This MD&A includes certain "forward-looking statements" that involve many risks and uncertainties. When used, words such as "anticipate," "expect," "believe," "intend," "may be," "will be" and similar words or phrases, or the negative thereof, unless the context requires otherwise, are intended to identify forward-looking statements. These forward-looking statements are based on management's present expectations and beliefs about future events. As with any projection or forecast, these statements are inherently susceptible to uncertainty and changes in circumstances. The Company is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise.

See the risk factors included in Item 1A of this report for a detailed discussion of important factors that could cause actual results to differ materially from those reflected in such forward-looking statements. The potential for actual results to differ materially from such forward-looking statements should be considered in evaluating our outlook.

INTRODUCTION

Management's discussion and analysis of financial condition and results of operations ("MD&A") is provided as a supplement to the accompanying condensed consolidated financial statements and footnotes to help provide an understanding of the financial condition, changes in financial condition and results of operations of American Commercial Lines Inc. (the "Company"). MD&A should be read in conjunction with, and is qualified in its entirety by reference to, the accompanying condensed consolidated financial statements and footnotes. MD&A is organized as follows.

Overview. This section provides a general description of the Company and its business, as well as developments the Company believes are important in understanding the results of operations and financial condition or in understanding anticipated future trends.

Results of Operations. This section provides an analysis of the Company's results of operations for the three and nine months ended September 30, 2008 compared to the results of operations for the three and nine months ended September 30, 2007.

Liquidity and Capital Resources. This section provides an overview of the Company's sources of liquidity, a discussion of the Company's debt that existed as of September 30, 2008 and an analysis of the Company's cash flows for the nine months ended September 30, 2008 and September 30, 2007.

Changes in Accounting Standards. This section describes certain changes in accounting and reporting standards applicable to the Company.

Critical Accounting Policies. This section describes any significant changes in accounting policies that are considered important to the Company's financial condition and results of operations, require significant judgment and require estimates on the part of management in application from those previously described in the Company's filing on Form 10-K for the year ended December 31, 2007. The Company's significant accounting policies include those considered to be critical accounting policies.

Quantitative and Qualitative Disclosures about Market Risk. This section discusses our analysis of significant changes in exposure to potential losses arising from adverse changes in fuel prices and interest rates since our filing on Form 10-K for the fiscal year ended December 31, 2007.

OVERVIEW

Our Business

We are one of the largest and most diversified marine transportation and services companies in the United States, providing barge transportation and related services under the provisions of the Jones Act, as well as the manufacturing of barges, towboats and other vessels, including ocean-going liquid tank barges. We are the third largest provider of dry cargo barge transportation and second largest provider of liquid tank barge

transportation on the United States Inland Waterways consisting of the Mississippi River System, its connecting waterways and the Gulf Intracoastal Waterway (the "Inland Waterways"), accounting for 13.5% of the total inland dry cargo barge fleet and 12.9% of the total inland liquid cargo barge fleet as of December 31, 2007, according to Informa Economics, Inc., a private forecasting service ("Informa"). Our manufacturing subsidiary, Jeffboat, was the second largest manufacturer of dry cargo barges in the United States in 2006 according to Criton Corporation, publisher of River Transport News. We believe this also approximates our ranking in terms of construction of liquid tank barges (including both inland and ocean-going liquid tank barges). We provide additional value-added services to our customers, including warehousing and third-party logistics through our BargeLink LLC joint venture. Our operations incorporate advanced fleet management practices and information technology systems, including our proprietary ACL Trac real-time GPS barge tracking system, which allows us to effectively manage our fleet.

During the fourth quarter of 2007, we acquired Elliot Bay Design Group, a naval architecture and marine engineering firm, which will continue to provide architecture, engineering and production support to its many customers in the commercial marine industry, while providing ACL with expertise in support of its transportation and manufacturing businesses.

During the second quarter of 2008, we acquired the remaining ownership interests of Summit Contracting, LLC ("Summit"). We had previously made an investment equal to 30% ownership in this entity in May, 2007. Summit provides environmental and civil construction services to a variety of customers.

