KIRBY CORP

Demand for tank barge transportation services is driven by the production volumes of the bulk liquid commodities. Marine transportation demand for the segment’s four primary commodity groups, petrochemicals, black oil, refined petroleum products and agricultural chemicals, is based on differing circumstances. While the demand drivers of each commodity are different, the Company has the flexibility, in certain cases, of reallocating inland equipment and coastal equipment among the petrochemical, refined petroleum products and black oil markets as needed.

Petrochemical products are used in both consumer non-durable and durable goods. Bulk petrochemical volumes have historically tracked the general domestic economy and correlate to the United States Gross Domestic Product. During 2021, inland barge utilization improved from the mid-70% range during the 2021 first quarter to the mid-to high 80% range in the 2021 fourth quarter as the economy recovered from the impact of COVID-19. During 2022, the Company’s inland barge utilization improved to the high 80% range reflecting increased activity levels as a result of higher refinery and petrochemical plant utilization. During 2023, the Company’s inland barge utilization improved to the low 90% range as improved activity levels were partially offset by lock closures and several refinery outages. Coastal tank barge utilization for the transportation of petrochemicals increased from the low 90% range in 2022 to the mid 90% range during 2023 due to improved economic conditions.

The demand for black oil, including ship bunkers, varies by type of product transported. Demand for transportation of residual oil, a heavy by-product of refining operations, varies with refinery utilization and usage of feedstocks. During 2021 through 2023, the Company continued to transport crude oil and natural gas condensate produced from the Eagle Ford and Permian Basin shale formations in Texas, both along the Gulf Intracoastal Waterway with inland vessels and in the Gulf of Mexico with coastal equipment, and continued to transport Utica crude oil and natural gas condensate downriver from the Mid-Atlantic to the Gulf Coast, albeit, at reduced levels as some of the product was transported by newly constructed pipelines. During 2021, volumes recovered from the lows seen in 2020 as economic activity improved. During 2021, inland black oil tank barge utilization averaged in the mid-70% range during the first nine months of 2021 and recovered to the high 80% range in the 2021 fourth quarter. During 2022, inland black oil tank barge utilization further improved to the high 90% range in the 2022 fourth quarter. During 2023, inland black oil tank barge utilization averaged in the high 90% range. Coastal black oil tank barge utilization averaged in the mid 90% range in 2022 and the high 90% range in 2023 as utilization was supported by a higher percentage of term contracts. Inland and coastal asphalt shipments are generally seasonal, with higher volumes shipped during April through November, months when weather allows for efficient road construction.

Refined petroleum product volumes are driven by United States gasoline and diesel fuel consumption, principally vehicle usage, air travel, and weather conditions. Volumes can also be affected by gasoline inventory imbalances within the United States. Generally, gasoline and No. 2 oil are exported from the Gulf Coast where refining capacity exceeds demand. The Midwest is a net importer of such products. Volumes were also driven by diesel fuel transported to terminals along the Gulf Coast for export to South America. Ethanol, produced in the Midwest, is moved from the Midwest to the Gulf Coast. In the coastal trade, tank barges are frequently used regionally to transport refined petroleum products from a coastal refinery or terminals served by pipelines to the end markets. Many coastal areas rely upon access to refined petroleum products by using marine transportation in the distribution chain. In 2022, coastal refined petroleum products tank barge utilization averaged in the low 90% range. During 2023, coastal refined petroleum products tank barge utilization averaged in the high 90% range as activity levels continued to improve.

Demand for marine transportation of domestic and imported agricultural fertilizer is seasonal and directly related to domestic nitrogen-based liquid fertilizer consumption, driven by the production of corn, cotton and wheat. During periods of high natural gas prices, the manufacturing of nitrogen-based liquid fertilizer in the United States is curtailed. During these periods, imported products, which normally involve longer barge trips, replace the domestic products to meet Midwest and South Texas demands. Such products are delivered to the numerous small terminals and distributors throughout the United States farm belt.