Shipping is a global industry and its prospects are closely tied to the level of economic activity in the world. The maritime shipping industry is fundamental to international trade because it is the only practicable and cost effective means of transporting large volumes of many essential commodities and finished goods. Shipping markets are highly competitive and ship charter hire rates are very sensitive to changes in demand for and supply of capacity, and are consequently volatile. There are four main segments in the shipping industry, namely tankers, which carry such cargo as crude oil, petroleum products, etc.; bulk carriers, which carry coal, grain, etc; containerships, which carry only containers; and gas tankers, which carry mostly LPG and LNG. According to the latest available figures, in 2005 total annual world seaborne trade was estimated at 7.2 billion metric tonnes, of which drybulk cargoes amounted to 2.6 billion tonnes and oil cargoes amounted to 2.6 billion tonnes.

Container shipping is responsible for the movement of a wide range of goods from one part of the world to another in a unitized form. Participants in the container shipping industry include \\\\\\\\\\\\\\\"liner\\\\\\\\\\\\\\\" companies, who operate container shipping services, containership owners, often known as charter owners, who own containerships and charter them out to the operators, and shippers who require the seaborne movement of containerized goods. Container shipping represents an important and increasingly significant part of the global seaborne movement of goods. In 2005, global container trade stood at an estimated 105 million TEU. As of September 1, 2006, the global containership fleet contained 3,848 fully cellular containerships, with a total standing slot capacity of almost 9.0 million TEU, while the total container capable fleet capacity stood at almost 11.0 million TEU.

Growth in the liner shipping market has been relatively rapid in comparison with other major shipping sectors such as tankers and bulk carriers. In terms of loaded containers moved from origin to destination, estimated global container trade increased from 50.8 million TEU in 1997 to 105.2 million TEU in 2005, a compound average annual growth rate of 9.5%. In the last three years demand for container shipping has accelerated strongly, with estimated growth in world container trade reaching 11.6% in 2003, 13.4% in 2004 and 10.1% in 2005.

The average age (weighted by TEU) of the 27 vessels in the Company’s containership fleet will be approximately 11.4 years as of October 1, 2006 and, upon delivery of all of its contracted vessels as of the end of 2009, the average age (weighted by TEU) of the 42 vessels in its containership fleet will be approximately 9.1 years. As of October 1, 2006, the average remaining duration of the charters for the Company’s containership fleet, including 16 contracted vessels for which the Company has arranged charters, will be 10.6 years (weighted by aggregate contracted charter hire).

The Company’s contracted vessels have been or are being built based upon designs from Samsung, Hyundai Heavy Industries and Sungdong Shipbuilding & Marine Engineering Co., Ltd. These designs, which include certain technological advances, make the containerships efficient with respect to both voyage speed and loading capability when compared to many vessels operating in the containership sector. The 9,580 TEU vessel the Company has contracted for is capable of speeds of 25.2 knots on design drafts, which would make it among the fastest containerships afloat.

The containerships in the Company’s combined containership fleet are deployed under multi-year, fixed-rate time charters having initial terms that range from two and a half to 12 years. These charters expire at staggered dates ranging from January 2007 to December 2021, with no more than 12 expiring in any 12-month period. Under the time charters, the charterer pays voyage expenses such as port, canal and fuel costs and the Company pays for vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs. The Company is also responsible for each vessel\\\\\\\\\\\\\\\'s intermediate and special survey costs.

Voyage expenses were $3.4 million in the six months ended June 30, 2006, representing a decrease of $0.1 million, or 2.9%, from $3.5 million in the six months ended June 30, 2005.

Vessel operating expenses increased 20.5%, or $5.0 million, to $29.4 million in the six months ended June 30, 2006, from $24.4 million in the six months ended June 30, 2005.

Depreciation expense increased 5.2%, or $0.7 million, to $14.2 million in the six months ended June 30, 2006, from $13.5 million for the six months ended June 30, 2005.

Interest expense increased $4.7 million, or 46.5%, to $14.8 million in the six months ended June 30, 2006, from $10.1 million in the six months ended June 30, 2005.