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     June 30, 1997
                                             -------------
                                    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 July 31, 1997
     --------------------------         ------------------------------
     Common stock, no par value                    2,394,780
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                            KENAN TRANSPORT COMPANY

                                    INDEX


                                                                 Page
                                                                 ----
Part I - Financial Information

    Consolidated Balance Sheets as of June 30, 1997 and
      December 31, 1996                                             1

    Consolidated Statements of Income for the three 
      and six months ended June 30, 1997 and 1996                   2

    Consolidated Statements of Cash Flows for the 
      six months ended June 30, 1997 and 1996                       3

    Notes to Consolidated Financial Statements                      4

    Management's Discussion and Analysis of Financial 
      Condition and Results of Operations                           5



Part II - Other Information

    Item 4 - Submission of Matters to a Vote of Security Holders    6

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

    Signatures                                                      7
    
    Index to Exhibits                                               8

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                       PART I - FINANCIAL INFORMATION

                          KENAN TRANSPORT COMPANY
                        CONSOLIDATED BALANCE SHEETS
                           (Dollars in thousands)

<TABLE>
<CAPTION>
                                            June 30,     December 31,
                                              1997          1996    
ASSETS                                    (Unaudited)      (Note 1)  
---------------------------------------------------------------------
<S>                                           <C>            <C>
Current Assets
   Cash and cash equivalents                  $11,185        $11,181 
   Short-term investments                         -              -  
   Accounts receivable                          4,723          4,988 
   Operating supplies and parts                   475            413 
   Prepayments -      
    Tires                                         982          1,033 
    Insurance, licenses and other                 908            698 
   Deferred income taxes                        1,856          1,741 
---------------------------------------------------------------------
       Total Current Assets                    20,129         20,054 

Operating Property
   Land                                         3,531          3,531 
   Buildings and leasehold improvements        10,545          9,279 
   Revenue equipment                           56,428         56,015 
   Other equipment                              4,236          3,923 
---------------------------------------------------------------------
                                               74,740         72,748 
   Accumulated depreciation                   (29,719)       (28,615)
---------------------------------------------------------------------
       Net Operating Property                  45,021         44,133 

Other Assets                                    1,051            857 
---------------------------------------------------------------------
                                              $66,201        $65,044 
=====================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
---------------------------------------------------------------------
Current Liabilities
   Accounts payable                           $ 1,194        $ 1,257 
   Wages and employee benefits payable          4,674          5,136 
   Claims payable                               3,483          3,409 
   Other accrued expenses                         184            166 
   Income taxes payable                           --              52 
---------------------------------------------------------------------
       Total Current Liabilities                9,535         10,020 

Deferred Income Taxes                           9,266          9,181 

Stockholders' Equity
   Common stock; no par; 20,000,000 shares
      authorized; 2,394,780 and 2,389,497
    shares issued and outstanding               3,096          2,996 
   Retained earnings                           44,304         42,847 
---------------------------------------------------------------------
                                               47,400         45,843 
---------------------------------------------------------------------
                                              $66,201        $65,044 
=====================================================================

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

</TABLE>
                                   Page 1<PAGE>
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                                   KENAN TRANSPORT COMPANY
                              CONSOLIDATED STATEMENTS OF INCOME
                (Unaudited and dollars in thousands except per share amounts)

<TABLE>
                                             Three Months Ended      Six Months Ended
                                                   June 30,               June 30,      
                                            --------------------   ---------------------
                                              1997        1996        1997        1996  
----------------------------------------------------------------------------------------
<S>                                         <C>         <C>         <C>         <C>     
Operating Revenue                           $17,233     $16,637     $34,979     $34,224 

Operating Expenses  
   Wages and employee benefits                8,806       8,606      17,756      17,532 
   Fuel, parts, tires and other               3,477       3,122       6,976       6,420 
   Taxes and licenses                         1,062       1,046       2,156       2,170 
   Claims and insurance                         663         596       1,307       1,197 
   Communications, utilities and rent           348         357         711         786 
   Depreciation                               1,647       1,689       3,302       3,250 
----------------------------------------------------------------------------------------
                                             16,003      15,416      32,208      31,355 
----------------------------------------------------------------------------------------
Operating Income                              1,230       1,221       2,771       2,869 
   Interest income and other expenses, net       71          33         117         103 
----------------------------------------------------------------------------------------
Income before Provision for Income Taxes      1,301       1,254       2,888       2,972 
   Provision for income taxes                   491         491       1,102       1,169 
----------------------------------------------------------------------------------------
Net Income                                  $   810     $   763     $ 1,786     $ 1,803 
========================================================================================


Weighted average number of shares
   outstanding (in thousands)                 2,395       2,389       2,393       2,389 

Earnings per share                          $   .34     $   .32     $   .75     $   .76 

Operating ratio                               92.9%       92.7%       92.1%       91.6% 

Dividends paid per share                    $ .0675     $ .0650     $ .1350     $ .1300 



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

</TABLE>
                                          Page 2
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                            KENAN TRANSPORT COMPANY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                For the Six Months Ended June 30, 1997 and 1996
                      (Unaudited and dollars in thousands)

<TABLE>
<CAPTION>
                                                1997           1996  
----------------------------------------------------------------------
<S>                                           <C>            <C>
Cash Provided by (Applied to):
   Operations                                 $ 4,523        $ 4,856 
   Purchases of operating property, net        (4,190)        (7,244)
   Short-term investments, net                    -            6,076 
   Dividends                                     (329)          (317)
----------------------------------------------------------------------
Net Increase in Cash and Cash Equivalents           4          3,371 
Beginning Cash and Cash Equivalents            11,181          3,220 
----------------------------------------------------------------------
Ending Cash and Cash Equivalents              $11,185        $ 6,591 
======================================================================



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



                                     Page 3
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                             KENAN TRANSPORT COMPANY

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


1.  Basis of Presentation  

          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, 1996 has been taken from the
    audited financial statements at that date.

