FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549


(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
           EXCHANGE ACT OF 1934

           For the quarterly period ended         March 31, 1999
                                            -------------------------
                                   OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
           EXCHANGE ACT OF 1934

                
Commission File Number       0-12058
                             -------

                          KENAN TRANSPORT COMPANY                
           ------------------------------------------------------
           (Exact name of registrant as specified in its charter)

              North Carolina                         56-0516485     
     -------------------------------               ---------------       
     (State or other jurisdiction of                (IRS Employer
      incorporation or organization)              Identification No.)


             University Square - West, 143 W. Franklin Street
                 Chapel Hill, North Carolina, 27516-3910            
        -----------------------------------------------------------
        (Address of principal executive offices, including Zip Code)


                             (919) 967-8221                        
        -----------------------------------------------------------
           (Registrant's telephone number, including Area Code)

    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       
                                 -------          -------

    Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

                 Class                   Outstanding at April 30, 1999
      --------------------------         -----------------------------
      Common stock, no par value                    2,421,562





<PAGE>

                         KENAN TRANSPORT COMPANY

                                 INDEX


                                                                     Page
                                                                     ----
Part I - Financial Information

    Consolidated Balance Sheets as of March 31, 1999 and
    December 31, 1998                                                  1

    Consolidated Statements of Income for the three months 
    ended March 31, 1999 and 1998                                      2

    Consolidated Statements of Cash Flows for the three 
    months ended March 31, 1999 and 1998                               3

    Notes to Consolidated Financial Statements                     4 - 5

    Management's Discussion and Analysis of Financial 
    Condition and Results of Operations                            6 - 9



Part II - Other Information

    Item 6 - Exhibits and Reports on Form 8-K                         10

    Signatures                                                        11

    Index to Exhibits                                                 12






<PAGE>
                     PART I - FINANCIAL INFORMATION

                         KENAN TRANSPORT COMPANY
                       CONSOLIDATED BALANCE SHEETS
                         (Dollars in thousands)

                                                March 31,    December 31,
                                                  1999          1998
ASSETS                                        (Unaudited)      (Note 1)
-------------------------------------------------------------------------
Current Assets
   Cash and cash equivalents                      $ 9,696        $ 8,023
   Accounts receivable, net                         9,379         10,441 
   Operating supplies and parts                       572            572 
   Prepayments       
     Tires                                          1,889          1,851 
     Insurance, licenses and other                  1,517          1,353 
     Deferred income taxes                          2,164          2,164 
                                                 ------------------------
        Total Current Assets                       25,217         24,404 

Operating Property
   Land                                             3,464          3,464 
   Buildings and leasehold improvements            11,453         11,412 
   Revenue equipment                               73,755         72,703 
   Other equipment                                  6,651          6,490 
                                                 ------------------------
                                                   95,323         94,069 
   Accumulated depreciation                       (38,015)       (36,444)
                                                 ------------------------
        Net Operating Property                     57,308         57,625 

Intangible Assets, Net                             10,800         10,944 
Other Assets                                        1,670          1,671 
                                                 ------------------------
                                                  $94,995        $94,644 
                                                 ========================
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------------------------------------------
Current Liabilities
   Capital lease obligations                      $ 1,052        $ 1,108
   Accounts payable                                 2,604          2,784 
   Wages and employee benefits payable              5,833          9,331 
   Claims payable                                   4,228          3,942 
   Income taxes payable                               744            --  
                                                ------------------------
        Total Current Liabilities                  14,461         17,165 

Long-Term Debt                                     10,000         10,000
Capital Lease Obligations                           3,924          2,056
Deferred Income Taxes                              11,243         11,243 

Stockholders' Equity
   Common stock; no par; 20,000,000 shares 
     authorized; 2,421,562 and 2,400,462 
     shares issued and outstanding                  4,400          4,400
   Deferred incentive compensation                   (898)          (956) 
   Retained earnings                               51,865         50,736
                                                 ------------------------
                                                   55,367         54,180 
                                                 ------------------------
                                                  $94,995        $94,644 
                                                 ========================

The Notes to Consolidated Financial Statements are an integral part of
these balance sheets.