The Industry

Transportation Industry: Barge market behavior is driven by the fundamental forces of supply and demand, influenced by a variety of factors including the size of the Inland Waterways barge fleet, local weather patterns, navigation circumstances, domestic and international consumption of agricultural and industrial products, crop production, trade policies and the price of steel. According to Informa, the industry fleet, net of barges scrapped, increased by 240 dry cargo barges and 24 tank barges in the two years ended December 31, 2007. Informa also estimates that from 1998 to 2005, the Inland Waterways fleet size was reduced by 2,407 dry cargo barges and 54 liquid tank barges for a total reduction of 2,461 barges, or 10.7%. Despite the increases in industry fleet size in the two most current years, at December 31, 2007 the 18,029 dry and 2,866 liquid barges, or a total fleet size of 20,895 remained 9.5% below the 1998 level.

Competition is intense for barge freight transportation. The top five carriers (by fleet size) of dry and liquid barges comprise over 62% of the industry fleet in each sector as of December 31, 2007. The average economic useful life of a dry cargo barge is generally estimated to be between 25 and 30 years and between 30 and 35 years for liquid tank barges.

The demand for dry cargo freight on the Inland Waterways is driven by the production volumes of dry bulk commodities transported by barge, as well as the attractiveness of barging as a means of freight transportation. Historically, the major drivers of demand for dry cargo freight are coal for domestic utility companies, industrial and coke producers and export markets; construction commodities, such as cement, limestone, sand and gravel; and coarse grain, such as corn and soybeans, for export markets. Other commodity drivers include products used in the manufacturing of steel, finished and partially-finished steel products, ores, salt, gypsum, fertilizer and forest products. The demand for our liquid freight is driven by the demand for bulk chemicals used in domestic production, including styrene, methanol, ethylene glycol, caustic soda and other products. It is also affected by the demand for clean petroleum products and agricultural-related products such as ethanol, vegetable oil, bio-diesel and molasses.

Freight rates in both the dry and liquid freight markets are a function of the relationship between the amount of freight demand for these commodities and the number of barges available to load freight. We believe that the current supply/demand relationship for dry cargo freight indicates that the improvements in market freight rates obtained in the last several years will be sustained into the near term as Informa's most recent forecast indicates that the existing dry fleet will expand only approximately 10% through 2011 due to significant retirements of older barges. Certain spot rate contracts, particularly for grain, are subject to significant seasonal and other fluctuations. We are uncertain as to the impact that the instability in the financial markets and recession-like trends in any of our commodity markets may have on volumes or pricing of particular commodities at this time. We intend to be ready to capitalize on market demand shifts and on barge transportation being the lowest cost provider of shipping services.

For purposes of industry analysis, the commodities transported in the Inland Waterways can be broadly divided into four categories: grain, coal, liquids and bulk cargoes. Using these broad cargo categories the following graph depicts the total millions of tons shipped through the United States Inland Waterways for the quarters ended September 30, 2008 and September 30, 2007 by all carriers according to the US Army Corps of Engineers (the "Corps") Waterborne Commerce Statistics Center data. The Corps does not estimate ton-miles, which we believe is a more accurate volume metric. Note that the most recent periods are typically estimated for the Corps' purposes by lockmasters and retroactively adjusted as shipper data is received.

[[Image Removed: (BAR CHART)]]

Source: U.S. Army Corps of Engineers Waterborne Commerce Statistics Center

The Manufacturing Industry: Our manufacturing segment competes with companies also engaged in building equipment for use on both the Inland Waterway system and in ocean-going trade. Based on available industry data, we believe our manufacturing segment is the second largest manufacturer of dry cargo and liquid tank barges for Inland Waterways use in the United States. Due to the relatively long life of the vessels produced by inland shipyards and the relative over-supply of barges built in the late 1970's and early 1980's there has only recently been a resurgence in the demand for new barges as older barges are retired or made obsolete by U.S. Coast Guard requirements for liquid tank barges. This heightened demand may ultimately increase competition within the segment.

