form_10k.htm

For the Year Ended December 31,

Vessels Entering Drydock

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

x Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2008

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number 000-51368

TBS INTERNATIONAL LIMITED

(Exact name of registrant as specified in its charter)

Bermuda	98-0225954
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
Commerce Building, Chancery Lane, Hamilton HM 12, Bermuda
(Address of principal executive offices)

(Registrant's telephone number, including area code) (441) 295-9230
Securities registered pursuant to section 12(b) of the Act:

Title of each class		Name of each exchange on which registered
Class A common shares, par value $0.01		The NASDAQ Global Select Market

Securities registered pursuant to section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company . See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act check one):

Large Accelerated Filer ¨ Accelerated Filer x Non-accelerated Filer ¨ (Do not check if a small reporting company)

Smaller Reporting Filer ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

The aggregate market value of voting and non-voting common equity held by non-affiliates was $583 million on June 30, 2008, based upon the last reported sales price of such stock on The NASDAQ Global Select Market on that date.

As of March 13, 2009, the registrant had outstanding 17,500,871 Class A common shares, par value $0.01 per share, and 12,390,461 Class B common shares, par value $0.01 per share.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the 2009 Annual General Meeting of Shareholders (the “Proxy Statement”), to be filed within 120 days of the end of the fiscal year ended December 31, 2008, are incorporated by reference in Part III to the extent described herein.

As used in this Annual Report on Form 10-K, the terms "we," "our," "us," "TBS" and "the Company" refer to TBS International Limited and its consolidated subsidiaries. We use the terms "International" and "TBSI" when we wish to refer only to TBS International Limited, the holding company that is the issuer of our common shares, and not to TBS International Limited and its consolidated subsidiaries.

Forward-Looking Statements

The Company’s filings with the Securities and Exchange Commission (the "SEC"), including this Annual Report on Form 10-K for the fiscal year ended December 31, 2008, our Annual Report to Shareholders, any quarterly report on Form 10-Q, any current report on Form 8-K (along with any exhibits to such reports as well as any amendments to such reports), our press releases, and any other written or oral statements made by or on behalf of the Company, may include or incorporate by reference forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, among other things, the information concerning our possible or assumed future results of operations, our newbuilding plan, our drydocking program, business strategies, financing plans, competitive position, potential growth opportunities, customer demand and the effects of future regulation and competition.

Generally, one can identify these forward-looking statements because they use words like "anticipates," "believes," "estimates," "excepts," "future," "intends," "plans," "targets," "projects," "seeks" and similar expressions. These statements appear throughout this Annual Report, on Form 10-K including in the sections entitled "Item 1 - Business" and "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations." These statements are only our current expectations. They are based on our management's beliefs and assumptions and on information currently available to our management. The matters discussed in these forward-looking statements involve risks, uncertainties and assumptions. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot assure you of 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, risks and other factors. These 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, this Annual Report on Form 10-K for the period ended December 31, 2008 and our 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.

Table of Contents

PART I

Item 1. Business

A. Overview

We are an ocean transportation services company, originating in 1993, 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. TBS International Limited is a Bermuda exempted company formed in 1997.

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.

As of December 31, 2008, our controlled fleet totaled 47 vessels, including 45 ships that we own and two that we charter-in with an option to purchase. 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. Two of the vessels are scheduled for delivery in 2009 and the remaining four in 2010. The two newbuilds, which are expected to be delivered in the second and fourth quarter of 2009, have been named Rockaway Belle and Dakota Princess.

Financial data including revenues from external costumers, for the years ended December 31, 2008, 2007 and 2006 follows: (in millions except for Number of Voyages)

Year ended December 31,	Total Assets		Total revenue		Net income		Total revenue tons (RT) carried	Number of Voyages

2008	$	1,041.7	$	611.6	$	191.8	9.3 RT	319

2007	$	559.1	$	352.9	$	98.2	6.6 RT	276

2006	$	403.1	$	251.7	$	39.1	4.4 RT	226

We target niche markets, which include trade routes, ports and cargoes not efficiently served by container and large dry bulk vessel operators. In order to effectively serve these markets, we offer regularly scheduled voyages using our fleet of multipurpose tweendeckers and handysize and handymax dry bulk carriers. Tweendeck vessels are differentiated by their retractable decks that can create separate holds, facilitating the transportation of non-containerized cargoes. Our vessels are able to navigate and service many ports with restrictions on vessel size and transport many types of cargo that cannot be carried efficiently by container or large dry bulk carriers.

As part of our comprehensive transportation service offering, we provide portside and inland logistics, related support services and solutions for challenging cargoes. To provide these services, we employ a professional staff of approximately 170 employees at December 31, 2008, with extensive experience and diverse backgrounds. In addition, our affiliate, TBS Commercial Group Ltd. ("TBS Commercial Group"), has fully staffed agencies and representative offices on five continents, with local teams of commercial agents and port captains who meet regularly with customers to tailor solutions to their logistics needs. We believe this full-service approach to shipping provides a superior level of service that has resulted in the development of long-term relationships with our customers.

Our customers rely on our regular service as an integral part of their supply chain, and many of these relationships have been established for over ten years. We serve over 300 customers in more than 20 countries. We have developed long-term relationships with established and well-respected industrial shippers in diverse markets including mining, steel manufacturing, trading, heavy industry, industrial equipment and construction. We believe our business model allows us to respond rapidly to our customers’ changing demands and short delivery windows, increasing the value of our services to them as we enable them to schedule production and distribution.

Table of Contents

Beginning in the fourth quarter of 2008 shipping rates declined significantly from the record high rates of the second quarter of 2008. Rates were further influenced by the tightening of credit markets caused by turmoil in the financial markets. The shipping rate decline correlated directly with the deceleration of world demand for commodities and the corresponding decrease in commodity prices. These conditions are still present in the beginning of 2009. As of December 31, 2008, due to the economic climate, we concluded there was an indication of possible impairment of our long-lived assets and goodwill. Accordingly, impairment analyses were performed for both long-lived assets and goodwill at December 31, 2008. Both analyses indicated that there was no impairment. See Item 7. "Summary of Critical Accounting Policies".

Our Competitive Strengths

Trade Routes and Ports of Call

Our ocean transportation services focus on Asia and Latin America. Based on increasing customer demand, we have extended our business model into several new markets, including the Middle East. We began operations in 1993, sailing between East Asia and the West Coast of South America. In 1995, we expanded our routes by adding sailings between the East and West Coasts of South America. In 2002, we began offering cargo service between North America and the East and West Coasts of South America and expanded our routes by offering service from Brazil to West Africa and within the Middle East. We continued to expand our service in the Middle East and North Africa during 2005 and 2006. In 2007, we began cargo service between the East Coast of South America and the Mediterranean. During 2008 we operated our vessels in six liner, parcel and bulk services over eight routes. In the third quarter of 2008, due to a shift in demand on our trade service routes, we re-allocated our ships to routes where we were experiencing elevated demand and consequently, we are not running any vessels for the Mediterranean Service. However, we may reinstitute the service should demand increase.