                                  Page 1


<PAGE>
                         KENAN TRANSPORT COMPANY
                   CONSOLIDATED STATEMENTS OF INCOME
             For the Three Months Ended March 31, 1999 and 1998
           (Unaudited and in thousands except per share amounts)


                                                   1999           1998   
------------------------------------------------------------------------
Operating Revenue                                 $33,961        $28,481 

Operating Expenses  
   Wages and employee benefits                     17,550         14,277 
   Fuel and other operating expenses                7,055          6,079 
   Depreciation and amortization                    2,669          2,507 
   Taxes and licenses                               1,874          1,653 
   Claims and insurance                             1,378          1,011 
   Equipment rents                                  1,405            923 
                                                 ------------------------
                                                   31,931         26,450 
                                                 ------------------------
Operating Income                                    2,030          2,031 
Interest Expense                                     (201)          (138)
Interest Income and Other Expenses, Net               310             33 
                                                 ------------------------
Income before Provision for Income Taxes            2,139          1,926 
Provision for Income Taxes                            834            751 
                                                 ------------------------
Net Income                                        $ 1,305        $ 1,175 
                                                 ========================



Weighted average number of shares
   outstanding                                      2,422          2,400 



Basic and diluted earnings per share              $   .54        $   .49 

Operating ratio                                      94.0%          92.9%

Dividends paid per share                          $ .0725        $ .0700 



The Notes to Consolidated Financial Statements are an integral part of
these statements.    


                                  Page 2




<PAGE>
                         KENAN TRANSPORT COMPANY
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
             For the Three Months Ended March 31, 1999 and 1998
                   (Unaudited and dollars in thousands)


                                                    1999          1998  
------------------------------------------------------------------------
Cash Provided by (Applied to):
   Operations                                     $ 2,354        $ 2,990 
   Purchases of operating property, net               (29)        (1,009)
   Business acquisition                               --          (7,863)
   Debt and lease obligations, net                   (476)         7,232
   Dividends                                         (176)          (168)
                                                 ------------------------
Net Increase in Cash and Cash Equivalents           1,673          1,182 
Beginning Cash and Cash Equivalents                 8,023          3,422 
                                                 ------------------------

Ending Cash and Cash Equivalents                  $ 9,696        $ 4,604 
                                                 ========================


The Notes to Consolidated Financial Statements are an integral part of
these statements.        


                                  Page 3




<PAGE>
                         KENAN TRANSPORT COMPANY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               (Unaudited)


1.   Basis of Presentation  
---------------------------
    The accompanying consolidated financial statements are prepared in
conformity with generally accepted accounting principles and include the
accounts of Kenan Transport Company and its wholly-owned subsidiary,
Petro-Chemical Transport, Inc. All significant intercompany accounts and
transactions have been eliminated.
      
    The financial information included herein is unaudited; however,
such information reflects all adjustments (consisting solely of normal
recurring adjustments) that are, in the opinion of management, necessary
for a fair statement of results for the interim periods.

    The balance sheet at December 31, 1998 has been taken from the
audited financial statements at that date.

    The results of operations for the three months ended March 31, 1999
and 1998 are not necessarily indicative of the results to be expected for
the full year.



2.   Recent Accounting Pronouncements
-------------------------------------
    In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, Accounting For Derivative Instruments and Hedging Activities
(the "Statement"). The Statement requires that upon adoption, all
derivative instruments be recognized in the balance sheet at fair value,
and that changes in such fair values be recognized in earnings unless
specific hedging criteria are met. Changes in the values of derivatives
that meet these hedging criteria will ultimately offset related earnings
effects of the hedged items; effects of certain changes in fair value are
recorded in other comprehensive income pending recognition in earnings.
The Company will not adopt the Statement until required to do so on
January 1, 2000.



