This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect current expectations of the Company's management. They are based on our management's beliefs and assumptions and on information currently available to our management. Forward-looking statements include, among other things, the information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, potential growth opportunities and the effects of future regulation and competition. Forward-looking statements include all statements that are not historical facts and can generally be identified by the use of forward-looking statements because they use words as the "anticipates," "believes," "estimates," "expects," "future," "intends," "plans," "targets," "projects," "seeks" and similar terms.

Forward-looking statements involve risks, uncertainties and assumptions. Although the Company does not make forward-looking statements unless it believes it has a reasonable basis for doing so, it cannot guarantee their accuracy. Actual results may differ materially from those expressed, implied or projected in or by these forward-looking statements due to a number of uncertainties and risks, including the risks disclosed in our Form 10-K filed with the Securities and Exchange Commission on March 30, 2009, and other unforeseen risks. The uncertainties, risks and other factors, among other unforeseen risks, include, but are not limited to:

· changes in demand for our services, which are increasingly difficult to predict due to the current economic downturn and the widespread reduction of business activity generally;

· a decline in rates in the shipping market, will continue for a prolonged period;

· the effect of a decline in vessel valuations;

· our ability to maintain financial ratios and satisfy financial covenants in our credit facilities;

· changes in rules and regulations applicable to the shipping industry, including, without limitation, legislation adopted by international organizations such as the International Maritime Organization and the European Union or by individual countries;

· actions taken by regulatory authorities;

· changes in trading patterns significantly impacting overall vessel tonnage requirements;

· changes in the typical seasonal variations in charter rates;

· increases in costs, including changes in production of or demand for oil and petroleum products, crew wages, insurance, provisions, repairs and maintenance, generally or in particular regions;

· the risk that financial counterparties will default;

· changes in general domestic and international political conditions;

· changes in the condition of our vessels or applicable maintenance or regulatory standards, which may affect, among other things, our anticipated drydocking or maintenance and repair costs;

· increases in the cost of our drydocking program or delays in our anticipated drydocking schedule;

· China Communications Construction Company Ltd./ Nantong Yahua Shipbuilding Co., Ltd.'s ability to complete and deliver the vessels on the anticipated schedule and the ability of the parties to satisfy the conditions in the shipbuilding agreements; and

· other factors listed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, the risks disclosed in our Form 10-K filed with the Securities and Exchange Commission on March 30, 2009 and subsequent reports on Form 10-Q and Form 8-K.

You should not rely on any forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required under applicable law.

General

The following is a discussion of our financial condition at March 31, 2009 and December 31, 2008 and our results of operations comparing the three months ended March 31, 2009 with the three months ended March 31, 2008. You should read this section in conjunction with the consolidated financial statements including the related notes to those financial statements included elsewhere in this Quarterly Report.

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We are an ocean transportation services company that offers worldwide shipping solutions to a diverse client base of industrial shippers. We offer liner, parcel and bulk services and vessel chartering supported by a fleet of multipurpose tweendeckers and handysize and handymax bulk carriers. Our liner, parcel and bulk services carry steel products, salt, sugar, grain, fertilizers, chemicals, metal concentrates, aggregates and general cargo. In addition to providing frequent, regularly scheduled voyages within our shipping network, we offer a unique Five-Star Service consisting of ocean transportation, logistics, port services, operations and strategic planning. This distinguishes us from traditional dry cargo shipping companies.

Over the past 16 years, we have developed our business model around key trade routes between Latin America and Japan, South Korea and China, as well as ports in North America, Africa, the Caribbean, and the Middle East. In addition to providing frequent, regularly scheduled voyages within our shipping network, we offer additional services such as cargo scheduling, loading and discharge that offer a fully integrated shipping solution to our customers.

