U.S. Shipping Partners L.P. Reports Fourth Quarter and Full Year 2007 Financial Results

Market Wire, February, 2008

U.S. Shipping Partners L.P. (NYSE: USS) (the "Partnership") today reported its results for the fourth quarter and year ended December 31, 2007.

The Partnership had voyage revenue of $43.5 million, operating income of $4.9 million and a net loss of $1.4 million for the three months ended December 31, 2007 compared to voyage revenue of $36.8 million, operating income of $3.3 million and a net loss of $0.9 million for the same period in 2006.

Earnings before interest, taxes and depreciation and amortization ("EBITDA"), a non-GAAP measure explained in greater detail below under "Use of Non-GAAP Financial Information," was $14.7 million for the three months ended December 31, 2007 compared to $11.7 million for the comparable period in 2006.

The Partnership had voyage revenue of $176.7 million, operating income of $25.4 million and net income of $4.8 million for the year ended December 31, 2007 compared to voyage revenue of $150.1 million, operating income of $18.3 million and net income of $5.9 million for the year ended December 31, 2006.

EBITDA was $63.8 million for 2007 compared to $49.5 million for 2006.

As previously announced, the Partnership declared a distribution of $0.45 per common unit in respect of the fourth quarter, or $1.80 per common unit for full year 2007. In addition, the Partnership announced that United States Shipping Master LLC, the holder of the Partnership's subordinated units and general partner units, requested that the Partnership not pay the fourth quarter distribution on the subordinated units and general partner units and instead retain the cash for working capital purposes; to increase reserves available for payment of future quarterly distributions on its common units; for the completion of its capital construction program; and to strengthen coverage with respect to the Partnership's financial covenants under its credit facility in future periods.

Paul Gridley, CEO of U.S. Shipping Partners, said: "Operationally, the Partnership had a good fourth quarter and year. We have taken steps to buttress our liquidity in light of the uncertain economic and market conditions we and our industry face. As a result of our projected utilization and charter rates for our fleet in 2008 (including the expected on-time and on-budget delivery in 2008 of our two ATBs currently under construction), along with the cash we will preserve by not paying distributions on our subordinated and general partner units, we are confident that we will have sufficient liquidity in 2008 to continue to pay the minimum $0.45 quarterly distribution on our common units and be in compliance with all financial covenants under our credit facilities."

Three Months Ended December 31, 2007

For the three months ended December 31, 2007, voyage revenues were $43.5 million, an increase of $6.7 million from $36.8 million for the same period in 2006, despite the fact that the ITB Baltimore was out of service for the 25 days during the quarter that were required to complete the repair of damages it sustained during Hurricane Dean while in the shipyard after completing its regularly scheduled drydocking. The increase in voyage revenues and operating income was due primarily to the addition of the ATB Freeport, which was placed in service in July 2007 and contributed $4.5 million in voyage revenues in the fourth quarter of 2007. Additionally, an increase in charter rates and the number of days worked (due to a lower number of drydocks in 2007), contributed an additional $2.2 million of voyage revenues in the three months ended December 31, 2007, compared to the same period in 2006. On December 14, 2007, the ITB Philadelphia commenced a single voyage to transport grain from the U.S. to Africa for various humanitarian organizations. In addition to transporting the grain to the east coast of Africa, the Partnership is required to bag all of the grain following discharge and transport a portion of the grain via truck to points inland. In accordance with US GAAP, the Partnership will not recognize voyage revenue or voyage expenses on this voyage until the grain is delivered to its final destination in February 2008. At this time the grain has been discharged from the vessel and is being transported to its final destination. At December 31, 2007, total deferred costs for this voyage were approximately $1.4 million.

During the three months ended December 31, 2007, voyage expenses increased $2.0 million, depreciation and amortization expense increased $1.6 million and vessel operating expenses increased $1.5 million. The addition of the ATB Freeport accounted for additional voyage expenses of $1.2 million and an increase in fuel charges for the remaining fleet increased voyage expenses by $1.1 million (although our chartering contracts generally protect us from increased fuel costs); these increases were offset by lower port charges and commission expenses aggregating $0.3 million. The increase in depreciation and amortization expense is primarily due to additional amortization of drydock expenditures of $1.2 million, principally resulting from drydocks completed in 2006 and early 2007, and $0.8 million attributable to the addition of the ATB Freeport. These increases to depreciation and amortization expense were offset by a decrease of $0.4 million resulting from an adjustment to the values assigned to the vessels in the original purchase of the ITBs due to net payments made to us under the Hess Support Agreement, which were considered an adjustment to the original purchase price. The increase in vessel operating expenses is primarily due to the addition of the ATB Freeport, which increased vessel operating expenses by $1.4 million. Additionally, repairs and maintenance expense and crew wages and benefits each increased by $0.6 million. The increase in crew wages and benefits resulted from a new collective bargaining agreement with the union that covers the officers of the Partnership's vessels. These increases were offset by a $1.1 million net decrease in all other vessel operating expenses.