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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-Q

         [X]           Quarterly report pursuant to Section 13 or  15(d)
                       of the Securities and Exchange Act of 1934
                       
                       For the quarter ended September 30, 1998
                       
         [ ]           Transition  report  pursuant  to  Section  13  or
                       15(d) of the Securities and Exchange Act of 1934
                       
Commission File Number 1-7615
                                        
                                Kirby Corporation
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)
                                        
                Nevada                                   74-1884980
      -------------------------------        ---------------------------------
      (State or other jurisdiction of        (IRS Employer Identification No.)
      incorporation or organization)                              
                                                           
1775 St. James Place, Suite 200, Houston, TX              77056-3453
- --------------------------------------------              ----------            
  (Address of principal executive offices)                (Zip Code)
                                        
                                 (713) 435-1000
              ----------------------------------------------------
              (Registrant's telephone number, including area code)
                                        
                                    No Change
              ---------------------------------------------------- 
              (Former name, former address and former fiscal year,
                           if changed since last report)

Indicate  by  check  mark  whether the registrant: (1)  has  filed  all  reports
required  to be filed by Section 13 or 15(d) of the Securities Exchange  Act  of
1934  during  the  preceding  12 months (or for such  shorter  period  that  the
registrant was required to file such reports), and (2) has been subject to  such
filing requirements for the past 90 days.

                             Yes  [X]       No   [ ]

The  number  of  shares outstanding of the registrant's Common Stock,  $.10  par
value per share, on November 6, 1998 was 20,914,794.

    2
                         PART I - FINANCIAL INFORMATION

                 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                            CONDENSED BALANCE SHEETS
                                   (Unaudited)
                                        
                                     ASSETS


                                                      September 30,  December 31,
                                                          1998           1997
                                                      -------------  ------------
                                                            ($ in thousands)
                                                                 
Current assets:                                                        
  Cash and cash equivalents                             $    712       $  2,043
  Available-for-sale securities                           21,135         21,773
  Receivables:                                                       
     Trade, net of allowance for doubtful accounts        51,649         70,137
     Insurance claims and other                           50,645         14,458
  Inventories                                             14,332         14,875
  Prepaid expenses and other current assets                6,403          7,359
  Deferred income taxes                                    1,709          1,468
  Property held for sale                                   5,868             --
  Current assets of discontinued operations                   --          3,684
                                                         -------        -------
                                                                     
       Total current assets                              152,453        135,797
                                                         -------        -------
                                                                     
Property and equipment, at cost                          469,268        471,019
  Less accumulated depreciation                          206,684        198,635
                                                         -------        -------
                                                                     
                                                         262,584        272,384
                                                         -------        -------
Investments in affiliates:                                           
  Insurance affiliate                                         --         45,320
  Marine affiliates                                       15,614         16,256
                                                         -------        -------
                                                                     
                                                          15,614         61,576
                                                         -------        -------
                                                                     
Excess cost of consolidated subsidiaries, net of                     
 accumulated amortization                                  5,497          6,652
Sundry                                                     3,757          4,562
Long-term assets of discontinued operations                   --         36,988
                                                         -------        -------
                                                                     
                                                        $439,905       $517,959
                                                         =======        =======

            See accompanying notes to condensed financial statements.


    3

                   KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                              CONDENSED BALANCE SHEETS
                                     (Unaudited)
                                        
                        LIABILITIES AND STOCKHOLDERS' EQUITY


                                                     September 30,  December 31,
                                                         1998           1997
                                                     -------------  ------------
                                                           ($ in thousands)
                                                                
Current liabilities:                                             
  Current portion of long-term debt                    $  5,333       $  5,333
  Income taxes payable                                    8,139          4,319
  Accounts payable                                       14,654         26,712
  Accrued liabilities                                    47,091         54,193
  Deferred revenues                                       2,338          5,046
                                                        -------        -------
                                                                 
       Total current liabilities                         77,555         95,603
                                                        -------        -------
                                                                 
Long-term debt, less current portion                    173,635        149,485
Deferred income taxes                                    43,324         48,409
Other long-term liabilities                               6,423          6,193
                                                        -------        -------
                                                                 
                                                        223,382        204,087
                                                        -------        -------
                                                                          
Contingencies and commitments                                --             --
                                                                          
Stockholders' equity:                                                      
  Preferred stock, $1.00 par value per share.                             
     Authorized 20,000,000 shares.                           --             --
  Common stock, $.10 par value per share. Authorized           
     60,000,000 shares, issued 30,907,000 shares.         3,091          3,091
  Additional paid-in capital                            158,369        159,016
  Accumulated other comprehensive income                    573            572
  Retained earnings                                     142,089        136,945
                                                        -------        -------
                                                                 
                                                        304,122        299,624
  Less cost of 9,971,000 shares in treasury                      
     (6,619,000 at December 31, 1997)                   165,154         81,355
                                                        -------        -------
                                                        138,968        218,269
                                                        -------        -------
                                                                 
                                                       $439,905       $517,959
                                                        =======        =======
                                        
            See accompanying notes to condensed financial statements.


    4

                             KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                                    CONDENSED STATEMENTS OF EARNINGS
                                               (Unaudited)


                                                     Three months ended       Nine months ended
                                                       September 30,             September 30,  
                                                    --------------------    ---------------------
                                                       1998       1997         1998        1997  
                                                    ---------   --------    ---------   ---------
                                                    ($ in thousands, except per share amounts)   
                                                                                  
Revenues:                                                                                       
  Marine transportation                             $ 62,700    $65,007     $184,955    $192,622
  Diesel repair                                       19,627     18,878       63,951      59,828
  Investment income and other                            564        322        1,373         831
  Gain (loss) on disposition of assets                  (138)        12          106         170
                                                     -------     ------      -------     -------
                                                                                                
                                                      82,753     84,219      250,385     253,451
                                                     -------     ------      -------     -------
Costs and expenses:                                                                             
  Costs of sales and operating expenses               53,055     54,012      161,730     166,433
  Selling, general and administrative                 10,039      9,904       29,345      29,990
  Taxes, other than on income                          1,938      1,927        5,897       5,647
  Depreciation and amortization                        6,800      6,940       20,459      21,208
  Impairment of long-lived asset                       8,333         --        8,333          --
                                                     -------     ------      -------     -------
                                                                                                
                                                      80,165     72,783      225,764     223,278
                                                     -------     ------      -------     -------
                                                                                                
   Operating income                                    2,588     11,436       24,621      30,173
Equity in earnings of insurance affiliate                418        422        1,325       3,734
Loss on sale of insurance affiliate                  (10,536)        --      (10,536)         --
Equity in earnings of marine affiliates                1,034        778        2,899       2,172
Interest expense                                      (3,236)    (3,293)      (9,235)    (10,117)
                                                     -------     ------      -------     -------
                                                                                                 
   Earnings (loss) from continuing operations
    before taxes on income                            (9,732)     9,343        9,074      25,962
(Provision) benefit for taxes on income                3,161     (3,470)      (3,930)     (9,776)
                                                     -------     ------      -------     -------
                                                                                                
   Net earnings (loss) from continuing operations     (6,571)     5,873        5,144      16,186
Earnings from discontinued operations, net of                                                           
 taxes on income                                          --         76           --       2,607
                                                     -------     ------      -------     -------
                                                                                                
   Net earnings (loss)                              $ (6,571)   $ 5,949     $  5,144    $ 18,793
                                                     =======     ======      =======     =======
TABLE CONTINUED ON NEXT PAGE                                                                    


