The coronavirus pandemic and a severe winter storm in North America drove Kirby Corp into the red and slashed its revenues from marine transportation
One of the largest owners of inland and coastal tugboats reported a slump in revenues and a net loss during Q1 2021 due to falling demand. Kirby reported revenues of US$496.9M during Q1 2021, compared with US$643.9M in the same period in 2020.
The Houston, US-headquartered group reported a net loss of US$3.4M in Q1 2021, compared with net earnings of US$35.3M during the first three months of 2020, excluding one-time items. “The first quarter’s financial results were impacted by continued pandemic headwinds, low pricing in marine transportation, and the impact of winter storm Uri,” said Kirby president and chief executive David Grzebinski.
Business had started to improve at the beginning of 2021, but by the middle of the quarter it had been impacted by weather. “Our inland business experienced steady improvement in demand, which resulted in our barge utilisation improving to near 80% by mid-February,” said Mr Grzebinski. “However, as winter storm Uri impacted Texas and Louisiana, our customers were forced to close their refineries and chemical plants, many of which did not fully resume operations until late in the quarter.”
During those six weeks, refinery utilisation along the US Gulf coast plummeted to nearly 40%. At one stage, around 80% of the Gulf coast petrochemical plants were taken offline. “Overall, these disruptions significantly reduced our volumes and operating efficiencies during the quarter,” said Mr Grzebinski.
“When combined with the impact of lower pricing, seasonal winter weather, and high-water conditions on the Mississippi River, inland operating margins sharply declined.”
There was flooding on the Mississippi River, ice on the Illinois River and lock closures along the Gulf Intracoastal Waterway impacting spot and term-charter pricing during Q1 2021. Spot market rates were down around 25-30% compared with Q1 2020.
Kirby’s revenues in the inland market declined 30% compared with Q1 2020 due to lower pricing and barge utilisation. Low demand for refined products and black oil also affected the coastal towage sector. Kirby’s barge utilisation was in the mid-70% range during Q1 2021, although pricing on spot and term contracts was generally stable during the quarter.
Revenues in the coastal market declined 10% compared to Q1 2020 as a result of reduced barge utilisation, lower fuel rebills, and the retirement of three large-capacity vessels during Q2 and Q3 2020.
Tug operations and propulsion technologies will be discussed during Riviera Maritime Media’s series of virtual webinars, forums, conferences and technology days in 2021 - use this link for more details and to register on the events page