The marine industry is a vital link in international trade, with oceangoing vessels representing the most efficient, and often the only, method of transporting large volumes of basic commodities and finished products. In 2003, approximately 2.3 billion tons of dry bulk cargo were transported by sea, comprising more than one-third of all international seaborne trade.

Dry bulk cargo is cargo that is shipped in large quantities and can be easily stowed in a single hold with little risk of cargo damage.

Dry bulk cargo is generally categorized as either major bulk or minor bulk. Major bulk cargo constitutes the vast majority of dry bulk cargo by weight, and includes, among other things, iron ore, coal and grain. Minor bulk cargo includes products such as agricultural products, mineral cargoes (including metal concentrates), cement, forest products and steel products and represents the balance of the dry bulk industry. Other dry cargo is categorized as container cargo, which is cargo shipped in 20- or 40-foot containers and includes a wide variety of finished products, and non-container cargo, which includes other dry cargoes that cannot be shipped in a container due to size, weight or handling requirements, such as large manufacturing equipment or large industrial vehicles.

The balance of seaborne trade involves the transport of liquids or gases in tanker vessels and includes products such as oil, refined oil products and chemicals. The breakdown of seaborne trade by main commodity type is indicated in the following table. The dry bulk sector comprises a number of different cargoes, with a distinction between major and minor bulks. In terms of seaborne trade volumes (and the shipping ton-miles generated), the dominant influence is that of the major bulk trades, which include coal, iron ore and grains. During 2003, global seaborne trade in major bulks was 1.39 billion tons, representing 60% of total seaborne dry bulk trade.

The Company operates its vessels on four principal routes. Pacific Service is the Company’s oldest and most established route. The Company’s Eastbound liner and parcel service operates two regularly-scheduled sailings between China, Japan and South Korea in East Asia and the North and West Coasts of South America, Central America and the Caribbean Sea region. The Company operates one sailing between East Asia and the West Coasts of Central and South America and a second sailing between East Asia and the North Coast of South America and the Caribbean Sea region. The Company’s Westbound parcel service offers two regularly-scheduled monthly sailings from Chile, Ecuador and Peru to China, Japan and South Korea. Latin America Service serves the general and industrial cargo requirements of customers in Brazil, Argentina and Venezuela with three monthly sailings to the North Coast of South America and the Caribbean Sea region and to the West Coasts of Central and South America. North America Service operates a monthly dry bulk and parcel service, generally with one sailing transporting dry bulk cargoes from the East Coast of the U.S. to Brazil or Argentina, with a northbound sailing from Brazil or Argentina to ports on the Gulf and East Coasts of the U.S. Ocean Carriers offers worldwide dry bulk and parcel shipping solutions on routes determined on a customer-by-customer basis, and currently consists of two time-chartered vessels primarily used for bulk shipments of sugar or salt from Brazil to Nigeria.

The Company’s time charter services include both short- and long-term time charters. In connection with its time charters, the Company offers complete voyage management services. Three affiliated service companies, which are owned by the Company’s principal shareholders, provide substantially all of the operations, ship maintenance, crewing, technical support, purchasing, insurance and financial management services necessary to support the Company’s fleet.

The Company’s liner, parcel and bulk services primarily carry steel products, coal, salt, sugar, grain, fertilizers, chemicals, metal concentrates and general cargo. Steel products include specialty and carbon steel coils, steel pipe and structural steel used in the infrastructure development, construction, oil and gas transmission and automotive and appliance manufacturing industries. Fertilizers include ammonium sulfate shipped in bulk for use in commercial agriculture. Metal concentrates include copper, zinc, gold, silver and other metals generally shipped in small breakbulk lots from 1,000 to 10,000 metric ton parcels that are processed at their destinations by smelters into purer forms. General cargo includes industrial machinery, spare parts, oil well supplies, trailers, industrial tanks, project cargo and other commercial goods used in industrial applications.

Voyage revenue increased 32% to $158.0 million for the year ended December 31, 2004 compared to $119.7 million for the year ended December 31, 2003.

Voyage expense increased 15.7% to $60.7 million for the year ended December 31, 2004 compared to $50.5 million for the year ended December 31, 2003.

Vessel expense increased 27.4% to $79.3 million for the year ended December 31, 2004 compared to $62.2 million for the year ended December 31, 2003.

Income from operations increased $45.4 million, or 2,950.3%, to $46.9 million for the year ended December 31, 2004 compared to $1.5 million for the year ended December 31, 2003.