We have taken a conservative approach to building our liner, parcel and bulk cargo service network. The initial sailings on each route are typically based on the requirements of a major customer. After regular sailings are established, we notify other potential customers of the service so their cargoes may be transported as well. As demand increases, we evaluate committing additional resources to serve the route, either by purchasing or chartering-in additional vessels. We plan the loading and stowage of cargo on each sailing to maximize our ability to add cargo as vessels call in selected ports to discharge cargo, increasing our utilization rate and maximizing revenue per sailing. A summary of our services and routes operated during 2008 is as follows:

Service	Routes	Cargoes
TBS Pacific Service	Eastbound:	Eastbound:
	Japan, South Korea and China to the West, North and East Coasts of South America	Steel products, project cargo and general cargo
	Westbound: Peru, Ecuador and Chile to East Asia	Westbound: Minerals and metals
TBS Latin America Service	Northbound: Brazil to Central America, the Caribbean basin and the West Coast of South America Southbound: Colombia to Brazil and Argentina	Steel products, project cargo and general cargo Coal and petroleum coke
TBS North America Service	North America to the Caribbean and South America	Fertilizer and agricultural products
TBS Middle East Carriers	Middle East region including ports in United Arab Emirates to Qatar and Kuwait	Bulk aggregates
TBS Ocean Carriers	Brazil to the West Coast of Africa	Bulk sugar and salt
TBS Mediterranean Service	Brazil and Argentina to ports in the Mediterranean (as of the third quarter of 2008 we suspended this service route)	Steel products, project cargo and general cargo

Our liner, parcel and bulk services primarily carry steel products, salt, sugar, grain, fertilizers, chemicals, metal concentrates, aggregates and general cargo.

·	Steel products include specialty and carbon steel coils, steel pipe and structural steel used in 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, silver and other metals generally shipped in small break-bulk 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.

In addition to our liner, parcel and bulk services on the trade routes described above, we time charter-out vessels on an individual customer basis through TBS Ocean Carriers. However, any of our services may time charter-out a vessel to meet our customers' needs. Generally, we time charter-out vessels on a long-term basis to customers seeking vessel tonnage and on a short-term basis to reposition a vessel.

A time charter is a contractual arrangement under which a shipowner is paid for the use of a vessel at a daily rate for a fixed period of time. The shipowner is responsible for providing the crew and paying vessel operating expenses while the charterer is responsible for paying the voyage expenses. At December 31, 2008, ten vessels of our controlled and owned fleet were time chartered-out with an average remaining duration of 20 days. Those vessels were the: Chesapeake Belle, Canarsie Princess, Cherokee Princess, Maori Maiden, Shawnee Princess, Siboney Belle, Savannah Belle, Tupi Maiden, Wichita Belle and Zuni Princess.

The following table shows the annual number of time charters-out, related duration and gross charter revenue since 2004.

Year	Number of Charters		Duration (Days)		Gross Revenue (in thousands)

2008		74		3,004	$	83,883
2007		67		3,659		88,365
2006		57		4,301		63,114
2005		55		4,257		71,456
2004		46		2,780		50,746

B. Our Business Strategy

Our business strategy consists of providing reliable transportation services to leading industrial shippers over key ocean trade routes. The key elements of our business strategy are:

Focus on Increasing Cargo Volumes on Our Key Routes. We intend to increase cargo volumes on our key Pacific and Latin American trade routes. In addition to our liner, parcel and general cargo services, we are establishing a third sailing from China and Korea carrying steel parcels to Mexico, Central and South America. By adding additional vessels and sailings to the markets we already serve, we believe we will be able to provide more regular service to our clients, which we expect will allow us to capture a larger share of their shipping needs, and win new clients.

Develop New Trade Routes. We intend to continue developing new trade routes, such as adding sailings from Asia to Africa to our TBS Pacific Service. Our agents and port captains work closely with our clients, as well as potential clients, to identify additional services that we can provide. We target routes that share the characteristics of our established routes and appear suited to our fleet and our full service approach. When developing new trade routes, we initially utilize chartered-in vessels and commit resources to acquire vessels for operation on those routes once we have determined that the economics of the route are favorable and sustainable.

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Develop Our Logistics Support. We intend to further develop our logistics support through our Five Star Service. The goal of our Five Star Service is to provide a complete transportation solution to our global customers by providing a fully-integrated cargo and transport management system. We offer total project coordination, door-to-door supply chain management including port services, terminal operations, trucking, barging, warehousing, distribution, inland pick-up and delivery, and documentation. The Five Star Service differentiates us from traditional dry bulk ship owners by adding strategic planning and logistics support to our customers. Additionally, we intend on expanding our port warehouse network to support our logistics services.

Expand Our Fleet of Focused Vessel Types. 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 vessel class 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.

At December 31, 2008, the milestones met, as defined in the agreements, and the expected delivery dates are noted below:

Argyle

Maritime Corp.

Caton

Maritime Corp.

Dorchester

Maritime Corp.

Longwoods

Maritime Corp.

McHenry

Maritime Corp.

Sunswyck

Maritime Corp.

Milestone

Hull No NYHS200720

Rockaway Belle

Hull No NYHS200721

Dakota Princess

Hull No NYHS200722

To be Named

Hull No NYHS200723

To be Named

Hull No NYHS200724

To be Named

Hull No NYHS200725

To be Named

Contract Signing

Met

Steel Cutting

Met

Keel Laying

Met

Launching

Met

Anticipated Delivery - Quarter/Year

2nd Qtr '09

4th Qtr '09

1st Qtr '10

2nd Qtr '10

3rd Qtr '10

4th Qtr '10

Historically, we have expanded our fleet by acquiring second hand vessels. During 2008 we purchased and took delivery of eleven 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. 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.

Our controlled fleet at December 31, 2008, totaled 47 vessels and is comprised of 24 multipurpose tweendeckers and 23 handysize and handymax bulk carriers, totaling nearly 1.4 million deadweight tons. All vessels are dual flagged in Panama and the Philippines.

In the second quarter of 2009 we expect to take delivery of the first of six newbuild vessels. Delivery of the second newbuild vessel is expected in the fourth quarter of 2009. Delivery of the remaining four new build vessels is scheduled for 2010. The following table provides information regarding the 47 vessels in our controlled fleet at December 31, 2008, which excludes vessels chartered-in under short-term charter.