We have a strong position in various trade lanes in the Far East, South America, North America, the Caribbean, the Middle East and Africa. We offer our services globally in more than 20 countries to over 300 customers through a network of affiliated service companies. We have expanded and upgraded our fleet which now numbers 47 vessels including 45 ships that we own and two that we charter-in with an option to purchase. Historically, we have expanded our fleet by acquiring second hand vessels. While we remain committed to expanding our fleet, the current economic conditions and the current decline in demand for shipping services have caused us to reevaluate acquiring secondhand vessels. The global financial crisis has resulted in a reduction in the demand for shipping services and a significant downturn in spot freight and time charter rates. A reduction in the availability of vessel acquisition funding has caused potential buyers to delay, postpone or abandon their vessel acquisition plans. Pending any dramatic change in global economic conditions we have decided to suspend any further acquisitions of secondhand vessels. Our current business strategy includes growing through the acquisition of multi-purpose tweendeckers, under our new building contract, and chartering-in vessels as needed. On March 29, 2007, we entered into a contract for six "Roymar Class" 34,000 deadweight ton ("dwt") multipurpose vessels with retractable tweendecks, designed to our specifications for which we have arranged funding. Two of the vessels are scheduled for delivery in 2009 and the remaining four in 2010. The two newbuilds that are expected to be delivered in the second and fourth quarter of 2009 have been named Rockaway Belle and Dakota Princess.

Our financial results are largely driven by the following factors:

· macroeconomic conditions in the geographic regions where we operate;

· general economic conditions in the industries in which our customers operate;

· changes in our freight and sub-time charter rates - rates we charge for vessels we charter out - and, in periods when our voyage and vessel expenses increase, our ability to raise our rates to pass such cost increases through to our customers;

· the extent to which we are able to efficiently utilize our controlled fleet and optimize its capacity; and

· the extent to which we can control our fixed and variable costs, including those for port charges, stevedore and other cargo-related expenses, fuel, and commission expenses.

Our loan agreements with our various credit facilities contain both financial and non-financial covenants. During March 2009, based on third-party vessel valuations, we did not meet collateral coverage requirements. The credit facilities were modified to waive the collateral coverage and all financial covenants through the fourth quarter 2009. See - "Note 8 - Financing" for detailed information.

Management is taking measures to manage our business during the global financial crisis to position us to take advantage of the eventual recovery. These measures include: eliminating bonus payments to our executives and employees, freezing salaries at 2008 levels, instituting a cost cutting program, prepayments of debt, the negotiation of loan covenant waivers obtained in March 2009, reducing capital expenditures and scaling back the accelerated steel renewal and reinforcement program.

Drydocking

During the past twelve months, our fleet has grown to 47 vessels from 42 vessels. These vessels must be drydocked twice during a five-year cycle. Thus, our controlled fleet of 47 vessels at March 31, 2009, would result in 94 drydockings over five years or an average of 19 vessels per year.

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During the first quarter of 2009, one vessel that entered into drydock during the fourth quarter of 2008 continued its drydocking for 16 days into the first quarter and eight vessels entered drydock for 138 days. Our preliminary quarterly drydock schedule of vessels anticipated to be drydocked during 2009, including estimated number of drydock days and metric tons of steel renewal, is as follows:

                       Number of      Number of
                        vessels        vessels
                       in drydock      entering
                          from         drydock
                        previous        during         Number of drydock days      Approximate metric tons
                        quarter        quarter             during quarter          (MT) of steel installed

Second Quarter 2009        5              2                       123       days             235        MT
Third Quarter 2009         1              6                       158       days             540        MT
Fourth Quarter 2009        2              5                       179       days             482        MT
Total for 2009                            13                      460                      1,257

We estimate that vessel drydockings that require less than 100 metric tons of steel renewal will take from 25 to 35 days and that vessel drydockings that require over 100 metric tons of steel renewal will take from 35 to 75 days. We capitalize vessel improvements, including steel renewal and reinforcement, in connection with the first drydocking after we acquire vessels.