3.   Business Acquisitions
---------------------------
    On February 28, 1998, the Company acquired 100% of the outstanding
stock of Petro-Chemical Transport, Inc. (PCT), a wholly owned subsidiary 
of CITGO Petroleum Corporation. PCT is a tank truck carrier serving the 
petroleum industry in the Southeast, Midwest and on the West Coast. The 
acquisition, net of cash acquired, required a cash investment totaling 
$7,880,000. The Company financed the acquisition through its line of 
credit facility. 

    The acquisition has been accounted for using the purchase method of
accounting. The accompanying consolidated statements of income include
results of operations of PCT beginning March 1, 1998. The purchased assets 
and liabilities assumed have been recorded in the Company's financial 
statements at their estimated fair market values. The excess of the 
purchase cost over the fair value of net assets acquired in the acquisition 
(goodwill) is included in intangible assets in the accompanying 
consolidated balance sheets and is being amortized over 20 years on a 
straight-line basis.


                                  Page 4


<PAGE>
                         KENAN TRANSPORT COMPANY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               (Continued)


    The following unaudited pro forma summary presents the consolidated 
results of operations of the Company for the first quarter of 1999 and 
1998, as if the acquisition had occurred as of January 1, 1998. The pro 
forma information does not purport to be indicative of what would have 
occurred had the acquisition been made as of January 1, 1998 or of results 
that may occur in the future (dollars in thousands except per share 
amounts).

    Pro-Forma Information (unaudited)
    --------------------------------------------------------------------
                                                     1999        1998
                                                  ----------------------
    Revenue                                         $33,961     $34,180
    Net income                                        1,305       1,324
    Basic and diluted earnings per share                .54         .55



4.   Long-Term Debt
--------------------
    The Company has an unsecured $20,000,000 Reducing Line of Credit 
Facility with a bank. The agreement replaces the Company's previous 
$7,000,000 line of credit. Funds available under the line reduces $500,000 
per quarter beginning July 1, 1998 to a minimum line of $10,000,000. The 
agreement matures in March 2003. Interest under the agreement is at 
variable rates based on LIBOR plus an applicable margin. At March 31, 1999 
and 1998, the Company had $10,000,000 outstanding under the new credit 
facility. At March 31, 1998, the Company had $375,000 payable under a 
short-term note obligation assumed in the acquisition of Petro-Chemical 
Transport, Inc. The short-term note was paid in April of 1998.

    The Company has entered into a simple interest rate swap agreement to 
manage interest costs and risks associated with changing interest rates. 
The agreement effectively changes a portion of the Company's interest rate 
exposure on the line of credit from a floating rate to a fixed rate. The 
agreement matures in March 2003. At March 31, 1999, the notional principal 
amount of this agreement totaled $7,000,000. The Company does not hold or 
issue derivative instruments for trading purposes.

The Company agrees to exchange at specific intervals, the difference 
between fixed-rate and variable-rate interest amounts calculated by 
reference to the notional amount with any differential recorded as an 
adjustment to interest expense. 

 
                                  Page 5     


<PAGE>     
                         KENAN TRANSPORT COMPANY
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                   CONDITION AND RESULTS OF OPERATIONS


    The following is management's discussion and analysis of certain 
significant factors that have affected the Company's financial position
and operating results during the periods included in the accompanying
financial statements.



Results of Operations

    Revenue for the first quarter of 1999 was $33,961,000 compared to
$28,481,000 for the first quarter of 1998. Net income was $1,305,000
compared to $1,175,000 in 1998. Earnings per share were $.54 compared to
$.49 during the same period last year. 

    First quarter revenue increased $5,480,000 (19%) over the first 
quarter of 1998. The revenue growth was driven by the Company's 
acquisition of the stock of Petro-Chemical Transport, Inc. (PCT) on 
February 28, 1998. First quarter revenue attributable to PCT was 
$10,595,000 in 1999 compared to $3,381,000 in 1998. Demand for gasoline 
and chemicals was flat during the first quarter. In addition, the mild 
winter weather affected demand for propane gas and other heating fuels in 
the quarter. Miles operated increased 10% from the first quarter of 1998. 