Consolidated Financial Overview

During the second and third quarters of 2007, the Company substantially increased its leverage by reacquiring $300 million of its common stock in the open market. This represented almost 20% of the previously outstanding shares. The acquisition was funded with proceeds of borrowing under the Company's revolving credit facility. The acquisition and other borrowings for working capital needs increased our debt to rolling 12 months EBITDA ratio as defined in our credit agreement to 2.7 to 1 at September 30, 2008.

In the three months ended September 30, 2008, the Company had net income of $18.3 million compared to net income of $15.9 million in the three months ended September 30, 2007. Results for the three months ended September 30, 2007 included manufacturing work in process inventory valuation write-downs of $3.3 million ($2.1 million after tax). Exclusive of those expenses, income increased $0.3 million or 1.8% for the three months ended September 30, 2008 compared to the same period of the prior year. This slight increase is attributable to higher operating margins in the transportation and manufacturing segments which were almost completely offset by higher selling, general and administrative expenses; higher interest costs and higher income tax expense.

For the nine months ended September 30, 2008 the Company had net income of $24.3 million compared to $20.7 million in the same period of the prior year. Results for the first nine months of 2007 included after tax debt retirement expenses totaling $15.3 million on the retirement of the Company's 9.5% senior notes and the Company's previous revolving credit facility. The retirement of the asset-based revolver and the Senior Notes is also discussed in the footnotes to the condensed consolidated financial statements and in the Liquidity and Capital Resources section. Results for the nine months ended September 30, 2008 included an after tax benefit of $1.3 million related to the decision not to withdraw from a multi-employer pension plan for certain represented employees of the Company's terminal operations and the write-off of $2.4 million in debt issuance costs ($1.5 million after tax) related to the amendment of the credit facility.

Exclusive of the expenses separately discussed above for the quarter and year-to-date periods, income decreased $13.6 million or 35.7% for the nine months ended September 30, 2008 compared to the same period of the prior year. The decline was driven by lower operating margins in the transportation segment, higher selling, general and administrative expenses and higher interest expense partially offset by higher margins in the manufacturing segment and lower income tax expense.

For the three months ended September 30, 2008 EBITDA was $49.6 million, an increase of 14.9% over the same period of the prior year. EBITDA as a percentage of combined revenue was 15.8% for the third quarter of 2008 compared to 16.7% for the third quarter of 2007 (See the table at the end of this Consolidated Financial Overview and Selected Financial Data for a definition of EBITDA and a reconciliation of EBITDA to consolidated net income).

For the nine months ended September 30, 2008, EBITDA was $100.3 million, a decline of 4.8% over the same period of the prior year. EBITDA as a percentage of combined revenue declined to 11.1% for the nine months ended September 30, 2008 compared to 14.1% for the nine months ended September 30, 2007.

On both a quarter-over-quarter and year-to-date comparative basis the manufacturing segment's gross margin (excluding the manufacturing inventory adjustments in the third quarter of 2007) increased by approximately 1% driven by improved labor utilization in the shipyard and the reduction in build hours per barge on revenues that increased 41% quarter-over- quarter and more than 29% year-over-year. Unlike 2007, no barges have been produced for transportation segment use in the current year.

Selling, general and administrative expenses, excluding the expenses related to newly acquired businesses, were higher in the third quarter of 2008 compared to 2007 due primarily to higher incentive compensation accruals and targeted marketing expenses. On that same basis, the year-to-date increase in selling, general and administrative expenses over the same period of the prior year was driven by the third quarter expenses cited above, the costs of the two reductions in force that have occurred in 2008 and higher estimates of workers compensation claims from prior years.

The increase in the transportation segment's operating income in the quarter was driven by 8.1% fuel neutral price increases, higher non-affreightment revenue, $6.8 million in direct and indirect fuel costs recoveries in excess of increased fuel pricing, $7.9 million in positive fuel volume variances, and $2.5 million in higher income from scrapping retired barges. These positive factors were almost fully offset by 14.0% lower affreightment ton-mile volume, higher costs of external towing, barge repairs and claims and higher labor costs. We estimate that approximately $3.2 million of our cost inflation was related to weather-related operating condition restrictions during the quarter.