		Year	Deadweight
Vessel Name	Vessel Type	Built	Weight Tons

Manhattan Princess	Handymax Bulk Carrier	1982	45,526
Tuscarora Belle	Handymax Bulk Carrier	1984	44,189
Chesapeake Belle	Handymax Bulk Carrier	1984	44,146
Canarsie Princess	Handymax Bulk Carrier	1985	42,842
Yakima Princess	Handymax Bulk Carrier	1990	42,475
Mohawk Princess	Handymax Bulk Carrier	1982	42,360
Sioux Maiden	Handymax Bulk Carrier	1989	42,248
Houma Belle	Handymax Bulk Carrier	1985	42,219
Alabama Belle	Handymax Bulk Carrier	1986	41,808
Fox Maiden	Handymax Bulk Carrier	1985	40,902
Iroquois Maiden	Handymax Bulk Carrier	1983	40,876
Miami Maiden	Handymax Bulk Carrier	1984	39,333
Biloxi Belle	Handymax Bulk Carrier	1984	39,225
Nyack Princess	Handymax Bulk Carrier	1984	38,885
Tupi Maiden	Handymax Bulk Carrier	1992	38,852
Maori Maiden	Handymax Bulk Carrier	1984	37,734
Shinnecock Belle	Handymax Bulk Carrier	1985	37,451
La Jolla Belle (1)	Handymax Bulk Carrier	1982	35,025
Wichita Belle	Multipurpose Tweendecker	1991	28,843
Nanticoke Belle	Multipurpose Tweendecker	1989	28,835
Laguna Belle (2)	Multipurpose Tweendecker	1996	28,503
Seminole Princess (2)	Multipurpose Tweendecker	1997	28,503
Zuni Princess	Handysize Bulk Carrier	1984	28,166
Mohave Maiden	Handysize Bulk Carrier	1984	28,074
Tayrona Princess	Multipurpose Tweendecker	1983	26,320
Mohegan Princess	Multipurpose Tweendecker	1983	26,276
Oneida Princess	Handysize Bulk Carrier	1998	24,247
Arapaho Belle	Handysize Bulk Carrier	1998	24,021
Apache Maiden	Multipurpose Tweendecker	1987	23,325
Kickapoo Belle	Multipurpose Tweendecker	1987	23,319
Cherokee Princess	Multipurpose Tweendecker	1990	23,286
Taino Maiden	Multipurpose Tweendecker	1985	23,278
Tuckahoe Maiden	Multipurpose Tweendecker	1985	23,278
Caribe Maiden	Multipurpose Tweendecker	1987	22,800
Ottawa Princess	Multipurpose Tweendecker	1987	22,800
Savannah Belle	Handysize Bulk Carrier	1982	22,558
Shawnee Princess	Multipurpose Tweendecker	1984	22,323
Inca Maiden	Multipurpose Tweendecker (3)	1986	22,133
Navajo Princess	Multipurpose Tweendecker (3)	1987	21,902
Hopi Princess	Multipurpose Tweendecker	1984	20,401
Aztec Maiden	Multipurpose Tweendecker	1984	19,777
Seneca Maiden	Multipurpose Tweendecker	1986	19,764
Kiowa Princess	Multipurpose Tweendecker	1986	19,762
Ainu Princess	Multipurpose Tweendecker	1987	17,324
Siboney Belle	Multipurpose Tweendecker	1987	17,324
Tamoyo Maiden	Multipurpose Tweendecker	1986	17,235
Zia Belle	Multipurpose Tweendecker	1997	8,492
	Total DWT		1,398,965

(1)	La Jolla Belle was previously named Rockaway Belle and was part of our existing fleet. On November 28, 2008 we launched the first of six newbuild ships which we have named Rockaway Belle. We expect to take delivery on that vessel in the second quarter of 2009.

(2)

On January 30, 2007, International's wholly owned subsidiaries Fairfax Shipping Corp. ("Fairfax") and Beekman Shipping Corp. ("Beekman") each sold and leased back a vessel pursuant to a sale-leaseback arrangement. Fairfax sold the vessel Seminole Princess to Adirondack Shipping LLC ("Adirondack") for $23.0 million, and Beekman sold the vessel Laguna Belle to Rushmore Shipping LLC ("Rushmore") for $22.0 million each pursuant to a Memoranda of Agreement. Fairfax had taken delivery of the vessel Seminole Princess (formerly the Clipper Flamingo) for $23.1 million on November 10, 2006. Beekman had taken delivery of the vessel Laguna Belle (formerly the Clipper Frontier) for $22.0 million on November 15, 2006. Under the sale-leaseback arrangement, Fairfax entered into a seven-year bareboat charter with Adirondack and Beekman entered into a seven-year bareboat charter with Rushmore for their respective vessels. We used the proceeds from the sale to repay advances under the revolving credit facility.

(3)	These vessels are multipurpose tweendeckers with the ability to carry wheeled cargo such as automobiles, tractors or trailers. The vessels allow cargo to be "rolled on" and "rolled off" in addition to allowing cargo to be "lifted-on" and "lifted-off".

Multipurpose Tweendeckers

Our multipurpose tweendecker vessels have retractable tweendecks that can convert a multipurpose tweendecker to a bulk carrier, and back again. Unlike container ships, which can carry only cargo that can be or has been pre-packaged into standard 20-foot or 40-foot containers, or bulk carriers that limit the ability to mix different cargoes in any one hold, multipurpose tweendeckers can be divided into multiple cargo compartments by a mezzanine deck, or tweendeck. The tweendeck permits the carriage of cargoes of differing sizes and shapes in the same or separate holds and permits greater flexibility in the stowage and carriage of cargo. Many of our vessels sailing eastbound from Asia will call at multiple Latin American ports to discharge cargo and load additional cargo for shipment to other ports. Cargoes are stowed in a manner that facilitates efficient loading and discharging.

The following diagram shows a typical multipurpose tweendeck ship fitted for different types of cargo.

Our bulk carriers range in size from 22,558 dwt to 45,526 dwt. Several of the vessels have equipment that enables self-loading and discharging in an effort to enhance our ability to serve a broad range of ports.

The hull and machinery of every commercial vessel must be "classed" by a classification society authorized by its country of registry. Our vessels currently are enrolled with Lloyds Register of Shipping, or LR, Nippon Kaiji Kyokai, or NKK, American Bureau of Shipping, or ABS, Det Norske Veritas, or DNV, and Bureau Veritas, or BV. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and international conventions promulgated by the International Maritime Organization, or IMO. These include the Convention on Maritime Pollution Prevention, the International Safety Management Code, ("ISM Code"), and International Convention for the Safety of Life at Sea, ("SOLAS"). All of our vessels have been certified as being "in class" by their respective classification societies.

A vessel must undergo annual surveys, intermediate surveys and special surveys. In lieu of a special survey, a vessel's machinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. All of our controlled vessels are on special survey cycles for hull inspection and continuous survey cycles for machinery inspection. Every vessel is required to be drydocked every two to three years for inspection of the underwater parts of the vessel. Our fleet of 47 vessels will require approximately 94 drydockings over a five-year period. We anticipate drydocking approximately 19 vessels per year. We drydocked 17 vessels during 2008, including one vessel that entered into drydock during December 2007. During 2009, we anticipate drydocking 22 vessels, including one vessel that entered into drydock during December 2008.

In 2008 and prior years, we used vessel drydocking as an opportunity to make steel renewal and reinforcements that might have been required during the next five to ten years, and we believe this will reduce the cost of future drydockings. For the immediate future our drydocking program will only address deficiencies identified and recommendations made by classification surveyors.

Our drydocking expenditures and surveys are being accounted for using the deferral method. Under the deferral method of accounting for drydocking, the costs incurred are deferred and amortized on a straight-line basis over the period through the date of the next drydocking, which is typically thirty months. We only include in deferred drydocking costs those costs that are incurred to meet regulatory requirements, or are expenditures that add economic life to the vessel, increase the vessel’s earnings capacity or improve the vessel’s efficiency. Normal repairs and maintenance, whether incurred as part of the drydocking or not are expensed as incurred.