    5                

                             KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                               CONDENSED STATEMENTS OF EARNINGS, Continued
                                               (Unaudited)     

                                                                           
                                                     Three months ended       Nine months ended    
                                                       September 30,             September 30,      
                                                    --------------------    ---------------------   
                                                       1998       1997         1998        1997    
                                                    ---------   --------    ---------   ---------   
                                                    ($ in thousands, except per share amounts)     
                                                                                    
Net earnings (loss) per share of common stock:                                                              
  Basic:                                                                                         
   Continuing operations                            $   (.31)   $   .24     $    .23    $    .66   
   Discontinued operations                                --         --           --         .11   
                                                     -------     ------      -------     -------   
                                                                                                
     Net earnings (loss)                            $   (.31)   $   .24     $    .23    $    .77
                                                     =======     ======      =======     =======
  Diluted:                                                                                      
   Continuing operations                            $   (.31)   $   .24     $    .23    $    .66   
   Discontinued operations                                --         --           --         .10  
                                                     -------     ------      -------     ------- 
                                                                                                
     Net earnings (loss)                            $   (.31)   $   .24     $    .23    $    .76   
                                                     =======     ======      =======     =======
              
                             See accompanying notes to condensed financial statements.


    6

                       KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                             CONDENSED STATEMENTS OF CASH FLOWS
                                         (Unaudited)


                                                                             Nine months
                                                                         ended September 30,
                                                                        ----------------------
                                                                          1998         1997
                                                                        ---------    ---------
                                                                           ($ in thousands)
                                                                               
Cash flows from operating activities:                                        
 Net earnings                                                           $  5,144     $ 18,793
 Adjustments to reconcile net earnings to net cash provided                           
  by continuing operations:                                          
   Earnings from discontinued operations                                      --       (2,607)
   Depreciation and amortization                                          20,459       21,208
   Provision (credit) for deferred income taxes                           (3,987)         857
   Gain on disposition of assets                                            (106)        (170)
   Deferred scheduled maintenance costs                                     (340)       2,247
   Loss on sale of insurance affiliate                                    10,536           --
   Equity in earnings of insurance affiliate, net of redemption           (1,325)         766
   Equity in earnings of marine affiliates, net of distributions         
    and contributions                                                        643       (2,708)
   Impairment of long-lived asset                                          8,333           --
   Other                                                                      68            3
   Increase (decrease) in cash flows resulting from changes in           
    operating working capital                                                980       (8,740)
                                                                         -------      -------
     Net cash provided by operating activities of continuing operations   40,405       29,649
   Net cash provided by (used in) operating activities of                 
    discontinued operations                                                 (494)      11,964
                                                                         -------      -------
     Net cash provided by operating activities                            39,911       41,613
                                                                         -------      -------
                                                                             
Cash flows from investing activities:                                        
 Proceeds from sale and maturities of investments                          1,200        1,935
 Purchase of investments                                                     (18)      (4,678)
 Capital expenditures                                                    (24,043)     (16,847)
 Proceeds from disposition of assets                                       2,200        2,284
 Proceeds from disposition of businesses                                  39,989           --
 Investing activities of discontinued operations                            (275)      (1,633)
                                                                         -------      -------
     Net cash provided by (used in) investing activities                  19,053      (18,939)
                                                                         -------      -------
TABLE CONTINUED ON NEXT PAGE                                                 


    7                                                                  

                       KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES               
                        CONDENSED STATEMENTS OF CASH FLOWS, Continued                
                                         (Unaudited)                                 

                                                                      
                                                                             Nine months       
                                                                          ended September 30, 
                                                                        ---------------------- 
                                                                          1998         1997    
                                                                        ---------    --------- 
                                                                            ($ in thousands)   
                                                                                      
Cash flows from financing activities:                                          
 Borrowings (payments) on bank revolving credit agreements, net           29,400      (22,400)
 Increase in long-term debt                                                   --       50,000 
 Payments on long-term debt                                               (5,250)     (39,249)
 Purchase of treasury stock                                              (87,254)     (10,887)
 Proceeds from exercise of stock options                                   2,809        1,423 
                                                                         -------      ------- 
     Net cash used in financing activities                               (60,295)     (21,113) 
                                                                         -------      ------- 
     Increase (decrease) in cash and cash equivalents                     (1,331)       1,561 
                                                                              
Cash and cash equivalents, beginning of year                               2,043        1,544 
                                                                         -------      ------- 
Cash and cash equivalents, end of period                                $    712     $  3,105 
                                                                         =======      ======= 
Supplemental disclosures of cash flow information:                            
 Cash paid during the period:                                                 
    Interest                                                            $  6,905     $  7,203 
    Income taxes                                                        $  5,534     $  8,311 

            See accompanying notes to condensed financial statements.


    8
                 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                                        
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                        
      In  the  opinion  of  management,  the  accompanying  unaudited  condensed
financial  statements  of Kirby Corporation and consolidated  subsidiaries  (the
"Company")  contain  all  adjustments  (consisting  of  only  normal   recurring
accruals) necessary to present fairly the financial position as of September 30,
1998  and December 31, 1997, and the results of operations for the three  months
and nine months ended September 30, 1998 and 1997.

(1)  BASIS FOR PREPARATION OF THE CONDENSED FINANCIAL STATEMENTS

      The  condensed financial statements included herein have been prepared  by
the  Company,  without  audit,  pursuant to the rules  and  regulations  of  the
Securities  and  Exchange  Commission. Although the Company  believes  that  the
disclosures  are  adequate  to make the information  presented  not  misleading,
certain  information and footnote disclosures, including significant  accounting
policies  normally included in annual financial statements, have been  condensed
or  omitted pursuant to such rules and regulations.  It is suggested that  these
condensed financial statements be read in conjunction with the Company's  latest
Annual Report on Form 10-K.

(2)  ADOPTION OF ACCOUNTING STANDARDS

      Effective  January  1,  1998, the Company adopted Statement  of  Financial
Accounting  Standards ("SFAS") No. 130, "Reporting Comprehensive Income,"  which
establishes standards for reporting and display of comprehensive income and  its
components in a full set of financial statements. Comprehensive income  includes
all  changes  in a company's equity (except those resulting from investments  by
and  distributions to owners), including, among other things,  foreign  currency
translation  adjustments and unrealized gains (losses) on marketable  securities
classified  as  available-for-sale.  The Company's total comprehensive  earnings
for  the three months and nine months ended September 30, 1998 and 1997 were  as
follows (in thousands):




                                                 Three months ended     Nine months ended
                                                    September 30,          September 30,
                                                 ------------------     ------------------
                                                   1998       1997       1998        1997 
                                                 --------    ------     ------     -------
                                                                           
Net earnings (loss) from continuing operations   $(6,571)    $5,873     $5,144     $16,186
Net earnings from discontinued operations             --         76         --       2,607
                                                  ------      -----      -----      ------
                                                                         
     Net earnings (loss)                          (6,571)     5,949      5,144      18,793
Unrealized gain (loss) on marketable securities     (255)       602          1         375
                                                  ------      -----      -----      ------
                                                                         
     Total comprehensive earnings (loss)         $(6,826)    $6,551     $5,145     $19,168
                                                  ======      =====      =====      ======


    9
                 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                                        
              NOTES TO CONDENSED FINANCIAL STATEMENTS - (Continued)

(2)  ADOPTION OF ACCOUNTING STANDARDS, Continued

      SFAS  No.  131, "Disclosures about Segments of an Enterprise  and  Related
Information"  ("SFAS No. 131"), issued in June 1997, establishes  standards  for
reporting  information about operating segments in annual  financial  statements
and  requires  that  enterprises  report selected  information  about  operating
segments  in  interim  reports issued to shareholders.  SFAS  No.  131  will  be
adopted by the Company in 1998.  The adoption of SFAS No. 131 is not expected to
have  a  material  impact  on the Company's financial condition  or  results  of
operations.

