In early February, Kirby Corp. acquired Higman Marine Inc., an operator of inland tank barges and towboats, along with its affiliates. Both companies are based in Houston and transport petroleum products. Kirby, the nation’s largest tank barge operator, paid about $419 million in the deal before closing adjustments.
As of late February, Kirby operated 998 inland tank barges, far more than its competitors, and that included its acquired Higman assets. Higman’s fleet consisted of 159 inland tank barges, including two under construction, and 75 inland towboats, moving petrochemicals, refined petroleum products, crude oil, natural gas condensate and black oil on the Mississippi River System and Gulf Intracoastal Waterway. Higman’s customers included oil companies, many of which are also Kirby’s clients.
“The Higman acquisition benefits Kirby by increasing its footprint and driving economies of scale,” Gregory Lewis, Credit Suisse analyst in New York, said in early March. “Kirby has been looking at potential opportunities to consolidate the inland barge market since before the (global oil) downturn started. That’s what they do, so the acquisition came as little surprise, though the timing is always difficult to predict.”
Barge operators were hurt when crude oil dropped from over $100 a barrel in 2014 to below $40 in 2015. But crude has improved since and has stayed above $60 most of this year. Kirby’s shares on the New York Stock Exchange are below their 2014 peak, but have been recovering lost ground.
“The barges acquired from Higman have an average age of 7 years, and our estimated barge fleet value for them is about $275 million,” Lewis said. “We estimate the value of the towboats acquired from Higman at roughly $200 million. Higman’s towboat fleet will help Kirby high-grade its older horsepower.” Higman’s towboats are an average of 8 years old, he said.
Early last year, Kirby said its owned and leased inland tank barges were an average of 14.9 years old, while its owned and chartered inland towboats averaged 30.5 years.
Kirby transports bulk liquid products on the Mississippi River System, on the Gulf Intracoastal Waterway, along three U.S. coasts and in Alaska and Hawaii. It moves dry-bulk commodities in the nation’s coastwise trade. At the start of this year, before the Higman acquisition, Kirby owned 841 inland tank barges, 227 towboats, 56 coastal tank barges and 53 tugboats.
David Grzebinski, Kirby’s president and CEO, said in early February that as the inland market begins its recovery, the Higman acquisition would help Kirby emerge larger, more efficient and better able to serve its customers.
“The nation’s inland barge market remains highly fragmented but should continue to benefit from further consolidation,” Lewis said. A series of acquisitions by Kirby, dating to 1986, includes 33 marine transport companies and 19 distribution and services firms. Kirby acquired the inland barge assets of SEACOR Holdings Inc. in 2016.
As for the inland market this year, Grzebinski said in January that industrywide vessel retirements, minimal newbuilds, competitor consolidations and additional petrochemical capacity indicate utilization will improve from 2017.