    Operating expenses for the first quarter of 1999 increased
$5,481,000 (21%) over 1998 levels. The increase in operating expenses
was primarily attributable to the inclusion of PCT's operation for the 
full quarter in 1999 and the resulting increase in miles operated. As a 
percentage of revenue, wages and employee benefits expense increased to 
51.7% from 50.1% due to increased driver wages and higher benefit costs. 
Insurance and claims expensed increased to 4.1% from 3.5% due to higher 
claims experience in 1999. As a percentage of revenue, an increase in 
equipment rents was offset by lower relative depreciation costs. The 
Company's operating ratio for the quarter was 94.0% compared to 92.9% in 
1998. 

    The average balance of outstanding debt and capital lease
obligations during the first quarter of 1999 and 1998 were approximately
$13,668,000 and $9,208,000, respectively. Interest expense was $201,000 
for the first quarter of 1999 compared to $138,000 in 1998.

    The $277,000 increase in interest income and other expenses was 
primarily attributable to the Company's sale of older trailer equipment.



Liquidity and Capital Resources

    At March 31, 1999, cash and cash equivalents totaled $9,696,000, an
increase of $1,673,000 from the end of 1998. Working capital of
$10,756,000 was up $3,517,000 from year-end 1998, and the current ratios
were 1.74 and 1.42, respectively. At March 31, 1999, the Company had
outstanding debt and capital lease obligations totaling $14,976,000
compared to $13,164,000 at December 31, 1998. 



                                  Page 6




<PAGE>     
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                    CONDITION AND RESULTS OF OPERATIONS
                               (continued)


    Cash and cash equivalents have increased $5,092,000 from March 31,
1998. The Company has second quarter cash commitments of approximately
$2,500,000 for tractor replacements. Management believes that cash flows
from operations and the Company's bank line of credit will be sufficient
to fund these planned expenditures as well as 1999 working capital
requirements, expansion opportunities and other corporate needs.



Environmental Matters

    The Company's operations require the storage of fuel for use in its
tractors in both underground and aboveground tanks. The Company has a
program to maintain its fuel storage facilities in compliance with
environmental regulation. Under the program, the Company incurs costs to
replace tanks, remediate soil contamination resulting from overfills,
spills and leaks and monitor facilities on an ongoing basis. These costs
are recorded when it is probable that a liability has been incurred and
the related amount can be reasonably estimated. Such costs have not been
and are not expected to be material to the Company's operations or
liquidity. 



Year 2000

The "Year 2000" issue results from computer systems that store and 
process data using two-digit fields to represent the year rather than 
four-digit fields. Consequently, some computer systems may not process 
dates beyond 1999. Businesses are at risk of computer system failures that 
may cause disruptions in their operations. Computer systems termed Year 
2000 compliant have been tested and certified to correctly process dates 
beyond the year 2000.

Kenan's information technology ("IT") systems include financial and 
operational software and hardware. The Company has completed an assessment 
of its critical IT systems and the majority are Year 2000 compliant.  The 
Company is in the process of correcting all remaining critical IT systems 
with implementation of solutions expected by June 30, 1999. All non-
critical IT systems, such as desktop hardware and software, are scheduled 
to be made Year 2000 compliant by September 30, 1999. 

The Company's non-IT systems consist primarily of embedded technology 
in tractors, telephone equipment and office equipment. All testing and 
remediation is scheduled to be completed by June 30, 1999.
	


                                 Page 7



<PAGE>     
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                    CONDITION AND RESULTS OF OPERATIONS
                               (continued)


The total cost for remediation of IT and embedded technology systems is 
estimated to be $258,000. As of March 31, 1999, the Company has incurred 
and expensed approximately $124,000 related to Year 2000 readiness. These 
cost estimates include internal and external labor for remediation and 
testing of the Company's systems. Overall, management believes that the 
cost will not be material and the Year 2000 will not pose significant 
operational problems for the Company's internal systems. 