       SFAS   No.   132,  "Employers'  Disclosures  about  Pensions  and   other
Postretirement  Benefits"  ("SFAS No. 132"), issued in  February  1998,  revises
employers' disclosures about pension and other postretirement benefit plans.  It
does  not  change the measurement or recognition of those plans.  The  statement
standardizes  the disclosure requirements for pensions and other  postretirement
benefits  to the extent practicable, requires additional information on  changes
in  the  benefit obligations and fair values of plan assets that will facilitate
financial   analysis,  and  eliminates  certain  disclosures.   Restatement   of
disclosures  for earlier periods is required.  SFAS No. 132 will be  adopted  by
the Company in 1998.

(3)  DISCONTINUED OPERATIONS

      On March 16, 1998, the Company announced the completion of the sale of its
U.S.  flag product tanker and harbor service operations for $38,600,000 in cash.
Under  the terms of a purchase agreement dated January 28, 1998, Kirby sold  two
offshore  tankers and its harbor service operations to Hvide Marine Incorporated
and five offshore tankers were sold to August Trading Company, Inc.

      The  offshore tanker and harbor service operations' financial results were
accounted for as discontinued operations as of December 31, 1997, and previously
reported  financial  statements were restated to reflect the discontinuation  of
the operations.  The Company recorded an estimated net loss of $3,966,000 as  of
December 31, 1997 from the sale of the tanker and harbor service operations, and
such  results  included a provision for operations during the phase-out  period,
January 1, 1998 through the date of sale.

    10
                 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                                        
              NOTES TO CONDENSED FINANCIAL STATEMENTS - (Continued)

(4)  TAXES ON INCOME

      Earnings from continuing operations before taxes on income and details  of
the  provision for taxes on income from continuing operations for United  States
and  Puerto  Rico operations for the three and nine months ended  September  30,
1998 and 1997 were as follows (in thousands):

                                                                
Earnings (loss) before taxes on income:                                                                 
  United States                            $(10,150)   $8,921    $ 7,749    $22,228
  Puerto Rico                                   418       422      1,325      3,734
                                            -------     -----     ------     ------
                                           $ (9,732)   $9,343    $ 9,074    $25,962
                                            =======     =====     ======     ======
                                                                         
Provision (benefit) for taxes on income:                                                                    
  United States:                                                            
    Current                                $  4,604    $4,013    $ 7,229    $ 7,270
    Deferred                                 (7,974)     (817)    (3,987)       827
    State and local                             209       274        688        754
                                            -------     -----     ------     ------
                                             (3,161)    3,470      3,930      8,851
                                                                             
  Puerto Rico - Current                          --        --         --        925
                                            -------     -----     ------     ------
                                           $ (3,161)   $3,470    $ 3,930    $ 9,776
                                            =======     =====     ======     ======





    11
                 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                                        
              NOTES TO CONDENSED FINANCIAL STATEMENTS - (Continued)

(4)  TAXES ON INCOME, Continued

     Earnings from discontinued operations before taxes on income and details of
the provision for taxes on income from United States discontinued operations for
the  three  and  nine  months  ended September 30,  1997  were  as  follows  (in
thousands):




                                          Three months ended     Nine months ended
                                          September 30, 1997    September 30, 1997
                                          ------------------    ------------------
                                                                
Earnings before taxes on income                  $ 148                $4,065
                                                  ====                 =====
Provision (benefit) for taxes on income:                                                       
  United States:                                              
    Current                                      $(902)               $  620
    Deferred                                       974                   848
    State and local                                 --                   (10)
                                                  ----                 -----
                                                 $  72                $1,458
                                                  ====                 =====



(5)  IMPAIRMENT OF LONG-LIVED ASSETS

      Effective  September 30, 1998, the carrying value of one of the  Company's
two remaining offshore liquid tank barge/tug units was reduced by $8,333,000  in
accordance  with  SFAS  No.  121, "Accounting for the Impairment  of  Long-Lived
Assets  and  for Long-Lived Assets to Be Disposed Of" ("SFAS No. 121")  and  was
reclassified as property held for sale on the condensed balance sheet. The  pre-
tax non-recurring charge was taken in anticipation of the unit being sold in the
1998 fourth quarter for a price approximating the revised carrying value of  the
unit.   The  unit  was  sold on October 30, 1998 for a price  approximating  the
revised  carrying value of the unit.  No pre-tax gain or loss will be recognized
from the sale of the unit.

      On October 1, 1998, the Company sold its other unit for a pre-tax gain  of
approximately $3,900,000.  The gain will be recorded in the 1998 fourth quarter.
The  sale of the two units completes the Company's exit from the offshore liquid
transportation business.

    12
                 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                                        
              NOTES TO CONDENSED FINANCIAL STATEMENTS - (Continued)

(6)  SALE OF REMAINING INTEREST IN UNIVERSAL INSURANCE COMPANY

      Effective  September 30, 1998, the Company sold its remaining  45%  voting
common  stock interest and its non-voting preferred stock interest in  Universal
Insurance Company ("Universal") for $36,000,000 in cash.  Universal, a  property
and casualty insurance company in the Commonwealth of Puerto Rico, was formed by
Kirby  in  1972.  In September 1992, the Company merged Universal  with  Eastern
America  Insurance Company ("Eastern America"), a subsidiary of Eastern  America
Insurance  Group,  Inc.  ("Eastern  America  Group").   In  accordance  with   a
shareholders'  agreement  between the Company,  Universal  and  Eastern  America
Group,  through redemption rights, Universal had the obligation to purchase  the
Company's  entire interest in Universal gradually, over a 15 year  period.   The
Company  closed the sale on October 7, 1998 and the cash proceeds were  used  to
reduce the Company's revolving line of credit.

     Under an anticipated redemption schedule, the Company would have received a
stream of cash payments between now and the year 2008 totaling $62,000,000.  The
$36,000,000  received  represented the present  value  of  the  payment  stream.
Including  prior  redemptions and the final sale,  the  Company  received  total
payments of $58,000,000 for its interest in Universal.

      The Company recognized, during the 1998 third quarter, a pre-tax loss  for
book  purposes  of  $10,536,000  on the Universal  transaction.   The  Company's
investment  in  Universal, accounted for under the equity method of  accounting,
was  based on the estimated receipt of $62,000,000 of redemption payments to the
Company  over the next eleven years, and the recording of the remaining built-in
gain on the sale.

    13
                 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                                        
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                                        
                                        
      Statements  contained  in this Form 10-Q that are  not  historical  facts,
including,  but not limited to, any projections contained herein,  are  forward-
looking  statements  and  involve  a number of  risks  and  uncertainties.  Such
statements can be identified by the use of forward-looking terminology  such  as
"may," "will," "expect," "anticipate," "estimate," or "continue" or the negative
thereof  or  other  variations thereon or comparable  terminology.   The  actual
results  of  the future events described in such forward-looking  statements  in
this Form 10-Q could differ materially from those stated in such forward-looking
statements.   Among  the  factors  that could cause  actual  results  to  differ
materially  are:  adverse economic conditions, industry  competition  and  other
competitive factors, adverse weather conditions such as high water,  low  water,
fog  and  ice,  marine accidents, construction of new equipment by  competitors,
including  construction  with  government  assisted  financing,  government  and
environmental  laws  and regulations, and the timing, magnitude  and  number  of
acquisitions made by the Company.