Substantially all of the operations, ship maintenance, supervision of crewing, technical support, purchasing, insurance, financial management services and the network of commercial agents necessary to support our fleet and operate our business are supervised by four service companies.

Two of the service companies, TBS Shipping Services and Roymar, are our wholly-owned subsidiaries that we acquired from our principal shareholders at the time of our initial public offering in June 2005. These service companies manage the accounts of our other subsidiaries and, on their behalf, make payments and advances for costs associated with the operation of our business. The other service companies, TBS Commercial Group Ltd. ("TBS Commercial Group") and Beacon Holdings Ltd. ("Beacon"), are affiliated with us by common ownership. Messrs. James W. Bayley, Lawrence A. Blatte, Gregg L. McNelis and Joseph E. Royce, are collectively the beneficial owners of approximately 46.5% of our issued and outstanding common shares and hold 37.8% of the voting power of our shares. Each of these individuals is also a principal of, and together with Alkis N. Meimaris, who retired from the Company effective January 1, 2006, control TBS Commercial Group and Beacon. Messrs. Bayley, Blatte, McNelis, Meimaris and Royce own 36%, 9%, 15%, 9% and 31%, respectively of TBS Commercial Group and Beacon. Together these four companies employ approximately 340 experienced professionals who meet regularly with shippers and consignees to market our services in more than 20 countries and address the needs and concerns of our customers.

Operations management

TBS Shipping Services coordinates services to customers, integrates the activities of our commercial agency network, oversees charter activities, administers voyages and provides accounting services, including the preparation of the account ledgers and financial statements of International and its subsidiaries.

Roymar manages our controlled fleet providing an experienced technical management staff and a full range of vessel maintenance capabilities to ensure that we maintain a high-level of ship performance. The services provided by Roymar include:

·	supervising the recruiting of crew;
·	obtaining spares, stores and provisions necessary on board the vessels;
·	implementing our maintenance program;
·	arranging for and supervising all drydocking procedures;
·	arranging for surveys and inspections according to requirements of classification society, flag state and port state rules and regulations;
·	maintaining high safety and environmental protection standards in compliance with the ISM Code and SOLAS;
·	arranging for insurance of the vessels; and
·	identifying vessels to acquire and negotiating purchase options on vessels that we charter.

We are fully responsible for the maintenance of our controlled fleet. We make every effort to prevent delays at sea or in port caused by malfunctions or breakdowns. Roymar deploys superintendents, including master mariners and engineers, to supervise the maintenance of our controlled fleet. We minimize operation costs through continuous onboard supervision of our vessels and use of the vessels' crews for ship maintenance. We believe that our preventive maintenance practice has extended the lives of the vessels in our controlled fleet, minimized drydocking expenses and nearly eliminated downtimes and off-hire periods resulting from speed deficiencies, stoppages at sea and vessel breakdowns.

We have established a network of long-term commercial and operational relationships with affiliated commercial agency service companies. The majority of these service companies are wholly or partly-owned by TBS Commercial Group. Our principal shareholders own TBS Commercial Group. These service companies employ locally-based sales and customer service professionals who personally meet with shippers and consignees on a regular basis. These professionals provide a competitive advantage by addressing our customers' concerns and anticipating their future needs through their personal contact with our customers. We believe that personal attention to customers has played a critical role in our growth and success. Our method of operation focuses on sales and service for long-term sustained expansion. The agreements with TBS Commercial Group are subject to the approval of the Compensation Committee of our Board of Directors. We paid TBS Commercial Group approximately $16.8 million, $8.0 million, and $6.2 million in 2008, 2007, and 2006, respectively. See "Note 14 — Related Party Transactions" to our consolidated financial statements.

As of December 31, 2008, we had approximately 170 office employees located in Yonkers and Scarsdale, New York. Additionally, we have contracted with three unaffiliated manning agents, Aboitiz Jebsen Bulk Transport Corp., Intermodal Shipping, Inc., and Magsaysay Maritime Corp to provide approximately 1,128 Filipino officers and non-officers to crew our vessels. We are not a party to the contracts with the seagoing personnel who are required to have appropriate maritime licenses. Historically our labor relations have been good.

We believe we distinguish ourselves from our competition by offering proven reliability, frequent and on-time service, flexible cargo management, expert loading and stowage and close client coordination in the ports and on the vessels. This customer focus has enabled us, through our affiliated agents, to develop long-term relationships with established and well-respected industrial shippers in diverse markets including mining companies, steel manufacturers, trading companies, heavy industry, industrial equipment enterprises and construction companies. Our business model allows us to respond rapidly to our customers' changing demands and short delivery windows, increasing the value of our services to them as we enable them to schedule production and distribution.

A substantial majority of our repeat business is based on our relationships and reputation with our customers, and is not governed by long-term contracts. We depend upon a limited number of customers for a large part of our revenue. Our top ten customers by revenue, accounted for, in the aggregate, 45.5% of our total consolidated revenue for 2008. We have Contracts of Affreightment with several of these customers.

As noted in the table below, only one of our customers, Dangote Industries Limited, accounted for more than 10% of revenue. The loss of any of these customers could have a material adverse effect on our results of operations. The percentages of consolidated revenues from our major customers for each of the last three fiscal years are as follows:

	Year Ended December 31,
Customer	2008			2007			2006
Dangote Industry Limited		13.0	%		13.4	%		15.1	%
Constructions Materials		6.9	%		2.5	%		0.2	%

No other customer accounted for more than 5% of our consolidated revenues.

We transport cargo throughout the world, including the United States. The amount of voyage revenue generated by country for each of the last three fiscal years, after reduction for despatch, is as follows (in thousands):

	Year Ended December 31,
Country	2008		2007		2006
Brazil	$	127,360	$	72,053	$	51,653
Japan		79,812		40,592		33,409
United Arab Emirates		69,714		24,406		9,415
Peru		48,707		31,728		16,584
Chile		46,923		11,219		14,977
China		42,319		21,624		16,157
USA		33,702		19,785		21,256
Korea		15,699		5,775		6,018
Venezuela		9,903		4,579		8,453
Argentina		8,312		15,059		1,513
Others		36,456		14,689		7,712
	$	518,907	$	261,509	$	187,147

Revenue attributed to these countries is based on the location where the cargo is loaded. Time charter revenue by country cannot be allocated because we do not control the itinerary of the vessel. To conform to the 2008 presentation, we revised the 2007 and 2006 Consolidated Statements of Income for despatch. Despatch of $2.7 million and $1.9 million for 2007 and 2006, respectively, which were previously classified as voyage expense, are now included in voyage revenue. This revision did not impact net income. Despatch is the amount paid to a charterer when the loading or discharging of a vessel takes less time than contracted.

H. Competition

The cargo markets we serve are highly competitive. Our competition on the routes we serve consists primarily of regional shipping companies focused on the breakbulk market, international bulk shipping companies competing in the large lot segment of the bulk metal concentrates market and larger shipping concerns that compete in diverse shipping segments in addition to the breakbulk market. We compete on the basis of targeting niche markets that include trade routes, ports and cargoes not efficiently served by many container and large dry bulk vessel operators. We focus on smaller lots of 1,000 to 10,000 metric tons in the bulk metal concentrates market in Chile and Peru, whereas other bulk shipping companies focus on shipments of 20,000 to 45,000 metric tons of bulk metal concentrates. Additionally, we compete with other regional shipping companies in providing logistics, operations, port services and strategic planning.

