Kirby Corporation is the nation’s largest domestic tank barge operator,
transporting bulk liquid products throughout the Mississippi River System, on
the Gulf Intracoastal Waterway, coastwise along all three United States coasts
and in Alaska and Hawaii. The Company transports petrochemicals, black oil,
refined petroleum products and agricultural chemicals by tank barge. The Company
also operates six offshore barge and tug units transporting dry-bulk commodities
in the United States coastal trade. Through its diesel engine services segment,
the Company provides after-market services for medium-speed and high-speed diesel
engines, reduction gears and ancillary products for marine and power generation
applications, distributes and services high-speed diesel engines and transmissions,
pumps and compression products, and manufactures and remanufactures oilfield
service equipment, including pressure pumping units, for land-based pressure
pumping and oilfield service markets.
The Company, through its subsidiaries, conducts operations in two business
segments: marine transportation and diesel engine services.
The Company, through its marine transportation segment, is a provider of marine
transportation services, operating tank barges and towing vessels transporting
bulk liquid products throughout the Mississippi River System, on the Gulf Intracoastal
Waterway, coastwise along all three United States coasts and in Alaska and Hawaii.
The Company transports petrochemicals, black oil, refined petroleum products
and agricultural chemicals by tank barge. The Company operates offshore dry-bulk
barge and tugboat units engaged in the offshore transportation of dry-bulk cargoes
in the United States coastal trade. The segment is a provider of transportation
services for its customers and, in almost all cases, does not assume ownership
of the products that it transports. All of the Company’s vessels operate
under the United States flag and are qualified for domestic trade under the
Jones Act.
The Company, through its diesel engine services segment, sells genuine replacement
parts, provides service mechanics to overhaul and repair medium-speed and high-speed
diesel engines, transmissions, reduction gears, pumps and compression products,
maintains facilities to rebuild component parts or entire medium-speed and high-speed
diesel engines, transmissions and entire reduction gears, and manufactures and
remanufactures oilfield service equipment, including pressure pumping units.
The Company primarily services the marine, power generation and land-based oil
and gas operator and producer markets.
The United States inland waterway system, composed of a network of interconnected
rivers and canals that serve the nation as water highways, is one of the world’s
most efficient transportation systems. The nation’s inland waterways are
vital to the United States distribution system, with over 1.1 billion short
tons of cargo moved annually on United States shallow draft waterways. The inland
waterway system extends approximately 26,000 miles, 12,000 miles of which are
generally considered significant for domestic commerce, through 38 states, with
635 shallow draft ports. These navigable inland waterways link the United States
heartland to the world.
The United States coastal system consists of ports along the Atlantic, Gulf
and Pacific coasts, as well as ports in Alaska, Hawaii and on the Great Lakes.
Like the inland waterways, the coastal trade is vital to the United States distribution
system, particularly the regional distribution of refined petroleum products
from refineries and storage facilities to a variety of destinations, including
other refineries, distribution terminals, power plants and ships. In addition
to distribution directly from refineries and storage facilities, coastal tank
barges are used frequently to distribute products from pipelines. Many coastal
markets receive refined products principally from coastal tank barges. Smaller
volumes of petrochemicals are distributed from Gulf Coast plants to end users
and black oil, including crude oil and natural gas condensate, are distributed
regionally from refineries and terminals along the United States coast to refineries,
power plants and distribution terminals.
Based on cost and safety, barge transportation is often the most efficient
and safest means of transporting bulk commodities when compared with railroads
and trucks. The cargo capacity of a 27,500 barrel inland tank barge is the equivalent
of 46 railroad tank cars or 144 tractor-trailer tank trucks. A typical Company
lower Mississippi River linehaul tow of 15 barges has the carrying capacity
of approximately 216 railroad tank cars plus six locomotives, or approximately
1,050 tractor-trailer tank trucks. The Company’s inland tank barge fleet
capacity of 17.8 million barrels equates to approximately 29,700 railroad tank
cars or approximately 93,000 tractor-trailer tank trucks. Furthermore, barging
is much more energy efficient. One ton of bulk product can be carried 616 miles
by inland barge on one gallon of fuel, compared with 478 miles by railcars or
150 miles by truck. In the coastal trade, the carrying capacity of a 100,000
barrel tank barge is the equivalent of approximately 165 railroad tank cars
or approximately 525 tractor-trailer tank trucks. The Company’s coastal
tank barge fleet capacity of 6.0 million barrels equates to approximately 9,900
railroad tank cars or approximately 31,400 tractor-trailer tank trucks.
Tank barge transportation is safer than most modes of transportation in the
United States. Marine transportation generally involves less urban exposure
than railroad or truck transportation and operates on a system with few crossing
junctures and in areas relatively remote from population centers. These factors
generally reduce both the number and impact of waterway incidents.
The Company operates within the United States inland tank barge industry, a
diverse and independent mixture of large integrated transportation companies
and small operators, as well as captive fleets owned by United States refining
and petrochemical companies. The inland tank barge industry provides marine
transportation of bulk liquid cargoes for customers and, in the case of captives,
for their own account, throughout the Mississippi River and its tributaries
and on the Gulf Intracoastal Waterway. The most significant markets in this
industry include the transportation of petrochemicals, black oil, refined petroleum
products and agricultural chemicals. The Company operates in each of these markets.
The use of marine transportation by the petroleum and petrochemical industry
is a major reason for the location of United States refineries and petrochemical
facilities on navigable inland waterways. Texas and Louisiana currently account
for approximately 80% of the United States production of petrochemicals. Much
of the United States farm belt is likewise situated with access to the inland
waterway system, relying on marine transportation of farm products, including
agricultural chemicals. The Company’s principal distribution system encompasses
the Gulf Intracoastal Waterway from Brownsville, Texas, to Port St. Joe, Florida,
the Mississippi River System and the Houston Ship Channel. The Mississippi River
System includes the Arkansas, Illinois, Missouri, Ohio, Red, Tennessee, Yazoo,
Ouachita and Black Warrior Rivers and the Tennessee-Tombigbee Waterway.
The number of tank barges that operate on the inland waterways of the United
States declined from an estimated 4,200 in 1982 to 2,900 in 1993, remained relatively
constant at 2,900 until 2002, decreased to 2,750 from 2002 through 2006, and
then increased over the years to approximately 3,650 by the end of 2014. The
Company believes the decrease from 4,200 in 1982 to 2,750 in 2006 primarily
resulted from: the increasing age of the domestic tank barge fleet, resulting
in scrapping; rates inadequate to justify new construction; a reduction in tax
incentives, which previously encouraged speculative construction of new equipment;
stringent operating standards to adequately cope with safety and environmental
risk; the elimination of government regulations and programs supporting the
many new small refineries and a proliferation of oil traders which created a
strong demand for tank barge services; an increase in the average capacity per
barge; and an increase in environmental regulations that mandate expensive equipment
modification, which some owners were unwilling or unable to undertake given
capital constraints and the age of their fleets. The cost of tank barge hull
work for required periodic United States Coast Guard (“USCG”) certifications,
as well as general safety and environmental concerns, force operators to periodically
reassess their ability to recover maintenance costs.