K-Sea Transportation Partners: Stay the Course

Energy Executive Spotlight
Written by Jill Rose
Thursday, 31 January 2008
This petroleum transportation company pulled ahead by pursuing a goal of continual improvement. At K-Sea Transportation Partners, Timothy Casey and his team have an extremely simple philosophy: continue to improve. Achieving that in their business is not simple, however. K-Sea is a $300 million company providing petroleum transportation to companies like ExxonMobil and ConocoPhillips, a complex business involving barge logistics, tug-barge technology, and stringent safety standards. President and CEO Casey said the way the company stays focused is to continually strive to provide the best service in the industry. “That was our founding focus, and we’ve stuck to it. Every year, we talk about how we can improve our service to our customers,” he said. Timothy Casey, President and CEO The company began in 1999 as a management buyout of Eklof Marine Corp, where Casey had worked as controller and then CFO. At the time of the buyout, it had a 1 million-barrel fleet capacity; today, its capacity is 4.2 million barrels. Casey said the growth has come both organically, through building one to four barges a year, and through fleet acquisitions. In response to customer needs, the company has expanded its services from its base in the Northeast and Gulf of Mexico to the Delaware River/Chesapeake Bay area, the West Coast, Alaska, and Hawaii. “This has allowed our customers to select one vendor to service all their marine transportation needs in the US,” explained Casey. The main reason for the company’s incredible growth, which included adding about 700 employees, is its focus on professionalism. That includes providing better service, more robust safety programs, and newer technology than the competition. Said Casey, “Our industry has historically been dominated by family-run businesses. After the management buyout, we brought a more professional approach to the business, and the large petroleum companies tend to flock to us because of that.” Fast flow On the technology side, the company has installed satellite communication systems on the majority of its ships, allowing ship-status information to flow quickly into headquarters and out to customers. Casey said the company’s Web-based system allows customers to check the status of their vessels 24 hours a day from any Internet connected device. For the past four years, K-Sea has been adding articulation connection systems to the tugs and barges it builds and acquires. These systems represent a vast improvement over traditional units, which connect the tug to the bow via a tow line. Articulated units place the tug in a notch at the stern, allowing the barge to operate more like a ship. “That means a barge can go out in rougher weather, travel at higher speeds, and use less fuel,” said Casey. “These systems significantly increase the productivity, safety, and on-time ability of a vessel.” On the safety side, the company publishes a series of manuals spelling out what is expected from everyone working on a K-Sea vessel. The manuals are continually reviewed internally and updated based on employee feedback. The entire safety program has been certified as meeting the International Safety Management Code and the AWO (American Waterway Operators) Responsible Carrier program. “We are moving a very sensitive product, and we believe we do that better than anyone else. We push the safety culture down from the very top of the organization,” Casey said. In addition, each of K-Sea’s major customers conducts periodic reviews of its safety program. The customer audits are conducted quarterly, semi-annually, or annually, depending on the company. “Each one has a program they’ve set up,” Casey explained. “They come to us with recommendations, and we work with them to find solutions.” Running the show Casey describes his executive team’s management style as loose/tight. “We have a stringent set of goals we expect people to achieve, but we let them go about achieving them the way they see fit.” This has been a key factor in successfully managing the company through its enormous growth, according to Casey. “Many of us have worked on vessels, and a lot of our managers were captains at one time—they like to run their own show. And we want them to have a sense of ownership, so as long as they’re achieving their goals, I don’t need to breathe down their necks to tell them exactly how to do it.” Still, Casey admits one of his team’s biggest challenges has been adjusting from managing around 200 people to more than 900. “We are continually learning and getting better at that. We try to take our time and do things the right way,” he said. For example, four years ago, the company underwent a major change when it shifted from a privately held company to a public master limited partnership. Two years later, it reorganized from managing by individual vessel to a six-division structure based on geography. “Our IPO gave us extremely good access to low-cost capital, making us a consolidator of choice in the industry,” said Casey. “It was a very good decision for us.” Casey points out that the same philosophy he and his team have used all along—continually trying to improve the company—has translated well into the public arena. “Not only did we do what we told the stockholders we would do, we did it a little bit better. And we expect to always be able to do that.”

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