      In  March 1998, the Company completed the sale of its offshore tanker  and
harbor  service operations.  In accordance with a definitive purchase  agreement
dated  January  28,  1998, the Company sold two tankers and its  harbor  service
operation  to  Hvide  Marine  Incorporated and five tankers  to  August  Trading
Company,  Inc.,  for  a  combined purchase price of $38,600,000  in  cash.   The
offshore  tanker  and  harbor service operations' financial  results  have  been
accounted for as discontinued operations as of December 31, 1997, and previously
reported  financial statements have been restated to reflect the discontinuation
of  the  operations. Such financial results as of December 31, 1997  included  a
provision  for operations during the phase-out period, January 1,  1998  through
the date of sale.

      The  Company is a provider of marine transportation services, operating  a
fleet  of  527  inland  tank barges and 123 inland towing vessels,  transporting
industrial   chemicals  and  petrochemicals,  refined  petroleum  products   and
agricultural chemicals along the United States inland waterways.  The  Company's
marine  transportation operation also includes one dry bulk barge and tug  unit.
The  Company  also  serves as managing partner of a 35%  owned  offshore  marine
partnership,  consisting of four dry bulk barge and tug units, and  as  managing
partner  of a 50% owned offshore marine partnership, consisting of one dry  bulk
barge  and tug unit.  The partnerships are accounted for under the equity method
of accounting.

      The  Company is engaged through its diesel repair segment in the  overhaul
and  servicing  of large medium-speed diesel engines employed in  marine,  power
generation and rail applications.


    14
                 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                                        
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


RESULTS OF CONTINUING OPERATIONS

      The  Company  reported a net loss of $6,571,000, or  $.31  per  share,  on
revenues  of $82,753,000 for the 1998 third quarter, compared with net  earnings
from  continuing  operations of $5,873,000, or $.24 per share,  on  revenues  of
$84,219,000 for the 1997 third quarter.  Net earnings for the nine months  ended
September  30,  1998  were  $5,144,000,  or  $.23  per  share,  on  revenues  of
$250,385,000,   compared  with  net  earnings  from  continuing  operations   of
$16,186,000, or $.66 per share, on revenues of $253,451,000 for the  1997  first
nine  months.  For comparative purposes, net earnings for the 1997 third quarter
were  $5,949,000,  or $.24 per share, including net earnings  from  discontinued
operations  of $76,000, on revenues of $15,116,000.  Net earnings for  the  1997
first  nine  months were $18,793,000, or $.76 per share, including net  earnings
from  discontinued operations of $2,607,000, or $.10 per share, on  revenues  of
$49,517,000.  For  purposes of this Management's Discussion,  all  earnings  per
share  amounts presented are "Diluted Earnings Per Share."  The weighted average
number  of  common shares applicable to diluted earnings (loss)  for  the  third
quarter  of 1998 and 1997 were 21,175,000 and 24,536,000, respectively, and  for
the   1998   and  1997  first  nine  months  were  22,487,000  and   24,616,000,
respectively. The reduction in common shares for the 1998 periods compared  with
the applicable 1997 periods primarily reflects the acquisition of treasury stock
under  the  Company's  Dutch Auction self-tender offer and through  open  market
share repurchases, more fully discussed below.

      The  following table sets forth the Company's revenues and  percentage  of
such  revenues  for  the three months and nine months ended September  30,  1998
compared with the three months and nine months ended September 30, 1997 (dollars
in thousands):




                         Three months ended September 30,    
                         --------------------------------    
                               1998        1997              Increase (decrease)
                         --------------    --------------    -------------------
                         Amounts    %      Amounts    %      Amounts          %   
                         -------   ----    -------   ----    -------        ----  
                                                          
Revenues:                                                               
  Marine transportation  $62,700    76%    $65,007    77%    $(2,307)       (4)%
  Diesel repair           19,627    24      18,878    23         749         4
  Other income               426    --         334    --          92        28
                          ------   ---      ------    --      ------        --
                         $82,753   100%    $84,219   100%    $(1,466)       (2)%
                          ======   ===      ======   ===      ======        ==


    15
                 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                                        
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


RESULTS OF CONTINUING OPERATIONS, Continued


                         Nine months ended September 30,     
                         -------------------------------     
                              1998              1997         Increase (decrease)
                         --------------    -------------     -------------------
                         Amounts    %      Amounts    %      Amounts         %
                         -------   ----    -------   ----    -------        ----
                                                          
Revenues:                                                               
  Marine transportation  $184,955   74%    $192,622   76%    $(7,667)       (4)%
  Diesel repair            63,951   26       59,828   24       4,123         7
  Other income              1,479   --        1,001   --         478        48
                          -------  ---      -------   --      ------        --
                         $250,385  100%    $253,451  100%    $(3,066)       (1)%
                          =======  ===      =======  ===      ======        ==



      Revenue  from the marine transportation segment declined 4% for  the  1998
third  quarter  and  4% for the 1998 first nine months compared  with  the  1997
corresponding  periods.  The 1997 third quarter and first nine  months  included
$2,203,000  and  $6,959,000, respectively, of revenue from AFRAM Carriers,  Inc.
("AFRAM"),  the  Company's U.S. flag offshore break-bulk  freighter  subsidiary,
which  ceased  operations in September and October 1997 with  the  scrappage  of
AFRAM's last two freighters.

      During  the  1998  third  quarter  and first  nine  months,  chemical  and
petrochemical  volumes remained strong.  Refined product volumes, more  seasonal
in  nature,  were  firm  with the summer driving season.  Fertilizer  movements,
seasonal  with the spring and fall fertilizer seasons, improved in September  in
anticipation  of  a  normal fall season.  Spot market rates, which  historically
decline  during  the summer months due to fleet efficiencies and planned  summer
plant  maintenance  programs, held firm.  Contracts generally  continued  to  be
renewed with modest increases.

      During  the  month of September 1998, the Company's marine  transportation
segment  was  negatively  impacted by three Gulf of  Mexico  storm  events,  two
hurricanes  and one tropical storm, which significantly reduced fleet efficiency
during  September.  The Company estimated its 1998 third quarter was  negatively
impacted  by  the  loss  of  approximately $600,000  of  revenues  and  incurred
approximately  $400,000 of additional expenses due to  the  storm  events.   The
effects  of the three storm events reduced the Company's net operating  earnings
by an estimated $.02 to $.03 per share.


    16
                 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                                        
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                                        
                                        
RESULTS OF CONTINUING OPERATIONS, Continued

      The  Company's 1997 first nine months were negatively impacted by flooding
in  the  Mississippi River System during the months of February  through  April.
The  upper  Mississippi  River and Ohio River experienced  flooding  during  the
majority  of the first quarter, and the lower Mississippi River and  Ohio  River
experienced  severe high water during March and April.  The Company estimated  a
loss  of revenues of approximately $3,450,000 for the months of February through
April.  The flooding reduced the Company's net earnings by an estimated $.10 per
share for the 1997 first nine months.

