TOP NEWS: Trinity in Legal Mess over Barge Corrosion

Wednesday, July 17, 2002
By Larry Pearson

Trinity Industries, Inc., the nation's largest builder of inland hopper, deck and tank barges is facing a suit from a customer who charges that 18 petroleum tank barges delivered three years ago are subject to "rapid corrosion." The Dallas, Tex.-based company says the charges are "without merit." Florida Marine Transportation Inc., New Orleans, La. filed the charges in Louisiana State Court claiming the coating material inside the barge hull voids was a food source for bacteria that was causing the premature deterioration of the steel. There has been no reported problem with the tank holding the petroleum. The barge company said they had taken three of the 18 barges out of service due to the corrosion problem and they were working with the U.S. Coast Guard inspection department in New Orleans to investigate the problem. "We are working with the Coast Guard and the preeminent scientist in the country on this problem", said Jason Belcher, Florida Marine president. "We think this is an industry problem that will impact other carriers", Belcher added. Belcher said that he hopes the attention brought to this problem by his suit will help to quickly resolve it. Trinity Industries admits that the barges have suffered from corrosion but believe the problem is improper maintenance. Trinity claims the barges were exposed to long periods of immersion in sea water and sludge and that is what caused the premature corrosion. "An ongoing investigation by outside experts did not substantiate the claim that the coating material is a food source for the bacterial or that the coating is causing the corrosion," Trinity said in a recent statement Belcher denied that the problem was caused by the manner in which they operate their equipment. The Eighth District Coast Guard office located in New Orleans has been very much involved with this situation. "Fortunately, Florida Marine has been very proactive in this process," said Commander Patrick Little, chief of inspection for the Eighth District. "They brought the problem to us, and we inspected the three barges and agreed there was a major corrosion problem in these barges," Little added. Little said the seriousness of the problem was unusual for barges only 2-3 years old. "Maybe in a 20 year old barge corrosion problems develop, but not in barges this young," Little added. Florida Marine proposed a cleaning and repair procedure to the Coast Guard who accepted it as being within their guidelines. The work was done at commercial shipyards and the Coast Guard has approved the barges to return to service. Florida Marine also proposed and the Coast Guard accepted, a six-month reinspection of the barges. The Coast Guard has also notified other barge operators in the Eighth District to see if this problem is unique to these barges. "We want to know if other operators have faced this problem," Little said. To date, the major impact of the suit has been the downward slide of Trinity's stock. Listed on the NYSE, Trinity shares have closed at under $20 a share, a decline of almost 10 percent. Trinity produces barges at shipyard facilities in Paducah, Ky., Ashland City, Tenn., Caruthersville, Mo, and two Louisiana yards in Port Allen and Mandeville. Trinity's inland barge sales were about $200 million in fiscal year 2001. Florida Marine Transportation, Inc is a rapidly growing carrier of jet fuel, gasoline and diesel fuel on the Mississippi River and its tributaries. They own all of their barges plus 24 pushboats. In addition to the 18 barges that Florida Marine purchased from Trinity in the 1998-2000 time period, they also have taken delivery of 40 additional units in the last 18 months from the same builder.

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