strength of our core businesses and our long-term strategy,” said Mr Grzebinski. “We intend to continue capitalising on strong market fundamentals and driving shareholder value creation.”
Kirby expects capital spending in 2023 of around US$300M-US$380M, including US$40M on construction of new inland equipment.
It anticipates expenditure of approximately US$240M in marine maintenance capital and improvements to existing inland and coastal marine equipment, including ballast water treatment systems on some coastal vessels, and facility improvements.
The balance of up to about US$100M largely relates to new machinery and equipment and facility improvements in distribution and services, as well as information technology projects.
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