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, 2000
                                                 -----------------
                                       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, 2000
           -----------------------------------------------------------
            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, 2000 and
           December 31, 1999                                              1

        Consolidated Statements of Income for the three
           months ended March 31, 2000 and 1999                           2

        Condensed Consolidated Statements of Cash Flows for the
           three months ended March 31, 2000 and 1999                     3

        Notes to Condensed Consolidated Financial Statements          4 - 5

        Management's Discussion and Analysis of Financial
           Condition and Results of Operations                        6 - 8



Part II - Other Information

        Item 4 - Submission of Matters to a Vote of
           Security Holders                                               9

        Item 5 - Exhibits and Reports on Form 8-K                         9

        Signatures                                                       10

        Index to Exhibits                                                11



<PAGE>


                       PART I - FINANCIAL INFORMATION

                         KENAN TRANSPORT COMPANY
                      CONSOLIDATED BALANCE SHEETS
                         (Dollars in thousands)

                                                March 31,          December 31,
                                                  2000                 1999
ASSETS                                         (Unaudited)           (Note 1)
-------------------------------------------------------------------------------
Current Assets

    Cash and cash equivalents                   $     2,925         $     7,466
    Accounts receivable, net                         10,962              10,966
    Operating supplies and parts                        577                 676
    Prepayments

        Tires                                         2,458               2,257
        Insurance, licenses and other                 1,406               1,484
        Deferred income taxes                         1,861               1,861
                                                ................................
           Total Current Assets                      20,189              24,710
                                                ................................
Operating Property

    Land                                              3,464               3,464
    Buildings and leasehold improvements             11,544              11,496
    Revenue equipment                                84,273              79,888
    Other equipment                                   6,981               6,859
                                                ................................
                                                    106,262             101,707
    Accumulated depreciation                        (41,461)            (40,625)
                                                ................................
        Net Operating Property                       64,801              61,082
                                                ................................

Intangible Assets, Net                               10,224              10,368
                                                ................................
Other Assets                                          2,310               2,131
                                                ................................
                                                 $   97,524         $    98,291
                                                ================================

LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------------------------------------------------
Current Liabilities

    Capital lease obligations                   $       880         $       867
    Accounts payable                                  6,184               4,214
    Wages and employee benefits payable               6,310               9,008
    Claims payable                                    3,319               4,156
                                                ................................
        Total Current Liabilities                    16,693              18,245
                                                ................................

Long-Term Debt                                        6,000               6,000
                                                ................................
Capital Lease Obligations                             3,030               3,261
                                                ................................
Deferred Income Taxes                                12,630              12,434
                                                ................................

Stockholders' Equity

    Common stock; no par; 20,000,000 shares
        authorized; 2,421,562 shares issued
        and outstanding                               4,400               4,400
    Retained earnings                                55,441              54,678
    Deferred incentive compensation                    (670)              (727)
                                                 ...............................
                                                     59,171              58,351
                                                 ...............................
                                                $    97,524         $    98,291
                                                 ===============================

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

                                  Page 1



<PAGE>




                             KENAN TRANSPORT COMPANY
                        CONSOLIDATED STATEMENTS OF INCOME
              (Unaudited and in thousands except per share amounts)


                                                Three Months Ended
                                                     March 31,
                                               --------------------
                                              2000              1999
--------------------------------------------------------------------------

Operating Revenue                            $  38,279      $    33,961
                                            -----------------------------

Operating Expenses

    Wages and employee benefits                 20,108           17,550
    Fuel and other operating expenses            8,947            7,055
    Depreciation and amortization                2,871            2,669
    Taxes and licenses                           1,994            1,874
    Claims and insurance                         1,371            1,378
    Equipment rents                              1,382            1,405
-------------------------------------------------------------------------
                                                36,673           31,931
-------------------------------------------------------------------------
Operating Income                                 1,606            2,030
Interest Expense                                  (171)            (201)
Interest Income and Other Expenses, Net            125              310
-------------------------------------------------------------------------
Income before Provision for Income Taxes         1,560            2,139
Provision for Income Taxes                         616              834
-------------------------------------------------------------------------
Net Income                                   $     944      $     1,305
=========================================================================


Basic and diluted earnings per share         $     .39       $      .54

Operating ratio                                   95.8%            94.0%

Dividends paid per share                     $   .0750       $    .0725



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

                                                  Page 2



<PAGE>




                             KENAN TRANSPORT COMPANY
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
               For the Three Months Ended March 31, 2000 and 1999
                      (Unaudited and dollars in thousands)
<TABLE>
<CAPTION>


                                                                2000                  1999
----------------------------------------------------------------------------------------------
<S>                                                         <C>                   <C>