       The diesel repair segment's revenues for the 1998 third quarter reflected
a 4% increase compared with the 1997 third quarter and increased 7% for the 1998
first  nine  months  compared  with the 1997 first  nine  months.   The  segment
continued  to benefit from a strong nationwide engine overhaul and direct  parts
market.   The  Gulf Coast market, which had in recent quarters been enhanced  by
active  drilling and related oil service activities in the Gulf of  Mexico,  did
experience  a  modest  decline in the 1998 third quarter as drilling  activities
declined.   The East Coast, Midwest and West Coast markets continued  favorable.
The  diesel  repair segment's 1997 first nine months' revenues  were  negatively
impacted by the flooding in the Mississippi River System, as many Midwest inland
towing customers deferred engine maintenance and overhauls.

      The  following table sets forth the costs and expenses and  percentage  of
each for the three months and nine months ended September 30, 1998 compared with
the  three  months  and  nine  months  ended  September  30,  1997  (dollars  in
thousands):




                                             Three months ended September 30     
                                                 1998              1997           Increase (decrease)
                                             --------------    --------------     -------------------
                                             Amounts    %      Amounts    %       Amounts         %  
                                             -------   ----    -------   ----     -------       -----
                                                                                
Costs and expenses:                                                                                 
 Costs of sales and operating expenses       $53,055    66%    $54,012    74%     $ (957)        (2)%
 Selling, general and administrative          10,039    13       9,904    14         135          1  
 Taxes, other than on income                   1,938     2       1,927     2          11         -- 
 Depreciation and amortization                 6,800     9       6,940    10        (140)        (2)
 Impairment of long-lived assets               8,333    10          --    --       8,333        100
                                              ------   ---      ------   ---       -----        ---
                                             $80,165   100%    $72,783   100%     $7,382         10 %
                                              ======   ===      ======   ===       =====        ===   


    17
                 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                                        
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                                        
                                        
RESULTS OF CONTINUING OPERATIONS, Continued




                                              Nine months ended September 30,    
                                             --------------------------------    
                                                  1998               1997         Increase (decrease)
                                             --------------    --------------    --------------------
                                              Amounts   %       Amounts   %      Amounts          %   
                                             --------  ----    --------  ----    -------        -----
                                                                                
Costs and expenses:                                                                               
 Costs of sales and operating expenses       $161,730   71%    $166,433   74%    $(4,703)        (3)%
 Selling, general and administrative           29,345   13       29,990   14        (645)        (2) 
 Taxes, other than on income                    5,897    3        5,647    2         250          4  
 Depreciation and amortization                 20,459    9       21,208   10        (749)        (4) 
 Impairment of long-lived assets                8,333    4           --   --       8,333        100  
                                              -------  ---      -------  ---      ------        ---  
                                             $225,764  100%    $223,278  100%    $ 2,486          1 %
                                              =======  ===      =======  ===      ======        ===



      Costs  of sales and operating expenses for the 1998 third quarter and  the
1998  first  nine  months  reflected 10% and 1%  increases,  respectively,  when
compared  with  the  corresponding periods of 1997. The 1998 third  quarter  and
first  nine  months included an impairment of a long-lived asset of  $8,333,000.
The  carrying  value of an offshore liquid tank barge/tug unit  was  reduced  in
accordance with SFAS No. 121. The unit was sold on October 30, 1998 for a  price
approximating the revised carrying value of the unit. The 1997 third quarter and
first nine months included $2,073,000 and $6,816,000, respectively, of costs and
expenses  associated with the revenues generated by AFRAM,  whose  vessels  were
scrapped in September and October 1997.  In addition, the 1997 first nine months
included  higher  costs  and  expenses  associated  with  the  flooding  on  the
Mississippi River System.

    18
                 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                                        
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                                        
                                        
RESULTS OF CONTINUING OPERATIONS, Continued

      The  1998 third quarter and first nine months marine transportation  costs
and  expenses reflected higher vessel labor and maintenance costs when  compared
with  the 1997 comparable periods.  During 1998, in order to retain, as well  as
attract,  vessel  employees  into the marine lifestyle,  the  Company  increased
vessel   manpower  compensation.   Both  1998  periods  also  reflected   higher
maintenance  costs,  as the Company competed for shipyard space  with  companies
participating  in  the oil and gas drilling activities in the  Gulf  of  Mexico.
During  the 1998 third quarter, competition for shipyard space did diminish  due
to  a  decline  in drilling activities.  The 1998 third quarter and  first  nine
months'  diesel  repair  costs  and expenses also increased,  reflecting  higher
expenses  associated  with the 4% improvement in revenues  for  the  1998  third
quarter  and  7%  improvement for the 1998 first nine months compared  with  the
corresponding 1997 periods.

     Selling, general and administrative expenses increased 1% in the 1998 third
quarter  and  decreased  2%  for the 1998 first nine months  compared  with  the
corresponding  periods of 1997.  The 1998 third quarter increase  included  non-
recurring  expenses totaling $450,000 for executive severance pay,  search  firm
fees  and  consulting  fees for the implementation of a value  based  management
system  tied  to a new incentive compensation plan.  The decrease for  the  1998
first  nine months reflected savings in administrative expenses in the Company's
diesel  repair  segment  due to reorganization efforts and  the  elimination  of
unprofitable  business lines.  The results also reflect  the  savings  from  the
Company's costs reduction program implemented in late 1996 and is ongoing.   The
program  was  designed  to  reduce administrative costs  and  improve  operating
efficiencies.

    19
                 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                                        
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                                        
                                        
RESULTS OF CONTINUING OPERATIONS, Continued

      The  following table sets forth the operating income and operating margins
by  segment  for  the  three  months and nine months ended  September  30,  1998
compared with the three months and nine months ended September 30, 1997 (dollars
in thousands):




                             Three months ended September 30,       
                        ------------------------------------------  
                                1998                  1997           Increase (decrease)
                        --------------------  --------------------   -------------------
                        Operating             Operating                                 
                          income   Operating    income   Operating                      
                          (loss)     margin     (loss)     margin     Amounts        %   
                        ---------  ---------  ---------  ---------   --------     ------
                                                                                    
Marine transportation    $10,210     16.3%     $10,837     16.7%     $  (627)       (6)%
Diesel repair              1,999     10.2%       1,500      7.9%         499        33  
Corporate                 (1,714)               (1,236)                 (478)      (39) 
Impairment of assets      (8,333)                   --                (8,333)     (100) 
                          ------                ------                ------      ----  
                         $ 2,162               $11,101               $(8,939)      (81)%
                          ======                ======                ======      ====   






                             Nine months ended September 30,        
                        ------------------------------------------  
                                1998                  1997           Increase (decrease)
                        --------------------  --------------------   -------------------
                        Operating             Operating                                 
                          income   Operating    income   Operating                      
                          (loss)     margin     (loss)     margin    Amounts         %    
                        ---------  ---------  ---------  ---------   -------      ------
                                                                   
Marine transportation    $29,029     15.7%     $28,289      14.7%    $   740         3 %
Diesel repair              6,527     10.2%       4,714       7.9%      1,813        38  
Corporate                 (4,081)               (3,831)                 (250)       (7) 
Impairment of assets      (8,333)                   --                (8,333)     (100) 
                          ------                ------                ------      ----  
                         $23,142               $29,172               $(6,030)      (21)%
                          ======                ======                ======      ====  



    20
                 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                                        
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


RESULTS OF CONTINUING OPERATIONS, Continued

      The  following table sets forth the equity in earnings of affiliates, loss
on the sale of the insurance affiliate and interest expense for the three months
and nine months ended September 30, 1998 compared with the three months and nine
months ended September 30, 1997 (dollars in thousands):




                                               Three months       
                                            ended September 30,   Increase (decrease)
                                            -------------------   -------------------
                                               1998      1997      Amount         %  
                                            ---------  -------    --------      -----
                                                                    
