Marine transportation provides a vital link between a number of major refined petroleum product producing and consuming regions of the United States.

Wilson Gillette estimates that in 2003 approximately 68% of commodity chemicals were transported by rail, 20% by vessels in the inland waterways, 7% by pipeline and the remaining 5% by vessels in U.S. coastal waters. It is believed that the relatively small percentage of petrochemical and chemical products transported by vessels in U.S. coastal waters is primarily due to the limited number of vessels available for this service. It is estimated that the cost to ship by rail is significantly higher than shipping by tank vessel, even when inventory and logistics costs are factored in. The lower cost and availability of vessels with many tank segregations that allow smaller quantities of product to be carried will increase the demand for marine transportation of chemicals.

Historically, consumption of gasoline and other refined petroleum products has been very stable, exhibiting annual growth of approximately 1.4% from 1985 through 2003. In 2003, approximately 307 billion gallons, or 20 million barrels per day on average, of refined petroleum products were consumed in the United States, according to the Energy Information Administration of the U.S. Department of Energy, or EIA. The EIA estimates that retail demand for refined petroleum products will increase between 2003 and 2025 at a compounded annual growth rate of 1.6%, an approximately 44% increase over the total period.

There were 87 tank vessels, having an aggregate capacity of approximately 2.7 million dwt, employed in the coastwise transportation of refined petroleum, petrochemical and commodity chemical products at June 30, 2004. This total excludes barges having a capacity of less than 16,000 dwt, which are principally used on short voyages and generally are too small to compete effectively with the larger vessels in ocean going service.

All six ITBs are "sister vessels" of the same design and built to the same specifications. As sister vessels, the Company can operate them more efficiently because it can use common procedures with all the ITBs, while inventory management can be centralized and crews and officers can be interchanged among vessels. In addition, sister vessels allow the Company to substitute vessels in service and service the same contract with different vessels.

Double-bottom ship configurations are superior to single-hull configuration for the prevention of oil spills in the event of a grounding. As a result, charterers prefer double-bottom ships to conventional single-hull ships. Because the ITBs have two independent propulsion plants and are equipped with dual propellers and rudders, the risk of mechanical failure and unscheduled downtime for this fleet is lessened. The Company can perform engine maintenance at sea while the vessel is operating on the other engine.

Voyage expenses were $4.2 million for the three months ended March 31, 2004, an increase of $2.3 million, or 115%, as compared to voyage expenses of $2.0 million for the three months ended March 31, 2003.

Vessel operating expenses were $9.3 million for the three months ended March 31, 2004, an increase of $1.9 million, or 26%, as compared to $7.3 million for the three months ended March 31, 2003.