US towage service providers are still trying to recover operations that have been heavily impacted by the global coronavirus pandemic
Market bellwether Kirby Corp reported lower revenues and earnings during Q3 2020 as a result of falling demand for inland and coastal towage services due to Covid-19. During Q3 2020, it reported revenue of US$497M, compared with US$667M for the same period in 2019.
Its net earnings from July to September 2020 were US$27.5M, compared with US$48M for the same three months in 2019.
Kirby president and chief executive David Grzebinski confirmed the Covid-19 pandemic had adversely impacted Kirby’s businesses in Q3 2020. “Although general economic activity was slightly improved and increased profitability was realised in the distribution and services segment, the marine transportation businesses experienced lower volumes and barge utilisation,” he said.
“In marine transportation, our inland and coastal businesses were heavily affected by weak demand for liquid products including refined products, crude and black oil,” Mr Grzebinski continued.
“Throughout Q3 2020, refinery utilisation was well below historical norms as many of our customers experienced low consumer demand, high product inventories, and unfavourable economics,” he continued.
Covid-19 was not the only challenge affecting Kirby’s operations and revenues.
“A very active hurricane season resulted in further reductions in volumes and widespread disruptions including prolonged closures of some refineries, chemical plants, waterways, and major ports,” said Mr Grzebinski. “These challenging market conditions during the quarter contributed to low barge utilisation and limited spot market activity.”
Kirby’s revenues from marine transportation during Q3 2020 were US$321M, compared with US$413M in the same period a year before. Operating income from this division was US$32M in Q3 2020, compared with US$73M in the same three months in 2019.
In the inland market, average barge utilisation was in the low 70% range during Q3 2020, whereas it was in the low 90% range in Q3 2019.
Significant hurricane and tropical storm activity contributed to widespread and prolonged operational disruptions and lower volumes along the US Gulf coast throughout Q3 2020. As a result of lower barge utilisation, average spot market pricing for the quarter declined around 10% both sequentially and year-on-year.
In the coastal market, reduced demand for refined products and black oil resulted in limited spot market activity and barge utilisation in the mid-70% range.
Pricing in the spot market was generally stable, said Mr Grzebinski. However, revenues had declined 25% compared to Q3 2019. This was the result of reduced spot market activity, lower fuel rebills, the retirement of three large capacity vessels, and delays associated with hurricanes and storms along the US east and Gulf coasts.
Riviera is producing a range of technical and operational webinars and virtual events with the industry’s foremost experts. Sign up to attend on our events page