The decline in the transportation segment's operating income for the nine months ended September 30, 2008 was driven by a 9% decline in affreightment ton-mile volume, over $10.3 million in unrecovered direct and indirect

fuel costs, higher costs of external fleeting and towing, higher repairs expense and higher labor costs. These negative factors were partially offset by higher non-affreightment revenues, 8.7% higher fuel-neutral pricing on affreightment contracts, a $9.4 million positive fuel volume variance and higher scrapping income. We estimate that approximately $14.7 million of our cost inflation was due to weather-related operating condition restrictions during the first nine months of 2008.

Through September 30, 2008, we invested $19.7 million in new barges, $23.3 million in improvements to the existing boat and barge fleet, $6.2 million in improvements to our shipyard, $5.7 million in improvements to our support facilities (including our marine services facilities along the Inland Waterways) and $0.5 million in other capital additions. Additionally, the Company acquired the remaining ownership interests of Summit Contracting for approximately $8.5 million.

We operate primarily in two business segments: transportation and manufacturing.

Transportation

Affreightment contracts, for both the three and nine months ended September 30, 2008, comprised approximately 74% and 71% or $179.6 million and $474.6 million, respectively, of the Company's transportation segment's total revenues. For the three and nine months ended September 30, 2007, affreightment contracts comprised approximately 75% and 74% or $162.6 million and $428.4 million, respectively. Under such contracts our customers hire us to move cargo for a per ton rate from an origin point to a destination point along the Inland Waterways on the Company's barges, pushed primarily by the Company's towboats. Affreightment contracts include both term and spot market arrangements.

The remaining segment revenues ("non-affreightment revenues") were generated either by demurrage charges related to affreightment contracts or by one of three other distinct contractual arrangements with customers: charter/day rate contracts, outside towing contracts or other marine services contracts. Transportation revenue for each contract type is summarized in the key operating statistics table that follows.

In recent years the attractive nature of non-affreightment charter and day rate contracts has absorbed more of our available tank barge fleet, resulting in a reduction in the ratio of our affreightment revenues to total transportation segment revenues.

Under charter/day rate contracts the Company's boats and barges are leased to third parties who direct the use (loading, movement, unloading) of the vessels. Responsibility for tracking and reporting the tons moved by equipment leased to others is transferred to the third party and not included in the Company's tracking of affreightment ton-miles, but is captured and reported as part of ton-miles non-affreightment.

Outside towing revenue is earned by moving barges for other affreightment carriers at a specific rate per barge move.

Marine services revenue is earned for fleeting, shifting and cleaning services provided to third parties.

Comparatively, higher pricing, combined with the impact of nine less liquid barges in the quarter and ten more liquid barges year-to-date devoted to charter/day rate service drove charter and day rate revenue up 14.7% and 26.1% in the three and nine months ended September 30, 2008 over the comparable periods of the prior year.

Key operating statistics regarding our transportation segment are summarized in the following table.

Key Operating Statistics


                                                 Three                                           Nine
                                              Months Ended           % Change to             Months Ended            % Change to
                                             September 30,        Prior Year Quarter        September 30,          Prior Year YTD
                                                  2008           Increase (Decrease)             2008            Increase (Decrease)

Ton-miles (000's):
Total dry                                         8,255,921                     (13.4 )%        24,172,271                      (10.7 )%
Total liquid                                        710,540                     (16.7 )%         2,179,955                       (9.9 )%

Total affreightment ton-miles                     8,966,461                     (13.7 )%        26,352,226                      (10.6 )%
Total non-affreightment ton-miles                   981,597                     (16.6 )%         3,261,667                        5.0 %

Total ton-miles                                   9,948,058                     (14.0 )%        29,613,893                       (9.1 )%