Equity in earnings of insurance affiliate   $    418   $   422    $    (4)       (1)%
Loss on sale of insurance affiliate         $(10,536)       --    $10,536       100 %
Equity in earnings of marine affiliates     $  1,034   $   778    $   256        33 %
Interest expense                            $ (3,236)  $(3,293)   $   (57)       (2)%

                                    
                                            

                                     
                                   
                                                Nine months       
                                            ended September 30,   Increase (decrease)
                                            -------------------   -------------------
                                              1998      1997      Amount          %      
                                            ---------  --------   -------       -----
                                                                    
Equity in earnings of insurance affiliate   $  1,325   $  3,734   $(2,409)      (65)%
Loss on sale of insurance affiliate         $(10,536)        --   $10,536       100 %
Equity in earnings of marine affiliates     $  2,899   $  2,172   $   727        33 %
Interest expense                            $ (9,235)  $(10,117)  $  (882)       (9)%



      Effective  September 30, 1998, the Company sold its remaining  45%  voting
common  stock interest and its non-voting preferred stock interest in  Universal
for  $36,000,000 in cash.  Universal, a property and casualty insurance  company
in  the  Commonwealth of Puerto Rico, was formed by Kirby in 1972.  In September
1992, the Company merged Universal with Eastern America, a subsidiary of Eastern
America  Group.   In  accordance  with  a shareholders'  agreement  between  the
Company,  Universal  and  Eastern  America  Group,  through  redemption  rights,
Universal  had  the  obligation  to purchase the Company's  entire  interest  in
Universal  gradually, over a 15 year period.  The Company  closed  the  sale  on
October  7,  1998  and  the  cash proceeds were used  to  reduce  the  Company's
revolving line of credit.
    21
                 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                                        
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                                        
                                        
RESULTS OF CONTINUING OPERATIONS, Continued

     Under an anticipated redemption schedule, the Company would have received a
stream of cash payments between now and the year 2008 totaling $62,000,000.  The
$36,000,000  received  represented the present  value  of  the  payment  stream.
Including  prior  redemptions and the final sale,  the  Company  received  total
payments of $58,000,000 for its interest in Universal.

      The Company recognized, during the 1998 third quarter, a pre-tax loss  for
book  purposes  of  $10,536,000  on the Universal  transaction.   The  Company's
investment  in  Universal, accounted for under the equity method of  accounting,
was  based on the estimated receipt of $62,000,000 of redemption payments to the
Company  over the next eleven years, and the recording of the remaining built-in
gain on the sale.

      During  the  1997  second  quarter, the Company recognized  as  equity  in
earnings of insurance affiliate, $2,500,000 of cash received from Universal as a
result  of  a  resolution  of  a previously reserved Universal  contingency  for
outstanding  litigation.   The  litigation was  fully  reserved  on  Universal's
records  and  was  set  aside as part of the merger in 1992  of  Universal  with
Eastern America Insurance.

      Equity  in earnings of marine affiliates reflected a 33% increase for  the
1998  third quarter compared with the third quarter of 1997, and a 33%  increase
for  the  1998  first nine months compared with the first nine months  of  1997.
During  the  1998  third quarter, and for the majority of the  1998  first  nine
months,  the  partnership's five offshore barge/tug units were  fully  employed.
Results  for  the  1997  third  quarter and first nine  months  were  negatively
impacted by additional scheduled maintenance on the partnership's vessels and by
lower coal volume requirements than the 1998 comparable periods.

      Interest  expense  reflected a 2% decrease  for  the  1998  third  quarter
compared  with the third quarter of 1997, and a 9% decrease for the  1998  first
nine  months compared with the first nine months of 1997.  The decrease for both
1998  periods  reflects the excess cash flow from operations and $38,600,000  in
cash  proceeds  from  the  sale  of  the  offshore  tanker  and  harbor  service
operations,  both  of  which  were used to pay down the  Company's  $100,000,000
revolving  credit agreement (the "Credit Agreement") with Chase  Bank  of  Texas
N.A.,  as  agent  bank.  In addition, the Company benefited from lower  interest
rates on its Credit Agreement.  Partially offsetting the cash payments and lower
interest  rates on the Company's Credit Agreement was interest on the  Company's
borrowings through the Credit Agreement to finance the Dutch Auction self-tender
offer and open market share repurchases, both of which are discussed below.

    22
                 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                                        
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                                        
                                        
FINANCIAL CONDITIONS, CAPITAL RESOURCES AND LIQUIDITY

BALANCE SHEET

      Total assets as of September 30, 1998 were $439,905,000, a decrease of 15%
compared  with $517,959,000 as of December 31, 1997.  The following  table  sets
forth  the significant components of the balance sheet as of September 30,  1998
compared with December 31, 1997 (dollars in thousands):




                                                                         Increase (decrease)
                                            September 30,  December 31,  -------------------
                                                 1998          1997        Amount       %
                                            -------------  ------------  ---------    ------
                                                                             
Assets:                                                                                     
 Current assets                                $152,453      $135,797    $ 16,656       12 %
 Property and equipment, net                    262,584       272,384      (9,800)      (4)
 Investments in affiliates                       15,614        61,576     (45,962)     (75)
 Long-term assets of discontinued operations         --        36,988     (36,988)    (100)
 Other assets                                     9,254        11,214      (1,960)     (17)
                                                -------       -------     -------     ----   
                                               $439,905      $517,959    $(78,054)     (15)%
                                                =======       =======     =======     ====
                                                                         
Liabilities and stockholders' equity:                                                
 Current liabilities                           $ 77,555      $ 95,603    $(18,048)     (19)%
 Long-term debt                                 173,635       149,485      24,150       16
 Deferred taxes                                  43,324        48,409      (5,085)     (11)
 Other long-term liabilities                      6,423         6,193         230        4
 Stockholders' equity                           138,968       218,269     (79,301)     (36)
                                                -------       -------     -------     ----
                                               $439,905      $517,959    $(78,054)     (15)%
                                                =======       =======     =======     ====



      As of September 30, 1998, working capital increased to $74,898,000, an 86%
increase  compared  with  $40,194,000 at December 31, 1997.   The  increase  was
primarily  attributable to the recording of a $36,000,000  receivable  from  the
sale of Universal, effective September 30, 1998, partially offset by the sale of
the  discontinued offshore tanker and harbor service property and  equipment  in
March 1998.  Trade accounts receivable decreased 26%, reflecting the sale of the
offshore  operations  and the Company's emphasis on collection  of  receivables.
Property  held  for sale reflects the two offshore liquid tank  barge/tug  units
sold in October 1998.  Accounts payable decreased 45%, primarily reflecting  the
sale  of  the  offshore  operations.  Accrued liabilities  decreased  13%,  also
reflecting the sale of the offshore operations.

      The available-for-sale securities of $21,135,000 at September 30, 1998 and
$21,773,000 at December 31, 1997 were investments of Oceanic Insurance  Limited,
the Company's wholly owned captive insurance subsidiary.
    23
                 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                                        
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


FINANCIAL CONDITION, CAPITAL RESOURCES AND LIQUIDITY, Continued

      Long-term debt, less current portion, increased 16% to $173,635,000 as  of
September  30,  1998  compared with $149,485,000  at  December  31,  1997.   The
increase  mainly reflected the borrowing to finance the Company's Dutch  Auction
self-tender offer to purchase 3,066,922 shares of its common stock  at  a  total
purchase price of $75,705,000 and open market stock repurchases totaling 537,720
shares  of common stock at a total purchase price of $11,549,000, both of  which
are  more fully described below. Long-term debt was decreased by $38,600,000  of
cash received from the sale of the offshore tanker and harbor service operations
and repayments on long-term debt from excess cash flow.