Cash Provided by (Used for):
       Operations                                           $    2,305             $   2,354
       Purchases of operating property, net                     (6,446)                  (29)
       Debt and capital lease obligations, net                    (218)                 (476)
       Dividends                                                  (182)                 (176)
----------------------------------------------------------------------------------------------
Net (Decrease)Increase in Cash and Cash Equivalents             (4,541)                1,673
Beginning Cash and Cash Equivalents                              7,466                 8,023
----------------------------------------------------------------------------------------------
Ending Cash and Cash Equivalents                            $    2,925             $   9,696
==============================================================================================
</TABLE>



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

                                                Page 3



<PAGE>



                             KENAN TRANSPORT COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


1.      Basis of Presentation
------------------------------
        The  accompanying   condensed   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 condensed  consolidated  financial  statements  included herein have
been  prepared  by Kenan  Transport  Company  (the  "Company"),  without  audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
The  Consolidated  Balance Sheet as of December 31, 1999 has been taken from the
audited  financial  statements  as of that date.  Certain  information  and note
disclosures  normally  included in financial  statements  prepared in accordance
with generally  accepted  accounting  principles  have been condensed or omitted
pursuant to such rules and  regulations,  although the Company believes that the
disclosures are adequate to make the information presented not misleading. These
condensed  consolidated  financial statements should be read in conjunction with
the  consolidated  financial  statements  and  notes  thereto  included  in  the
Company's  latest  annual  report on Form 10-K for the year ended  December  31,
1999.

        The condensed  consolidated financial statements included herein reflect
all adjustments  (none of which are other than normal recurring  accruals) which
are, in the opinion of  management,  necessary  for a fair  presentation  of the
information included.

        The results of operations  for the three months ended March 31, 2000 and
1999 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,"  which
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. SFAS
No. 137 subsequently deferred the effective date of SFAS No. 133 for the Company
to January  1,  2001.  The  Company  will  adopt SFAS No. 133 at that time.  The
application of Statement 133 is not expected to have a significant impact on the
Company's financial position or results of operations.

                                    Page 4


<PAGE>



                             KENAN TRANSPORT COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)



3.      Earnings Per Share
--------------------------
        A reconciliation of net income and the weighted average number of shares
outstanding  used in  calculating  basic  and  diluted  earnings  per  share  is
presented in the table below (in thousands, except per share amounts):

                                           Three Months Ended
                                                 March 31

                                        ----------------------
                                         2000             1999
                                        ----------------------

        Net Income                     $  944          $   1,305
                                       =========================

        Weighted Average Shares:

          Basic shares                  2,422              2,422

        Dilutive effect of
           stock options                  --                --
                                       -------------------------
        Diluted shares                  2,422              2,422
                                       =========================
        Basic and diluted
           earnings per share          $  .39          $     .54


4.    Line-of-Credit
--------------------
On February 13, 1998, the Company negotiated an unsecured  $20,000,000  Reducing
Line-of-Credit  Facility (the facility) with a bank.  Funds  available under the
line reduce  $500,000  per quarter  beginning  July 1, 1998 to a minimum line of
$10,000,000.  The facility matures in March 2003. Interest under the facility is
variable  based on LIBOR plus an applicable  margin.  The Company had $6,000,000
outstanding  under the credit  facility at March 31, 2000 and December 31, 1999.
As of March 31,  2000,  the Company had  $10,500,000  available  to it under the
facility.  The credit agreement contains the following financial covenants:  (1)
Funds  from   Operations   to  Funded  Debt  Ratio,   and  (2)  Funded  Debt  to
Capitalization. The Company was in compliance with the covenants as of March 31,
2000 and December 31, 1999.

The Company has entered  into a simple  interest  rate swap  agreement to manage
costs and risks  associated with changing  interest rates.  Under the agreement,
the Company exchanges at specific intervals the difference between the fixed and
variable rate interest  amounts  calculated by reference to the notional  amount
with any  differential  recorded  as an  adjustment  to  interest  expense.  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. At March 31, 2000,
the  notional  principal  amount  of  this  agreement  totaled  $5,000,000.  The
agreement  matures in March 2003.  The average  variable  rates during the first
quarter of 2000 and 1999 were 6.1% and 5.2%,  respectively,  compared to a fixed
rate of 6.5% for these periods.

The Company does not hold or issue derivative instruments for trading purposes.


                                                   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 2000 was  $38,279,000  compared  to
$33,961,000  for the first quarter of 1999. Net income was $944,000  compared to
$1,305,000  in 1999.  Earnings  per share were $.39  compared to $.54 during the
same period last year.  Miles  operated  increased 8% from the first  quarter of
1999.