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I. Environmental and Other Regulations

Vessel Environmental Regulations

Ocean shipping is affected by extensive and changing environmental protection and other laws and regulations. These laws and regulations take the form of international conventions and agreements, including the International Maritime Organization, ("IMO"), conventions and regulations and the Safety of Life at Sea, ("SOLAS"), with which all internationally trading vessels must comply, and national, state and local laws and regulations, all of which are amended frequently. Compliance with these laws and regulations may entail significant expenses at any time, including expenses for ship modifications and changes in operating procedures, which could have an adverse effect on our results of operations. Subject to the discussion below and to the fact that the kinds of permits, licenses and certificates required for the operation of the owned vessels will depend upon a number of factors, we believe that we have and will be able to obtain all permits, licenses and certificates material to the conduct of our operations.

In the United States, we may be exposed to various federal, state and local environmental laws, ordinances and regulations, requiring the clean up of environmental contamination resulting from a discharge of oil or hazardous substances, and may be held liable to a governmental entity or to third parties in connection with any such contamination. These laws typically impose cleanup responsibility, and liability, which under these laws, has been interpreted to be strict, joint and several, and subject to very limited statutory defenses. The costs of investigation, remediation or removal of such substances and damages resulting from releases may be substantial.

Although we do not transport petroleum products, we are subject to the U.S. Oil Pollution Act of 1990, ("OPA 90"), because we use petroleum products for fuel and because the possibility of accidents involving oil tankers presents an exposure to our vessels. Under OPA 90, vessel owners, operators and bareboat charterers are responsible parties and are jointly, severally and strictly liable, unless the spill results solely from the act or omission of a third party, an act of God or an act of war, for all containment and cleanup costs and other damages resulting from the discharge or threatened discharge of oil into the navigable waters, adjoining shorelines or the 200 nautical mile exclusive economic zone of the United States. OPA 90 limits the liability of responsible parties for such costs and damages to the greater of $950 per gross ton of the vessel or $800,000 per non-oil tanker vessel that is over 300 gross tons, subject to possible adjustment for inflation. The Federal Water Pollution Control Act, ("FWPCA"), imposes significant civil penalties as well as strict, joint and several liability on responsible parties for removal costs and natural resource damages arising from the discharge of oil or other hazardous substances into U.S. navigable waters, adjoining shorelines, waters of the contiguous zone and areas of the outer continental shelf and deepwater ports. The Comprehensive Environmental Response, Compensation & Liability Act of 1980, ("CERCLA"), imposes strict, joint and several liability on responsible parties for releases and threatened releases of hazardous substances (other than oil) whether on land or at sea, subject to limits depending on the nature of the vessel and its cargo. Liability under CERCLA is limited to the greater of $300 per gross ton or $5 million for vessels over 300 gross tons carrying hazardous substances as cargo. The limits on liability under OPA 90, FWPCA and CERCLA do not apply if the discharge is caused by gross negligence, willful misconduct, or in the cases of OPA 90 and CERCLA, the violation by a responsible party or its agent of any applicable safety, construction or operating regulation. The statutory limits on liability may not apply in certain other instances, including if the responsible parties fail or refuse to report the incident or refuse to cooperate and assist in connection with oil removal activities. In addition, OPA 90, FWPCA and CERCLA specifically permit individual states to impose their own liability regimes with regard to oil and hazardous waste releases occurring within their boundaries, and many states have enacted legislation providing for unlimited liability for oil spills. In some cases, states that have enacted such legislation have not yet issued implementing regulations under these laws. We intend to comply with all applicable state regulations in ports where we call.

Pursuant to regulations promulgated by the U.S. Coast Guard, responsible parties (as defined in such regulations) must establish and maintain evidence of financial responsibility in the amount of $950 per gross ton, for a non-tank vessel. The Protection & Indemnity ("P&I") Associations, which historically provided shipowners and operators financial assurance, have refused to furnish evidence of insurance to responsible parties, and therefore responsible parties have obtained financial assurance from other sources at additional cost, including evidence of surety bond, guaranty or by self-insurance.

Port state authorities in general and in certain jurisdictions in particular have become more active in inspecting older vessels visiting their ports and, in certain instances, demanding that repairs be made before allowing a vessel to sail, even though that vessel may be fully insured, in class and in compliance with all relevant maritime conventions including SOLAS.

The IMO has adopted regulations that are designed to reduce oil pollution in international waters. In complying with OPA 90, IMO, and other regulations that may be adopted, shipowners and operators may be forced to meet new maintenance and inspection requirements, develop contingency arrangements for potential spills and obtain insurance coverage.

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The technical manager of our vessels, Roymar, is ISO 14001:2004 certified. Roymar has developed and implemented environmental practices and monitoring thereof; which protect and preserve the marine environment in which our managed vessels operate. We have high standards in our fleet for pollution prevention, regulatory compliance and continual improvement of our environmental management activities.

Other Regulations

Operation of our vessels also is affected by the recently adopted requirements of the International Maritime Organization's International Safety Management Code for the Safe Operation of Ships and Pollution Prevention, ("ISM") Code. The ISM Code mandates an extensive "Safety Management System" that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for operating vessels safely and describing procedures for dealing with emergencies. Our owned vessels and Roymar, the technical manager of our vessels, are currently ISM Code certified.

We also are required by various governmental and quasi-governmental agencies and other regulatory authorities to obtain permits, licenses and certificates in connection with our operations. Some countries in which we operate have laws that restrict the carriage of cargoes depending on the registry of a vessel, the nationality of its crew and prior and future ports of call, as well as other considerations relating to particular national interest. See D above ― "Classification and Inspection" for more information.

J. Security

Since the terrorist attacks of September 11, 2001, a variety of initiatives intended to enhance vessel security have been enacted, including the Maritime Transportation Security Act of 2002, or MTSA. U.S. Coast Guard regulations require that vessels operating in waters subject to the jurisdiction of the United States implement a number of security measures. Similarly, a new chapter of SOLAS, dealing specifically with maritime security, which came into effect in July 2004, dealing specifically with maritime security imposes various detailed security obligations on vessels and port authorities, most of which are contained in the newly created International Ship and Port Facilities Security Code, or ISPS Code. The ISPS Code is designed to protect ports and international shipping against terrorism. Since July 1, 2004, to engage in international trade, a vessel must have an International Ship Security Certificate, or ISSC, which attests to the vessel's compliance with SOLAS security requirements and the ISPS Code, from a recognized security organization approved by the vessel's flag state. ISPS Code requirements include:

·	on-board installation of automatic identification systems to provide a means for the automatic transmission of safety-related information among similarly equipped ships and shore stations, including information on a ship's identity, position, course, speed and navigational status;

·	on-board installation of ship security alert systems that do not sound on the vessel but instead alert the onshore authorities

·	development of vessel security plans;

·	permanent marking of a ship's identification number on its hull;

maintenance of a continuous synopsis record onboard showing a vessel's history, including the name of the vessel and of the state whose flag the ship is entitled to fly, the date on which the ship was registered with that state, the ship's identification number, the port at which the ship is registered and the name of the registered owners and their registered address; and

·	compliance with flag state security certification requirements.