     Stockholders' equity as of September 30, 1998 decreased 36% during the 1998
first  nine months, reflecting the Company's purchase of its common stock  under
the  Dutch  Auction  self-tender offer and open market repurchases,  more  fully
described below.  As of September 30, 1998, the Company had 9,971,000 shares  of
common stock in its treasury.

LONG-TERM FINANCING

      The  Company has a $100,000,000 Credit Agreement with Chase Bank of Texas,
N.A.,  as  agent  bank.   Effective January 30, 1998, the Credit  Agreement  was
amended  to  provide a one-time allowance for the disposition of assets  at  the
subsidiary  level.  The amendment also modified the minimum net  worth  covenant
and  fixed charge calculation.  Proceeds under the Credit Agreement may be  used
for  general corporate purposes, the purchase of existing or new equipment,  the
purchase  of  the Company's common stock, or for possible business acquisitions.
As  of  September  30,  1998,  $62,000,000  was  outstanding  under  the  Credit
Agreement.

TREASURY STOCK PURCHASES

      On  March  23, 1998, the Company purchased 3,066,922 shares of its  common
stock  under a Dutch Auction self-tender offer at a price of $24.50  per  share.
The Company announced the self-tender offer on February 17, 1998, expressing its
intentions to purchase up to 3,000,000 shares of its common stock at a  purchase
price  ranging  from $21.00 to $24.50 per share.  The tender  offer  expired  on
March 16, 1998.

      The  Company  elected to increase the size of the 3,000,000  share  tender
offer  and  to accept all shares tendered at a price of $24.50 per  share.   The
3,066,922  shares  purchased represented approximately 12.6%  of  the  Company's
common  stock outstanding immediately prior to the offer. Funding of the  tender
offer was from the Company's Credit Agreement.

    24
                 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                                        
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


FINANCIAL CONDITION, CAPITAL RESOURCES AND LIQUIDITY, Continued

      From July 31, 1998 through October 31, 1998, the Company purchased 593,700
shares  of  its  common stock at a total purchase price of $12,670,000,  for  an
average  price  of $21.34 per share.  The Company, as of October 30,  1998,  has
1,220,000  shares available under its Board of Directors' 6,250,000  total  open
market  stock  repurchase  authorization.  The  treasury  stock  purchases  were
financed  by  borrowings under the Company's Credit Agreement.  The  Company  is
authorized  to purchase its common stock on the New York Stock Exchange  and  in
privately negotiated transactions. When purchasing its common stock in the  open
market,  the  Company  is  subject to price, trading  volume  and  other  market
considerations.  Shares purchased may be used for reissuance upon  the  exercise
of  stock  options,  in future acquisitions for stock, or for other  appropriate
corporate purposes.

LIQUIDITY

      The  Company  generated  net  cash provided  by  operating  activities  of
continuing  operations of $40,405,000 and $29,649,000 for the nine months  ended
September  30,  1998  and 1997, respectively. The 1998 first  nine  months  were
positively  impacted  by a $980,000 increase in cash  flow  as  a  result  of  a
decrease  in  operating working capital, compared with a $8,740,000 decrease  in
cash  flow  for  the first nine months of 1997.  The Company accounted  for  its
ownership in Universal and accounts for its ownership in its marine partnerships
under  the  equity method of accounting. It recognized cash flow from  Universal
only  upon  receipt of an actual distribution or redemption and recognizes  cash
flow  from the marine partnerships upon the receipt or disbursement of cash from
the  partnerships.  During the 1997 first nine months, the  Company  received  a
$2,000,000 redemption of Universal's common stock and $2,500,000 as a result  of
the  Universal lawsuit ruling.  No redemptions of Universal's common stock  were
received during 1998 prior to the Company selling its remaining 45% common stock
interest  and  preferred stock interest effective September 30, 1998.   For  the
1998  first  nine  months,  the  Company  received  net  cash  from  the  marine
partnerships  of $3,541,000 and contributed to the partnerships $535,000  during
the 1997 first nine months.

      Funds  generated are available for capital construction projects, treasury
stock  repurchases, asset acquisitions, repayment of borrowings associated  with
treasury  stock  acquisitions  or asset acquisitions  and  for  other  operating
requirements.   In  addition  to  its  net  cash  flow  provided  by   operating
activities,  the Company also has available as of November 5, 1998,  $75,500,000
under its Credit Agreement and $121,000,000 available under its medium term note
program.   The Company's scheduled principal payments during the next 12  months
are $5,333,000.

    25
                 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                                        
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


FINANCIAL CONDITION, CAPITAL RESOURCES AND LIQUIDITY, Continued

     During the last three years, inflation has had a relatively minor effect on
the  financial  results of the Company.  The marine transportation  segment  has
long-term  contracts  which  generally contain cost escalation  clauses  whereby
certain costs, including fuel, can be passed through to its customers, while the
transportation  assets acquired and accounted for using the purchase  method  of
accounting  were adjusted to a fair market value and, therefore, the  cumulative
long-term  effect of inflation was reduced.  The repair portion  of  the  diesel
repair  segment is based on prevailing current market rates.  The  Company  does
not  presently use financial derivatives, but uses a mix of floating  and  fixed
rate debt.  The Company has no foreign exchange risks.

     The Company has no present plan to pay dividends on its common stock.

YEAR 2000

      The Company has a Year 2000 project team in place to address the potential
impact  on  the Company of the issue of computer software and embedded  computer
chips  being unable to distinguish the year 2000 from the year 1900.   In  1997,
the  Company  began  to  investigate the impact of  the  Year  2000  issues  and
associated  problems  on  the  Company's computer environment.   The  Year  2000
project  team  was  formed to determine the extent of  the  issue  and  to  make
recommendations  for remediation of such issues.  In addition, to  validate  the
extent  of  the  issues  and the project team remediation efforts,  the  Company
engaged  an  outside consulting firm to review the project team's  findings  and
make additional recommendations.

      The project team, with the assistance of the consulting firm, completed  a
detailed list of all of the Company's systems which may be impacted by the  Year
2000  issue.   The key areas were all of the Company's network components,  core
corporate   applications,  personal  computers  and  telephone  switches.    The
Company's  major  network components, personal computers and telephone  switches
are  currently Year 2000 compliant.  Core corporate applications include  OASIS,
the  Company's  internally developed vessel management system which  includes  a
billing,  sales and traffic system, and prepackaged vendor-based products.   The
principal  vendor-based  products  are Oracle Financial,  the  Company's  marine
transportation  segment's financial accounting system, JIT,  the  diesel  repair
segment's financial accounting system, and Ross Payroll, the system used by  all
of the Company's operations to compensate their employees.  A letter was sent to
each  supplier  of  the  affected system inquiring into  the  readiness  of  the
specific system, model or release.

