Kirby Corp.

Kirby Corp.

President and chief executive

The inland tank barge industry will experience many changes over the next five to 10 years. Perhaps no change will be greater, however, than the changes driven by fleet-replacement decisions and increased safety and security standards.

Other than some increased regulations driven by tightening environmental standards, the largest problem facing the inland barge industry over the past 20 years has been barge overcapacity. Due to this influence, the fleet has aged, significant consolidations have occurred and programs focused on squeezing out cost in the industry have been the industry's focus.

During the next five to 10 years, much of the inland barge industry's fleet will need to be replaced. The average age of the dry-cargo fleet is approximately 15 years, and the tank barge fleet is approximately 21 years. Returns at least equal to the industries' cost of capital will need to be achieved before any significant replacement begins. If the costs of capital returns are not achieved, the industry will continue to shrink somewhat until supply and demand allows for fair pricing levels where investment returns are achievable.

The other significant change in the industry will be driven by safety concerns, whether they are pushed by increased security requirements or shippers' demand for fewer accidents and spills. In the tank barge area, any cargo-containment compromise has become unacceptable as customers demand 100 percent compliance with the no-spill objective. Increased training, engineering changes and process and systems will continue to be refined to help further reduce the industry's accidents.

The other trends that will occur in the next five to 10 years include information technology systems that help the barge industry and the customer better manage their inventories and the operators manage their assets more efficiently.

Containers will also find their way on to the inland waterway system as inland ports build infrastructure that will efficiently handle containers when shippers become more comfortable about the inland waterway option.