Coast Guard regulations, intended to align with international maritime security standards, exempt non-U.S. vessels from MTSA vessel security measures, provided they have a valid ISSC on board. Our vessels comply with all MTSA, SOLAS and ISPS Code requirements and vessel certifications, which are kept current by Roymar.

K. Insurance

Our business is subject to normal hazards associated with owning and operating vessels in international trade. The operation of ocean going vessels carries an inherent risk of catastrophic marine disaster, including oil spills and other environmental accidents, as well as property losses caused by adverse weather conditions, cargo loss or damage, mechanical failures, human error, war, terrorism and business interruption due to political circumstances in foreign countries, hostilities, piracy and labor action. Not all risk can be insured against and the policies have certain deductibles for which we are responsible. We believe that our current insurance coverage is adequate to protect us against normal accident-related risk involved in the conduct of our business. Our principal insurance policies include:

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Hull and machinery and war risks insurance includes coverage for damages to a vessel’s hull and machinery in a collision, as well as basic perils of the sea and contributions for general average and salvage charges. This coverage includes the risk of actual or constructive total loss for our controlled fleet. Each vessel is insured for at least its fair market value, with a deductible of $75,000 per vessel per incident under the hull and machinery coverage and no deductible under the war risk coverage. The respective owners of the other vessels that we charter-in maintain insurance on those vessels, and we maintain time charter liability insurance to a limit of $500 million per incident.

Protection and Indemnity, or P&I, Insurance includes coverage for oil pollution, damage to docks and other installations and coverage against third-party liabilities encountered in our commercial operations. It also includes coverage for the death, injury or illness of our crew. Our P&I insurance is provided by mutual marine insurance associations, or P&I Clubs. P&I Clubs are formed by shipowners to provide protection from large financial losses to one member by contribution towards the loss by all members. We are subject to potential additional premiums for prior years due to funding requirements and coverage shortfalls of the clubs in the event claims exceed available funds and reserves. We also are subject to future premium increases based on prior year underwriting loss experience. We have an overall coverage limit of $4.5 billion for damage to cargo and third party liabilities and a sublimit for oil pollution of $1.0 billion per vessel for each accident or occurrence. Deductibles range from $5,000 to $50,000 depending on the nature of the claim.

Other Insurance is maintained for legal expenses with respect to freight, demurrage and defense claims. We also carry limited insurance covering the loss of revenue resulting from extended vessel off-hire periods.

L. Taxation

U.S. Taxation of TBS International Limited – Shipping Income

Unless exempt from U.S. federal income taxation under the rules discussed below, a foreign corporation generally is subject to U.S. federal income tax in respect of shipping income derived from sources within the United States. For these purposes, 50% of shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States constitutes income from sources within the United States ("U.S. source shipping income"). Shipping income attributable to transportation exclusively between non-U.S. ports will be considered to be 100% derived from sources outside the United States. Accordingly, in the absence of an exemption from tax under Section 883 of the U.S. Internal Revenue Code, as amended (the "Code") our gross U.S. source shipping income would be subject to either a 4% tax imposed without allowance for deductions or to a net basis tax.

The net tax regime is applicable if we are considered to have a fixed place of business in the United States that is involved in the earning of U.S. source shipping income and substantially all of such shipping income is attributable to regularly scheduled transportation. The U.S. source shipping income to which the net tax regime is applicable, net of applicable deductions, would be subject to an effective tax rate of up to 54.5% and certain interest paid would be subject to a 30% branch interest tax, or such lesser percentage as may be available under an applicable treaty. Any gain derived from the sale of a vessel, if considered to be from U.S. sources, also would be partly or wholly subject to the net tax regime. If the net tax regime does not apply, the gross tax regime will apply. Under the gross tax regime, our U.S. source shipping income, which, by operation of the source rule, cannot be more than 50% of our total shipping income, would be subject to a 4% tax imposed on a gross basis, without allowance for deductions.

U.S. source shipping income of a foreign corporation will qualify for exemption from U.S. federal income tax under Section 883 of the Code if (i) the corporation is organized in a foreign country that grants an equivalent exemption to U.S. corporations (the "country of organization requirement"), (ii) the stock of the corporation, or the direct or indirect corporate parent thereof (provided the parent is organized in a country that satisfies the country of organization requirement) is "primarily and regularly traded on an established securities market" in such country, in another country that grants the equivalent exemption from tax to U.S. corporations or in the United States, and (iii) certain other requirements are met, including that non-qualified shareholders, each holding 5% or more of a class of stock of the corporation, do not own 50% or more of the total value of such class of stock for more than one-half the days of taxable year (together, the "publicly traded test"). This exemption is available whether or not the corporation has or is considered to have a fixed place of business in the United States that is involved in the earning of U.S. source shipping income. Regardless of whether our U.S. source shipping income qualifies for exemption under Section 883 of the Code, gain realized on a sale of a vessel generally will not be subject to U.S. federal income tax, provided the sale is considered to occur outside of the United States for U.S. federal income tax purposes.

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We currently qualify for exemption under Section 883 of the Code, because International and its subsidiaries currently are incorporated in jurisdictions that satisfy the country of organization requirement and we satisfy the publicly traded test by virtue of International’s Class A common shares being primarily traded on the NASDAQ Global Select Market. Further, the aggregate ownership of all non-qualified 5% shareholders is less than 50% of the total value of the Class A common shares. If at any time we fail to satisfy the publicly traded test and we are unable to qualify for another applicable exemption, our U.S. source shipping income would be subject to U.S. federal income tax, either under the gross tax or net tax regime, each of which is described above.

Federal and State Taxation of TBS International Limited’s U.S. Subsidiaries

Our U.S. subsidiaries, Roymar and TBS Shipping Services and its subsidiaries, are subject to U.S. federal and state income taxes on the income earned by the respective subsidiary.

Bermuda Taxation of TBS International Limited

There currently is no Bermuda income or profits tax, withholding tax, capital gains tax, capital transfer tax, estate duty or inheritance tax payable by us or by our shareholders in respect of our shares. We have obtained an assurance from the Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act 1966 that, in the event that any legislation is enacted in Bermuda imposing any tax computed on profits or income, or computed on any capital asset, gain or appreciation or any tax in the nature of estate duty or inheritance tax, such tax shall not, until March 28, 2016, be applicable to us or to any of our operations or to our shares, debentures or other obligations except insofar as such tax applies to persons ordinarily resident in Bermuda or to any taxes payable by us in respect of real property owned or leased by us in Bermuda.

Marshall Islands Taxation of TBS International Limited

Pursuant to the Marshall Islands Revised Code (the Association Law), a Marshall Islands non-resident corporation is exempt from any corporate profit tax, income tax, withholding tax on revenues of the entity, asset tax, tax reporting requirement on revenues of the entity, stamp duty, exchange controls or other fees. There is an agreement between the Marshall Islands and the United States for the exchange of information with respect to taxes.