        The increase in miles operated for the quarter compared to last year was
primarily  due to our  adding new  customers  and  growth  within our  existing,
targeted customer base. The increase in revenue for the quarter compared to last
year was due to the increase in business  volume,  price  increases to cover the
higher  costs of our  driver  pay and  benefits  programs,  and  fuel  surcharge
programs that adjust our pricing as fuel prices rise.

        Operating  expenses for the first quarter of 2000  increased  $4,742,000
(15%) over the first  quarter of 1999.  The increase in  operating  expenses was
primarily due to increases in miles operated,  higher fuel prices, and increases
in driver pay rates and benefit costs. As a percentage of revenue,  fuel expense
increased  to 8.1% from 4.0% for the  quarter  compared to last year due to fuel
prices,  which increased 108% from the first quarter of 1999. Wages and employee
benefits  increased  as a  percentage  of revenue to 52.5% from 51.7% due to the
Company  increasing  driver  wages  and  enhancing  their  benefits  in order to
continue  attracting and retaining  professional  drivers in a very  competitive
labor market.  The Company's  operating ratio for the quarter was 95.8% compared
to 94.0% in 1999.

        Interest  expense was $171,000 for the first quarter of 2000 compared to
$201,000 in 1999.  The average  balances of  outstanding  debt and capital lease
obligations  during  the  first  quarter  of 2000  and 1999  were  approximately
$10,019,000 and $13,668,000, respectively.

        The  $185,000  decrease in interest  income and other  expenses  for the
quarter  compared to 1999 was primarily due to gains on the sale of equipment in
1999.

Liquidity and Capital Resources

        At March 31,  2000,  cash and cash  equivalents  totaled  $2,925,000,  a
decrease of  $4,541,000  from  December 31, 1999.  The decrease in cash and cash
equivalents  was  primarily  due to the Company  purchasing  59 tractors  and 45
trailers during the quarter under its replacement  program  designed to maintain
an efficient,  highly productive  fleet.  Working capital of $3,496,000 was down
$2,969,000  from year-end 1999. At March 31, 2000,  the Company had  outstanding
debt and capital lease obligations  totaling  $9,910,000 compared to $10,128,000
at December 31, 1999.

        The  Company  has  second  quarter  cash  commitments  of  approximately
$7,105,000 for tractor and trailer  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  2000  working   capital
requirements, expansion opportunities and other corporate needs.

                                                   Page 6

<PAGE>

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


Inflation

        The Company's condensed  consolidated  financial statements are prepared
based on historical dollars and are not intended to show the impact of inflation
or  changing  prices.  With the  exception  of  driver  wages  and fuel  prices,
inflation  and changing  prices have not had a material  effect on the Company's
financial position and results of operations.

Environmental Matters

        The Company stores fuel in underground and aboveground  tanks for use in
certain of its  terminal  facilities.  The Company has a program to maintain its
fuel storage facilities in compliance with environmental regulations.  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  Company's  Year 2000  program  successfully  prepared  its critical
internal  systems  for Y2K. In  addition,  the Y2K  preparation  programs of the
Company's  major  customers and suppliers  appear to have been successful as the
Company has not experienced  any significant  disruption in its operations as of
the date of this report.

        The total cost incurred during 1999 to remediate the Year 2000 issue was
approximately  $250,000.  The Company did not incur in the first quarter of 2000
nor does it expect to incur any further significant  expenditure related to Year
2000.

Market Risk

        Market risk is the potential loss arising from adverse changes in market
rates and prices,  such as currency  exchange  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.

        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,  2000,  the  Company  would have  received  approximately  $122,000 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 $131,000.

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  Exchange  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,

                                                      Page 7

<PAGE>

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



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.

        The Company's  future  operating  results may be affected by a number of
factors that include but are not limited to: general economic conditions such as
inflation  and  interest  rates;  competitive  conditions  within the  Company's
markets,  including  adverse  changes in demand for trucking  services,  pricing
pressure, availability of drivers and fuel prices; the Company's ability to sell
its services  profitably,  increase market share and manage expenses relative to
revenue  growth;  changes in  governmental  regulation;  changes in the trucking
transportation  and  logistic  industries;  and changes in the  Company's  labor
relations or other unforeseeable circumstances.

                                    Page 8


<PAGE>



                             PART II - OTHER INFORMATION


Item 4.        Submission of Matters to a Vote of Security Holders
-------        ---------------------------------------------------
               None

Item 5.        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, 2000:

               None


                                      Page 9


<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, 2000                  BY: /s/  William L. Boone
                                             ----------------------------
                                             Vice President-Finance and
                                             Chief Financial Officer



                                             Page 10

<PAGE>


                                              INDEX TO EXHIBITS

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

Exhibit
Number                            Description
--------       -------------------------------------------------------

27        Financial Data Schedule for the quarter ending
               March 31, 2000.



                                     Page 11