The Company is also continuing its assessment of the Year 2000 
readiness of selected third parties (key suppliers and customers) with 
whom it has material relationships. The goal is to ensure that no 
interruptions of service will occur as a result of Year 2000 issues at 
those companies on which the Company's business is materially dependent. 
The Company will continue to monitor the progress of those third parties 
and formulate contingency plans where necessary if significant exposures 
are identified. While the Company's investigations and assessments have 
not revealed a material third party that is not expecting to be Year 2000 
compliant, a failure of the Company's key suppliers, customers or other 
third party to adequately address their Year 2000 readiness could 
adversely affect the Company's business. 

    The most likely worst case scenario for Kenan Transport is that the 
Company would be unable to operate for a number of days due to general 
public infrastructure failures, utilities and telecommunication failures, 
internal equipment failures, or failure at external loading racks or 
retail store outlets. The inability of the Company to operate would result 
in a loss of revenues, partially mitigated by reduced cost.

    We believe that we have an effective plan in place to resolve the Year 
2000 issue in a timely manner. However, due to the unusual nature of the 
Year 2000 issue, it is difficult to predict with certainty what will 
happen after December 31, 1999.



Market Risk

Market risk is the potential loss arising from adverse changes in 
market rates and prices, such as foreign currency rates, and other 
relevant market rates or price changes. In the ordinary course of 
business, Kenan is exposed to interest rate risks and the Company 
regularly evaluates its exposure to this risk. The Company does not hold 
or issue derivative instruments for trading purposes.


                                 Page 

<PAGE>     
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                    CONDITION AND RESULTS OF OPERATIONS
                               (continued)


The fair value of the interest rate swap agreement represents the 
estimated receipts or payments that would be made to terminate the 
agreement. At March 31, 1999, the Company would have paid approximately 
$154,000 to terminate the agreement. Assuming a 100 basis point reduction 
in the LIBOR interest rate curve, the fair value of the interest rate swap 
agreement would decrease by approximately $238,000.



Forward-Looking Statements

Statements in this document that are not historical facts are hereby 
identified as forward-looking statements for the purpose of the safe 
harbor provided by Section 21E of the Securities Act of 1934 and Section 
27A of the Securities Act of 1933. The Company cautions readers that such 
forward-looking statements, including without limitation, those relating 
to the Company's future business prospects, revenues, working capital, 
liquidity, capital needs, interest costs and income, wherever they occur 
in this document or in other statements attributable to the Company are 
estimates reflecting the best judgement of the Company's senior management 
and involve a number of risks and uncertainties that could cause actual 
results to differ materially from those suggested by the forward-looking 
statements. 

Disclosures concerning Year 2000 issues also contain forward-looking 
statements that include assessments, timetables and cost estimates. The 
incremental costs of the Year 2000 project and the time by which the 
Company believes it will complete the Year 2000 modifications, as well as 
new system initiatives that are Year 2000 compliant and third party 
compliance, are based upon management's best estimates. There exists the 
possibility that factors outside of management's control may have a 
material impact on the Company operations.


                                 Page 9



<PAGE>
                         PART II - OTHER INFORMATION


Item 6.   Exhibits and Reports on Form 8-K
-------   --------------------------------
  (a)     The Exhibits to this Form 10-Q are listed on the accompanying
          Index to Exhibits.

  (b)     The following reports on Form 8-K have been filed during the
          quarter ended March 31, 1999:

          None


                                 Page 10




<PAGE>
                                SIGNATURES


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


                                         KENAN TRANSPORT COMPANY
                                              (Registrant)



DATE:      May 12, 1999                      BY:/s/  William L. Boone
                                             ----------------------------
                                             Vice President-Finance and
                                             Chief Financial Officer    


                                  Page 11




<PAGE>
                            INDEX TO EXHIBITS


The exhibits filed as part of this report are listed below:


    Exhibit
     Number                        Description                
   ---------    --------------------------------------------------------
      11        Statement Re Computation of Per Share Earnings

      27        Financial Data Schedule for the quarter ending March 31,
                1999.


                                  Page 12