Average ton-miles per affreightment barge             3,528                      (9.5 )%            10,232                       (5.5 )%
Rates per ton mile:
Dry rate per ton-mile                                                            23.7 %                                          21.2 %
Fuel neutral dry rate per ton-mile                                                6.6 %                                           7.9 %
Liquid rate per ton-mile                                                         52.4 %                                          37.4 %
Fuel neutral liquid rate per-ton mile                                            19.3 %                                          12.8 %
Overall rate per ton-mile                    $        20.02                      27.5 %     $        18.03                       23.8 %
Overall fuel neutral rate per ton-mile       $        16.98                       8.1 %     $        15.84                        8.7 %
Revenue per average barge operated           $       90,264                      17.7 %     $      241,651                       22.3 %
Fuel price and volume data (in thousands):
Fuel price                                   $         3.60                      63.4 %     $         3.27                       63.9 %
Fuel gallons                                         16,534                     (17.7 )%            54,783                       (8.0 )%
Revenue data (in thousands):
Affreightment revenue                        $      179,566                      10.5 %     $      474,570                       10.8 %
Towing                                               21,865                      22.6 %             64,272                       40.4 %
Charter and day rate                                 20,672                      14.7 %             58,956                       26.1 %
Demurrage                                            11,771                      15.3 %             34,124                        7.0 %
Other                                                10,109                      10.2 %             34,069                       26.0 %

Total non-affreightment revenue                      64,417                      16.6 %            191,421                       26.4 %

Total transportation segment revenue         $      243,983                      12.0 %     $      665,991                       14.9 %

Data regarding changes in our barge fleet for the three and nine months ended September 30, 2008 are summarized in the following table.

Barge Fleet Changes - Quarterly and YTD


 Current Quarter                                          Dry        Tankers       Total

 Barges operated as of the end of the 2nd qtr of 2008     2,338           384       2,722
 Retired (includes reactivations)                           (23 )          (4 )       (27 )
 New builds                                                   -             -           -
 Purchased                                                    -             -           -
 Change in number of barges leased                          (12 )           -         (12 )

 Barges operated as of the end of the 3rd qtr of 2008     2,303           380       2,683

  Barges - YTD                                          Dry        Tankers       Total

  Barges operated as of the end of 2007                 2,440           388       2,828
  Retired                                                 (95 )          (8 )      (103 )
  New builds                                                -             -           -
  Purchased                                                 1             -           1
  Change in number of barges leased                       (43 )           -         (43 )

  Barges operated as of the end of the 3rd qtr 2008     2,303           380       2,683

Data regarding our boat fleet at September 30, 2008 is contained in the following table.

Owned Boat Counts and Average Age by Horsepower Class


                    Horsepower Class     Number       Average Age

                    1950 or less              53              31.7
                    Less than 4300            22              34.3
                    Less than 6200            43              33.8
                    7000 or over              15              31.2

                    Total/overall age        133              32.7

In addition to the above count, the Company had 19 chartered boats in service at September 30, 2008. Average life of a boat (with refurbishment) exceeds 50 years. During the quarter ended September 30, 2008 four of the eight boats held for sale were sold. The sale price of one vessel sold exceeded its net book value at its reclassification date (its carrying value) by approximately $525. Cumulatively, the remaining vessels were sold at small gains after the impairment charge for those vessels booked in the second quarter 2008. Including the boat classified as held for sale in 2007, four vessels remain in prepaid and other current assets while being actively marketed.

Operating conditions on the Inland Waterways continued to be difficult during the third quarter of 2008. Corps estimated industry tonnage for all commodities declined 2.3% in the third quarter and 8.4% year-to-date compared to the prior year comparable periods. In terms of ton-miles, we were down 14.0% in the quarter and 9.1% year-to-date. Ton-mile declines in grain shipments account for over half of our total ton-mile decline in the quarter and almost 80% of our total decline on a year-to-date basis. Year-over-year coal and bulk cargo ton-miles are down approximately 3%, while liquids declined approximately 10% compared to the prior year. For affreightment contracts, average ton-miles per barge operated were down over 9% in the quarter due to the difficult weather-related operating conditions, driving the year-to-date average to down approximately 6% compared to the prior year.

We had 10,992 idle barge days in the third quarter of 2008 compared to 16,234 in the second quarter of 2008 and 3,941 in the prior year third quarter due to the difficult weather-related operating conditions. On a year-to-date basis, barge days lost are over 38,000 compared to approximately 14,200 in the prior year, or a 168% increase. In

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