New Ship Building

We are expanding our fleet of multipurpose retractable tweendeckers through our newbuilding program. In 2007, we contracted a Chinese shipyard to build six newly designed vessels. These 34,000 dwt vessels are a larger class of tweendeckers and their addition to our fleet will be a significant milestone in the implementation of our business plan to modernize and expand our fleet. The ships were designed by a TBS team, drawn from all phases of our operations, to optimize our efficient cargo transportation in our trade lanes. One vessel, the Rockaway Belle, formerly Hull No NYHS200720, was launched in November 2008 and we expect to take delivery in the second quarter of 2009. The milestones met (as defined in the agreements) and the expected delivery dates as of March 31, 2009, are noted below:

                Argyle       Caton      Dorchester   Longwoods     McHenry      Sunswyck
               Maritime     Maritime     Maritime     Maritime     Maritime     Maritime
                Corp.        Corp.        Corp.        Corp.        Corp.        Corp.
               Hull No      Hull No      Hull No      Hull No      Hull No      Hull No
              NYHS200720   NYHS200721   NYHS200722   NYHS200723   NYHS200724   NYHS200725
               Rockaway      Dakota         To         To be          To           To
Milestone       Belle       Princess     be Named      Named       be Named     be Named
Contract         Met          Met          Met          Met          Met          Met
Signing
Steel            Met          Met          Met          Met          Met          Met
Cutting
Keel Laying      Met          Met          Met
Launching        Met
Anticipated    2nd Qtr      4th Qtr      1st Qtr      2nd Qtr      3rd Qtr      4th Qtr
Delivery         2009         2009         2010         2010         2010         2010

Components of revenue and expense

We report our revenue as voyage revenue, reflecting the operations of our vessels that are not chartered out, and charter revenue, reflecting the operations of our vessels that have been chartered out to third parties. Voyage revenue and expenses for each reporting period include estimates for voyages in progress at the end of the period. For voyages in progress at March 31, 2009 we recognized voyage expense as incurred and recognized voyage revenues ratably over the length of the voyage. When a loss is forecast for a voyage, the full amount of the anticipated loss is recognized in the period in which that determination is made. Revenue from time charters in progress is calculated using the daily charter hire rate, net of daily expenses multiplied by the number of voyage days on-hire through period end.

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Time charter revenue consists of a negotiated daily hire rate for the duration of a voyage. The key factors driving time charter revenue are the number of days vessels are chartered out and the daily charter hire rates.

Voyage expenses consist of costs attributable to specific voyages. The number of voyage days is a significant determinant of voyage expense, which primarily consists of fuel costs, commissions, port call, stevedoring and lashing materials. The costs are paid by our subsidiaries.

Vessel expenses are vessel operating expenses that consist of crewing, stores, lube oil, repairs and maintenance including registration taxes and fees, insurance and communication expenses for vessels we control, charter hire fees we pay to owners for use of their vessels. The costs are paid by our subsidiaries.

Depreciation and amortization is computed for vessels and vessel improvements on the remaining useful life of each vessel, which is estimated as the period from the date we put the vessel into service to the date 30 years from the time that the vessel was initially delivered by the shipyard. Drydock costs are amortized on a straight-line basis over the period through the date of the next drydocking which is typically 30 months. Other fixed assets, consisting principally of computer hardware, software and office equipment are depreciated on a straight-line basis using useful lives of from three to seven years. Grabs are depreciated on a straight-line basis using useful lives of ten years. Vessel leasehold improvements, which are included with vessel improvements and other equipment, are amortized on a straight-line basis over the shorter of the useful life of the improvement or the term of the lease.

Commissions on freight and port agency fees are paid to related companies, Beacon and TBS Commercial Group, companies which are owned by our principal shareholders. Management fees and commissions paid to Beacon and TBS Commercial Group are fixed under agreements, and any new management agreements or amendments to the current management agreements with Beacon and TBS Commercial Group are subject to approval by the Compensation Committee of our Board of Directors.

