Rising demand for petroleum products and refinery turnarounds have improved margins and rates for North American inland towage providers.
A combination of increasing transportation volumes, lock closures and refinery upgrades have enhanced utilisation of tugs and barges along US waterways, said a leading tug owner.
Kirby Corp president and chief executive David Grzebinski said these led to a tightening of market conditions that improved Kirby’s tug and tank barge fleet utilisation and increased spot market rates. “Term contracts continued to move higher,” he added.
“Overall, higher demand, pricing improvements, and lower operating and maintenance costs helped to improve inland operating margins during Q3,” said Mr Grzebinski.
There have also been improvements in the coastal towage market in the US. “There were initial signs of a recovery with overall market conditions modestly improving,” he said.
There was higher demand in the Atlantic market during Q3 driven by refinery turnarounds. “Favourable conditions in the Pacific contributed to higher revenues compared to the second quarter,” he continued. This enabled Kirby to reprice term contracts to modestly higher rates.
Kirby’s tug and barge utilisation in the inland market ranged between 90-95%, while it had utilisation of around 80% in the coastal market in Q3.
Mr Grzebinski expects stable utilisation in the low to mid-90% range for Kirby’s inland towage assets in Q4 2018.
However, its coastal towage revenues and margins will be impacted by shipyard work for some of its large capacity vessels.
Kirby’s net earnings in Q3 2018 were US$41.8M compared with US$28.6M in the same period in 2017. Its consolidated revenues were US$704.8M in Q3 2018, up from US$541.3M in the same period in 2017.