M. Website Access to Reports

We make all of our filings with the SEC, including this annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all related amendments, available free of charge on our website at www.tbsship.com, under the Investor Relations tab, "SEC Filings" section. These reports are available soon after they are filed electronically with the SEC. Our SEC filings are also available at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, DC 20549. Investors may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC, from which investors can electronically access our SEC filings.

Additionally, our corporate governance materials, including the charters of the Audit, Compensation, Nominating and Corporate Governance Committees, the Corporate Governance Guidelines, and the Code of Business Conduct and Ethics may also be found under the "Governance" section of our website at www.tbsship.com. A copy of the foregoing corporate governance materials is available free of charge upon written request. In addition, we intend to post on our website at www.tbsship.com any amendment to, or waiver from, a provision of our Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, corporate controller and other employees performing similar functions within four business days following the date of such amendment or waiver.

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Item 1A. Risk Factors

The following risk factors and other information included in or incorporated by reference into this report should be carefully considered. Additional risks and uncertainties not presently known to us may also impair our business operations. If any of the following risks occur, our business, financial condition, operating results and cash flows could be materially adversely affected and the trading price of our Class A common shares could decline.

Risk Factors Relating to the Shipping Industry & Current Economic Conditions

Current economic conditions and uncertain economic outlook could adversely affect our results of operations and financial condition.

The global economy is currently undergoing a period of unprecedented volatility and recent declines in consumer and business confidence and spending, severe reductions in the availability of credit, and volatility in the capital and credit markets have adversely affected the business and economic environment in which we operate. A prolonged period of economic decline could have a material adverse effect on our results of operations and financial condition and exacerbate the other risk factors we have described below.

The global financial crisis has had, and may continue to have, an impact on our business and financial condition. Additionally, a protracted global recession could have a material adverse effect on our operating income, cash flows and the trading price of our stock.

The dry bulk shipping industry is volatile and unpredictable. We have experienced added volatility in freight rates directly correlating to the current worldwide financial crisis. The worldwide financial crisis has reduced the availability of liquidity and credit to borrowers, which further restricted shipping rates. Corresponding with the decline in freight rates there has been a reduced demand for steel products, agricultural commodities, metal concentrates, and aggregates. Many lenders and institutional investors have reduced and, in some cases, ceased to provide funding to borrowers. This market turmoil and tightening of credit have led to a widespread reduction of business activity generally, which has adversely affected demand for our services. Shipping rates and demand for shipping services correspond directly with the demand and price for commodities. Due to the economic condition for commodities and in conjunction with the volatile prices for steel products, agricultural commodities, metal concentrates, and aggregates, demand for shipping services has also moderated.

These conditions continued into early 2009, and we cannot predict the ultimate severity or length of the current economic crisis, or the timing or severity of future economic or shipping downturns. Any continuing economic slowdown, including a recession in major geographic regions, could further reduce the demand for shipping services while decreasing freight rates and increasing our costs, which could have a material adverse effect on our results of operations and financial condition, including causing asset impairments, as well as a material adverse affect on our operating income, cash flows and the trading price of our stock. International efforts to address the current global economic crisis may be unsuccessful in preventing a global recession.

Moreover, our business is exposed to risks associated with the creditworthiness and stability of our suppliers, customers and business partners. The consequences of such adverse effects could include interruptions or delays in performance of our contracts, reductions, renegotiations and interruptions in customer contracts, delays in or the inability of customers to obtain financing to finance shipping, and bankruptcy of customers or other creditors. Any of these events may adversely affect our cash flow, profitability and financial condition. Further, a continued downturn in the economy and our revenues could adversely affect our ability to maintain specified financial ratios and satisfy financial covenants required by our credit facilities.

The current worldwide financial crisis has reduced the availability of liquidity and credit to fund or support the continuation and expansion of business operations worldwide. Continued disruption of the credit markets has affected and could continue to adversely affect our suppliers’ and customers’ access to credit, which supports the continuation and expansion of their businesses worldwide and could result in disruptions in our business operations, contract cancellations or suspensions and payment delays or defaults by our customers. If current market conditions continue for a protracted period, our ability to access credit on favorable terms, or at all, may be adversely affected, which may limit our ability to finance future operations or capital needs, acquire vessels or pursue business opportunities.

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Costs and revenues in the shipping industry are volatile.

The shipping industry historically has experienced volatility in freight rates, the cost of fuel oil, the cost and availability of crew, port charges and currency exchange rates, as well as in vessel charter rates and vessel values due to changes in the level and pattern of global economic activity and the highly competitive nature of the world shipping industry. During the first three quarters of 2008 shipping rates were at record high levels; however, in the fourth quarter shipping rates began to significantly decrease. We have experienced significant growth in recent years, particularly from the increase in freight rates. We do not expect to be able to maintain the same percentage of revenue growth in the future that we were able to produce during 2008.

Changes to marine regulatory regimes in the ports at which our vessels call also may increase our costs. Our revenue is influenced by a number of factors that are difficult to predict with certainty, including global and regional economic conditions, developments in international trade, changes in seaborne and other transportation patterns, weather patterns, port congestion, canal closures, political developments, and armed conflicts, acts of terrorism, embargoes, and strikes. Demand for our transportation services is influenced by the demand for the goods we ship, including fertilizers, metal concentrates, steel products, aggregates and agricultural commodities, which in turn is affected by general economic conditions, commodity prices and competition. Steel products, metal concentrates, agricultural commodities, and aggregates accounted for approximately 24.8%, 17.9%, 16.7%, and 13.3%, respectively, of our total voyage revenues in 2008. Beginning in the fourth quarter of 2008 and continuing in 2009 the worldwide economy has experienced a sluggish demand for steel products, metal concentrates, agricultural commodities, and aggregates. This moderating demand for product has translated into a decreased demand for shipping. A further decrease in demand for these products could adversely affect our results of operations.

Our business depends to a significant degree on the stability and growth of the Asian economies.

Any pronounced slowdown or decline in the Chinese economy could be expected to have significant adverse effects on the economies of Latin American and Asian countries and on the demand for our services, and could be expected to result in further declines in freight rates and in the value of our vessels. We expect that a significant decline in the Asian economies would have a materially adverse effect on our results of operations.

Freight rates for ocean transport, whether computed on a spot or period basis, are currently below average levels as compared to prior years, as are prices for secondhand vessels. The strength of the shipping industry in the past several years had been attributable, to a significant degree, to the rapid growth of the Chinese economy. Economic growth in China caused unprecedented demand for raw materials from Latin America, including iron ore, bauxite, soybeans, timber, zinc, manganese and copper. These raw materials generally are transported by ocean freight. The growth of the Chinese economy stimulated growth in other Asian economies as well. The increased demands for trans-Pacific ocean freight resulted in increased ocean shipping freight rates, charter rates and vessel values across the globe. A prolonged decline or further deterioration in the Chinese and Asian economies may have a material adverse effect on our operating income, financial condition, cash flows and the trading price of our stock.

High or volatile oil prices could adversely affect the global economy and our results of operations.