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Results of Operations

Comparison of the three months ended March 31, 2009 to the three months ended
March 31, 2008

                             Three Months Ended             Three Months Ended
                               March 31, 2009                 March 31, 2008                Increase (Decrease)
                                            As a %                         As a %
                                              of                             of
                                             Total                          Total
                          In Thousands      Revenue      In Thousands      Revenue      In Thousands      Percentage

Voyage revenue           $       64,513        90.6     $       98,160        74.6            (33,647 )        (34.3 )
Time charter revenue              6,171         8.7             32,726        24.9            (26,555 )        (81.1 )
Logistics revenue                   266         0.4                532         0.4               (266 )        (50.0 )
Other revenue                       208         0.3                158         0.1                 50           31.6
   Total revenue                 71,158       100.0            131,576       100.0            (60,418 )        (45.9 )

Voyage expense                   28,999        40.8             31,918        24.2             (2,919 )         (9.1 )
Logistics                           249         0.4                500         0.4               (251 )        (50.2 )
Vessel expense                   27,979        39.3             23,434        17.8              4,545           19.4
Depreciation and
amortization                     22,719        31.9             13,493        10.3              9,226           68.4
General and
administrative                    8,686        12.2             11,767         8.9             (3,081 )        (26.2 )
   Total operating
   expenses                      88,632       124.6             81,112        61.6              7,520            9.3
(Loss) income from
operations                      (17,474 )     (24.6 )           50,464        38.4            (67,938 )       (134.6 )
Other (expenses) and
income
   Interest expense              (3,511 )      (4.9 )           (3,437 )      (2.6 )              (74 )          2.2
   Loss on
   extinguishment of
   debt                               -           -             (2,318 )      (1.8 )            2,318         (100.0 )
   Other income
   (expense)                       (303 )      (0.4 )              669         0.5               (972 )       (145.3 )
Net (loss) income        $      (21,288 )     (29.9 )   $       45,378        34.5     $      (66,666 )       (146.9 )

Voyage revenue

The table below shows key metrics related to voyage revenue:

                                               Three Months Ended March 31,
                                                 2009                 2008             Increase (Decrease)

Voyage Revenue (in thousands)               $       64,513       $       98,160     $     (33,647 )     (34.3 )%
Number of vessels (1)                                   35                   26                 9        34.6 %
Freight voyage days (2)                              3,116                2,375               741        31.2 %
Days on hire (3)                                     3,198                2,476               722        29.2 %
Revenue tons carried (thousands) (4)
     For all cargoes                                 2,148                2,044               104         5.1 %
     Excluding aggregates                            1,153                  994               159        16.0 %
     Aggregates                                        995                1,050               (55 )      (5.2 )%
Freight Rates
     For all cargoes                        $        30.04       $        48.02     $      (17.98 )     (37.4 )%
     Excluding aggregates                   $        44.78       $        86.32     $      (41.54 )     (48.1 )%
Daily time charter equivalent rates (5)     $       11,685       $       28,513     $     (16,828 )     (59.0 )%

(1) Weighted average number of vessels in the fleet, not including vessels chartered out.
(2) Number of days that our vessels were earning revenue, not including vessels chartered out.
(3) Number of days that our vessels were available for hire, not including vessels chartered out.
(4) Revenue tons is a measurement on which shipments are freighted. Cargoes are rated as weight (based on metric tons) or measure (based on cubic meters); whichever produces the higher revenue will be considered the revenue ton.

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(5) Daily Time Charter Equivalent or "TCE" rates are defined as voyage revenue less voyage expenses during the period divided by the number of available freight voyage days during the period. Voyage expenses include:
fuel, port call, commissions, stevedore and other cargo related and miscellaneous voyage expenses. To conform to the 2009 presentation daily time charter equivalent rates for 2008 were revised to exclude logistic expenses which were classified as voyage expense in 2008. No deduction is made for vessel or general and administrative expenses. TCE includes the full amount of any probable losses on voyages at the time such losses can be estimated. TCE is an industry standard for measuring and analyzing fluctuations between financial periods and as a method of equating TCE revenue generated from a voyage charter to time charter revenue.