      Based  on the information received from the various suppliers, the project
team (1) assigned priorities to identified systems based on a materiality factor
to  the  Company;  (2)  repaired or replaced certain material  items  that  were
determined  not  to  be  Year  2000 compliant; (3) tested  material  items;  (4)
continues  to communicate with certain material suppliers who have not  to  date
brought  their  systems  to Year 2000 compliance; (5) continues  to  review  and
communicate with suppliers of electronic devices used by the Company that use  a
timing  routine  to  function; and (6) continues to develop  a  contingency  and
business continuation plan with a target date for completion of March 31, 1999.
    26
                 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                                        
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


FINANCIAL CONDITION, CAPITAL RESOURCES AND LIQUIDITY, Continued

      As  of September 30, 1998, based on the information received to date  from
the  suppliers and through validation and testing, the majority of the Company's
systems, including OASIS and Oracle Financial, are in Year 2000 compliance.   By
December 31, 1998, the Company anticipates that, based on ongoing communications
with the suppliers of the Ross Payroll system, modification to bring that system
to  Year  2000  compliance  should be complete.   A  major  enhancement  of  the
Company's  JIT system was initiated in March 1997.  A portion of the enhancement
is  to  bring  the  whole  application to Year  2000  status.   The  project  is
anticipated to be completed by March 31, 1999.

     The total costs associated with required modifications to bring the Company
into  Year  2000  compliance  is not expected to be material  to  the  Company's
financial  position.  The total amount expended on the project through September
30, 1998 is less than $100,000.

      The  failure  to correct a material Year 2000 problem could result  in  an
interruption  in,  or  a  failure of, certain marine transportation  and  diesel
repair  operating  activities.  Such a failure could  materially  and  adversely
affect  the  Company's  results of operations, liquidity and  overall  financial
condition.   The  Company is unable at the present time to determine  whether  a
Year  2000  non-compliance of one or more of the Company's major  systems  would
materially  impact the Company's results of operations, liquidity  or  financial
condition.   The  Company is currently reasonably confident  of  its  Year  2000
compliance with its systems developed in-house, as well as certain of  its  pre-
packaged vendor based products; however, the Company is dependent on third-party
suppliers to bring its Year 2000 compliance project to a closure.

     The completion of the Year 2000 project is expected to significantly reduce
the  Company's level of uncertainty related to its third-party reliance for Year
2000 compliance, and will reduce the possibility of significant interruptions of
normal business operations.  The dates on which the Company believes the project
team  will bring closure to the Year 2000 issues are based on the Company's best
estimates,  at the present time.  However, there can be no guarantee that  these
estimates  can  be achieved, or that there will not be delays in,  or  increased
costs  associated  with, the implementation of the Year 2000 systems,  primarily
due  to  the  Company's  reliance on third parties and suppliers.   The  Company
cannot  ensure  its  ability  to  timely and cost-effectively  resolve  problems
associated with the Year 2000 issue that may affect its operation and  business,
or expose the Company to third-party liability.

      The Company cautions that forward-looking statements contained in the Year
2000  discussion should be read in conjunction with the Company's disclosure  in
the opening paragraph of this Management's Discussion and Analysis.

    27
                 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                                        
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


FINANCIAL CONDITION, CAPITAL RESOURCES AND LIQUIDITY, Continued

ACCOUNTING STANDARDS

      SFAS  No.  131, "Disclosures about Segments of an Enterprise  and  Related
Information,"   issued  in  June  1997,  establishes  standards  for   reporting
information about operating segments in annual financial statements and requires
that enterprises report selected information about operating segments in interim
reports  issued  to shareholders.  SFAS No. 131 will be adopted  in  1998.   The
adoption  of  SFAS  No.  131 is not expected to have a material  impact  on  the
Company's financial condition or results of operations.

       SFAS   No.   132,  "Employers'  Disclosures  about  Pensions  and   other
Postretirement   Benefits,"  issued  in  February   1998,   revises   employers'
disclosures about pension and other postretirement benefit plans.  It  does  not
change   the   measurement  or  recognition  of  those  plans.   The   statement
standardizes  the disclosure requirements for pensions and other  postretirement
benefits  to the extent practicable, requires additional information on  changes
in  the  benefit obligations and fair values of plan assets that will facilitate
financial   analysis,  and  eliminates  certain  disclosures.   Restatement   of
disclosures  for earlier periods is required.  SFAS No. 132 will be  adopted  by
the Company in 1998.
    28
                 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                           PART II - OTHER INFORMATION
                                        
                                        
Item 1.   Legal Proceedings
- -------   -----------------

          For  a  detailed explanation of the material pending legal proceedings
          against the Company, please refer to the Form 10-K for the year  ended
          December 31, 1997.

Item 6.   Exhibits and Reports on Form 8-K
- -------   --------------------------------

(a)       Exhibits:

          11.0 Computation of Earnings per Common Share.

          27.0 Financial Data Schedule.

(b)       Reports on Form 8-K:

          There  were  no reports on Form 8-K filed for the three  months  ended
          September 30, 1998.

                                   SIGNATURES

      Pursuant to the requirements of the Securities and Exchange Act  of  1934,
the  Registrant has duly caused this report to be signed on its  behalf  by  the
undersigned thereunto duly authorized.

                                   KIRBY CORPORATION
                                   (Registrant)

                                   By:  /s/  G. STEPHEN HOLCOMB
                                        -----------------------------
                                        G. Stephen Holcomb
                                        Vice President and Controller

Dated:    November 6, 1998



                                              EXHIBIT 11.0

                             KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
                                        
                                COMPUTATION OF EARNINGS PER COMMON SHARE


                                                                Three months ended    Nine months ended
                                                                  September 30,        September 30,
                                                                ------------------    -----------------
                                                                 1998       1997       1998       1997
                                                                -------    -------    -------    -------
                                                                (in thousands, except per share amounts)
                                                                                     
Net earnings (loss) from continuing operations                  $(6,571)   $ 5,873    $ 5,144    $16,186
Net earnings from discontinued operations                            --         76         --      2,607
                                                                 ------     ------     ------     ------
                                                                         
   Net earnings (loss)                                          $(6,571)   $ 5,949    $ 5,144    $18,793
                                                                 ======     ======     ======     ======
                                                                         
Basic earnings per share:                                                
Weighted average number of common shares outstanding             21,175     24,313     22,181     24,405
                                                                 ======     ======     ======     ======
                                                                         
Basic earnings (loss) per share from continuing operations      $  (.31)   $   .24    $   .23    $   .66
Basic earnings per share from discontinued operations                --         --         --        .11
                                                                 ------     ------     ------     ------
                                                                         
   Basic earnings (loss) per share                              $  (.31)   $   .24    $   .23    $   .77
                                                                 ======     ======     ======     ======
                                                                         
Diluted earnings per share:                                              
Weighted average number of common shares outstanding             21,175     24,313     22,181     24,405
Dilutive shares applicable to stock options                          --        223        306        211
                                                                 ------     ------     ------     ------
                                                                         
   Shares applicable to diluted earnings                         21,175     24,536     22,487     24,616
                                                                 ======     ======     ======     ======
                                                                         
Diluted earnings (loss) per share from continuing operations    $  (.31)   $   .24    $   .23    $   .66
Diluted earnings per share from discontinued operations              --         --         --        .10
                                                                 ------     ------     ------     ------
                                                                                 
   Diluted earnings (loss) per share                            $  (.31)  $    .24   $   .23     $   .76
                                                                 ======     ======     ======     ======




 


 5

THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF EARNINGS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.

 1,000
       
                             
                   9-MOS
                          DEC-31-1998
                               SEP-30-1998
                                             712
                                    21,135
                                  103,136
                                       842
                                     14,332
                               152,453
                                         469,268
                                 206,684
                                 439,905
                           77,555
                                        173,635
                                0
                                          0
                                         3,091
                                     135,877
                   439,905
                                         49,701
                               250,385
                                           35,971
                                  161,730
                                64,034
                                    68
                               9,235
                                  9,074
                                     3,930
                              5,144
                                       0
                                      0
                                            0
                                     5,144
                                      .23
                                      .23