          The results of operations for the three and six months ended
    June 30, 1997 and 1996 are not necessarily indicative of the results
    to be expected for the full year.    



2.   Effects of Recent Accounting Pronouncements

          The Financial Accounting Standards Board issued Statement of
    Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share",
    in February 1997. The Company is required to adopt SFAS No. 128 for
    the year ended December 31, 1997. This statement establishes
    standards for computing and presenting earnings per share (EPS) and
    makes them comparable to international EPS standards. The statement
    requires dual presentation of basic and diluted EPS on the face of
    the income statement and requires a reconciliation of the numerator
    and denominator of the basic EPS calculation to the numerator and
    denominator of the diluted EPS calculation. Basic and diluted EPS
    will not be materially different from previously reported EPS.















                                    Page 4
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                             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 second quarter of 1997 was $17,233,000, an increase
of $596,000 and 4% over the second quarter of 1996. We experienced modest
growth in demand for transportation of gasoline and chemical products,
while propane gas and heating fuels were flat as a result of a warmer
heating season. Net income was $810,000, an increase of $47,000 and 6%
over the second quarter of 1996. Earnings per share were $.34 compared to
$.32 in 1996. Miles operated increased 3% in comparison to the second
quarter of 1996.
  
    Revenue for the first half of 1997 was $34,979,000, an increase of
$755,000 and 2% over the first six months of 1996. Net income was
$1,786,000 compared to $1,803,000 for the first half of 1996. Earnings
per share were $.75 compared to $.76 in 1996. Miles operated increased 1%
in comparison to the first half of 1996.
    
    Operating expenses for the second quarter of 1997 totaled
$16,003,000, an increase of $587,000 and 4% over the second quarter of
1996. During the second quarter, we increased driver pay to our more
experienced drivers. We expect this change to result in lower turnover,
improved customer service and safety performance. Fuel prices continued
to decline during the quarter to levels slightly lower than those in the
second quarter of 1996. Accordingly, we have adjusted our fuel surcharge
program to reduce prices to our customers. The operating ratio for the
quarter was 92.9% compared to 92.7% in 1996.
    
    Operating expenses for the first half of 1997 totaled $32,208,000, an
increase of $853,000 and 3% over the first six months of 1996. The
operating ratio increased to 92.1% from 91.6% in 1996.


Liquidity and Capital Resources
-------------------------------
    The Company's liquidity and capital resources are adequate. At June
30, 1997, working capital was $10,594,000 compared to $10,034,000 at
December 31, 1996, and the current ratios were 2.11 and 2.00,
respectively. Cash and cash equivalents totaled $11,185,000 at June 30,
1997, and the Company had no debt outstanding under its $7,000,000 bank
line of credit. Management believes that cash flows from operations and
access to capital from the Company's bank line of credit will be
sufficient to fund 1997 capital expenditures, working capital
requirements, expansion opportunities and other corporate needs.

    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. 


                                  Page 5<PAGE>
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                            PART II - OTHER INFORMATION


Item 4.   Submission of Matters to a Vote of Security Holders
-------   ---------------------------------------------------
          The Registrant's Annual Meeting of Stockholders was held on May
          5, 1997 for the purpose of electing a board of directors and to
          transact other business as came before the meeting. Proxies for
          the meeting were solicited pursuant to Section 14(a) of the
          Securities Act of 1934 and there was no solicitation in 
          opposition to management's solicitations. The proposals voted 
          upon and the results of voting were as follows:

          (1)   Nominees for directors as listed in the proxy statement
                were elected for a one year term with the following vote:

                
                                    Votes        Votes         Broker
                                     For        Withheld     Non-votes
                                  ---------     --------     ---------
          Thomas S. Kenan, III    2,146,520         100       145,853
          Owen G. Kenan           2,146,520         100       145,853
          Lee P. Shaffer          2,146,520         100       145,853
          William C. Friday       2,146,520         100       145,853
          William O. McCoy        2,145,070       1,550       145,853
          Paul J. Rizzo           2,145,070       1,550       145,853
          Braxton Schell          2,146,420         200       145,853
          Paul Wright, Jr.        2,146,520         100       145,853
          Kenneth G. Younger      2,145,070       1,550       145,853





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)     No reports on Form 8-K have been filed during the quarter ended
          June 30, 1997.


                                    Page 6
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                                  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:     August 6, 1997                BY:   /s/  William L. Boone
                                              ----------------------------
                                              Vice President-Finance and
                                              Chief Financial Officer


                                   Page 7
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                             INDEX TO EXHIBITS


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


 Exhibit
  Number                         Description
---------       ---------------------------------------------------------- 
  10.A           Senior Managers' Life Insurance Plan

  10.B           Senior Management Severance Plan

  27             Financial Data Schedule for the 2nd Quarter 10-Q.





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