The decrease in voyage revenue for the three months ended March 31, 2009, as compared to the same period in 2008, was primarily due to an approximately 48% decrease in average freight rates for non-aggregate cargoes which was slightly offset by increased average freight rates for aggregates and an increase in non-aggregate revenue tons carried, primarily agricultural cargo.

Average freight rates for all cargoes decreased $17.98 per ton, or 37.4%, to $30.04 per ton for the three months ended March 31, 2009, as compared to $48.02 per ton for the same period in 2008. Excluding aggregates average freight rates would have been $44.78 per ton as compared to $86.32 per ton for the same period in 2008. The average freight rates decreased despite the decrease in high-volume, low-freighted aggregates bulk cargo that we handled in 2009 as compared to 2008. While average freight rates on aggregates bulk cargo is lower than average freight rates on other types of cargoes, voyage costs are also lower resulting in comparable daily time charter equivalent rates. For the three months ended March 31, 2009 and 2008 we had contracts of affreightment, expiring late 2010, under which we carried approximately 1,070,000 and 1,500,000 revenue tons and generated $18.5 million and $40.1 million of voyage revenue, respectively.

Revenue tons carried increased 103,959 tons or 5.1% to 2,147,911 tons for the three months ended March 31, 2009 from 2,043,952 tons for the same period in 2008. Non-aggregate revenue tons carried, primarily agricultural cargo, increased approximately 158,685 tons. Aggregate revenue tons carried decreased by 54,726 tons for the three months ended March 31, 2009 as compared to the same period in 2008.

The following table shows revenues attributed to our principal cargoes:

                                                Three Months Ended
                          March 31, 2009                       March 31, 2008                      Increase (Decrease)
                                                                                  As a %
                                              As a % of                          of Total
                                             Total Voyage                         Voyage
      Description          In Thousands        Revenue          In Thousands     Revenue       In Thousands      Percentage

Aggregates                $        12,902             20.0     $        12,373       12.6     $          529            4.3
Steel products                     11,858             18.4              27,935       28.5            (16,077 )        (57.6 )
Agricultural products              11,810             18.3              13,932       14.2             (2,122 )        (15.2 )
Metal concentrates                 10,145             15.7              20,374       20.8            (10,229 )        (50.2 )
Project cargo                       4,297              6.7               5,031        5.1               (734 )        (14.6 )
General cargo                       4,232              6.6               1,798        1.8              2,434          135.4
Rolling stock                       3,402              5.2               3,581        3.6               (179 )         (5.0 )
Other bulk cargo                    1,971              3.0               9,463        9.6             (7,492 )        (79.2 )
Fertilizers                         1,716              2.7                   -          -              1,716              -
Automotive products                 1,459              2.3               2,321        2.4               (862 )        (37.1 )
Other                                 721              1.1               1,352        1.4               (631 )        (46.7 )
   Total voyage revenue   $        64,513            100.0     $        98,160      100.0     $      (33,647 )        (34.3 )

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Time charter revenue

The key metrics related to time charter revenue are as follows:

                                      Three Months Ended March 31,
                                       2009                 2008              Increase (Decrease)

Time Charter Revenue (in
thousands)                         $       6,171       $        32,726     $    (26,555 )       -81.1 %
Number of vessels (1)                         10                    11               (1 )        -9.1 %
Time Charter days (2)                        887                 1,030             (143 )       -13.9 %
Daily charter hire rates (3)       $       6,958       $        31,773     $    (24,815 )       -78.1 %
Daily time charter equivalent
rates (4)                          $       5,947       $        30,339     $    (24,392 )       -80.4 %

(1) Weighted average number of vessels chartered out.
(2) Number of days the vessels earned charter hire.
(3) Weighted average charter hire rates.
(4) Daily Time Charter Equivalent or "TCE" rates for vessels that are time chartered out are defined as time charter revenue during the period . . .