As oil prices continue to fluctuate and experience periods of prolonged volatility, the global economy could weaken significantly. A global recession or depression would significantly reduce the demand for ocean freight while our fuel costs could increase. A significant reduction in the demand for ocean freight would have a material and adverse impact on our results of operations and financial condition.

In the highly competitive international shipping market, we may not be able to compete with new entrants or established companies with greater resources.

We employ our vessels in highly competitive markets that are capital-intensive and highly fragmented. Competition arises primarily from other vessel owners, many of whom have substantially greater resources than we have. Competition for the transportation of cargo by sea is intense and depends on price, location, size, age, condition and the acceptability of the vessel and its operators. Due in part to the highly fragmented market, competitors with greater resources could enter our market and operate larger fleets through consolidation or acquisitions and may be able to offer lower rates and higher quality vessels than we are able to offer.

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Worldwide increases in shipping capacity may further reduce shipping rates, which could adversely affect our results of operations.

The worldwide supply of shipping capacity is influenced by the number of newbuilding deliveries, the scrapping of older vessels, vessel casualties and the number of vessels that are out of service. An excess in shipping capacity may result in a reduction of shipping rates, which may adversely affect the profitability of our shipping services.

The current recession is reducing the supply of ocean-going tonnage and eliminating the specter of overbuilding that previously cast its shadow over 2010 and 2011. This can be observed in the increased scrapping of vessels; an inordinate number of vessels placed in lay-up that will not be reactivated until freight rates materially increase; and the reduction in newbuildings. Additionally, there is a shortage of multipurpose tweendeckers with deadweight tonnage of 19,000 and larger. While excess shipping capacity is being addressed in response to current market conditions, it will continue to be an issue.

Failure to comply with international safety regulations could subject us to increased liability, adversely affect our insurance coverage and result in a denial of access to, or detention in, certain ports.

The operation of our vessels is affected by the requirements of the International Maritime Organization's International Safety Management Code for the Safe Operation of Ships and Pollution Prevention, or the ISM Code. The ISM Code requires shipowners and bareboat charterers to develop and maintain an extensive "Safety Management System" that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. Any failure to comply with the ISM Code could subject us to increased liability, could invalidate existing insurance or decrease available insurance coverage for the affected vessels and could result in a denial of, access to, or detention in certain ports, all of which could materially and adversely affect our results of operations and liquidity.

We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws.

The U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. Our policies mandate compliance with these laws. We operate in many parts of the world that have experienced governmental corruption to some degree and, in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices. Despite our training and compliance program, we cannot assure you that our internal control policies and procedures will always protect us from reckless or negligent acts committed by our employees or agents. Violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our business and operations.

Compliance with environmental and other laws and regulations could adversely affect our business.

Extensive and changing environmental protection and other laws and regulations directly affect the operation of our vessels. These laws and regulations take the form of international conventions and agreements, including the International Maritime Organization, or IMO, conventions and regulations and the International Convention for the Safety of Life at Sea, or SOLAS, which are applicable to all internationally trading vessels, and national, state and local laws and regulations, all of which are amended frequently. Under these laws and regulations, various governmental and quasi-governmental agencies and other regulatory authorities may require us to obtain permits, licenses and certificates in connection with our operations. Some countries in which we operate have laws that restrict the carriage of cargoes depending on the registry of a vessel, the nationality of its crew and prior and future ports of call, as well as other considerations relating to particular national interest. Changes in governmental regulations and safety or other equipment standards may require unbudgeted expenditures for alterations, special surveys, drydocking or the addition of new equipment for our vessels. Port authorities in various jurisdictions may demand that repairs be made before allowing a vessel to sail, even though that vessel may be certified as "in class" and in compliance with all relevant maritime conventions. Compliance with these laws and regulations may require significant expenditures, including expenses for ship modifications and changes in operating procedures or penalties for failure to comply with these laws and regulations, which could adversely affect our results of operations.

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Pursuant to regulations promulgated by the U.S. Coast Guard, responsible parties (as defined in such regulations) must establish and maintain evidence of financial responsibility. The P&I Associations, which historically provided shipowners and operators financial assurance, have refused to furnish evidence of insurance to responsible parties, and therefore responsible parties have obtained financial assurance from other sources at additional cost, including evidence of surety bond, guaranty or by self-insurance. Any inability on our part to continue to comply with these Coast Guard regulations would have a material adverse effect on our results of operations.

Port State authorities in general and in certain jurisdictions in particular have become more active in inspecting older vessels visiting their ports and, in certain instances, demanding that repairs be made before allowing a vessel to sail, even though that vessel may be fully insured, in class and in compliance with all relevant maritime conventions including SOLAS. Vessels under certain flags are more likely to be subject to inspections by the Coast Guard. Additional expenses may be incurred for unscheduled repairs mandated by port state authorities.

The IMO has adopted regulations that are designed to reduce oil pollution in international waters. In complying with U.S. Oil Pollution Act of 1990, or OPA 90 and IMO regulations and other regulations that may be adopted, shipowners and operators may be forced to incur additional costs in meeting new maintenance and inspection requirements, in developing contingency arrangements for potential spills and in obtaining insurance coverage. Additional laws and regulations may be adopted that could have a material adverse effect on our results of operations. In the United States and in other countries where we operate, we are subject to various federal, state or local environmental laws, ordinances and regulations and may be required to clean up environmental contamination resulting from a discharge of oil or hazardous substances, such as a discharge of fuel. We also may be held liable to a governmental entity or to third parties in connection with the contamination. These laws typically impose cleanup responsibility. Liability under these laws has been interpreted to be strict, joint and several, and subject to very limited statutory defenses. The costs of investigation, remediation or removal of such substances and damages resulting from such releases could be substantial and could adversely affect our results of operations.

The shipping industry has inherent operational risks, which may not be adequately covered by insurance.

The operation of any ocean going vessel carries with it an inherent risk of marine disaster, environmental mishaps and collision or property losses. In the course of operating a vessel, marine disasters such as oil spills and other environmental mishaps, cargo loss or damage, business interruption due to political developments, labor disputes, strikes and adverse weather conditions could result in loss of revenues, increased liabilities or costs. We transport bulk cargoes such as fertilizer, salt and coal which, if not transported properly, could pose a risk to our vessels and to the environment. We cannot assure you that any insurance we maintain would be sufficient to cover the cost of damages or the loss of income resulting from a vessel being removed from operation or that any insurance claims would be paid or that insurance will be obtainable at reasonable rates in the future. Any significant loss or liability for which we are not insured, or for which our insurers fail to pay us, could have a material adverse effect on our financial condition. In addition, the loss of a vessel would adversely affect our cash flows and results of operations.

Risk associated with the shipping industry could affect our business and reputation, which could adversely affect our results of operations and share price.

As mentioned above, the operation of ocean going vessels carries inherent risk of marine disaster and environmental mishap. The involvement of our vessels in a marine disaster or an environmental mishap will harm our reputation as a safe and reliable vessel owner and operator, could have a material adverse effect on our financial condition and results of operations and could adversely affect our share price.

Marine claimants could arrest our vessels, which could damage our on-time performance reputation and result in a loss of cash flow.

Under general maritime law in many jurisdictions, crew members, tort claimants, claimants for breach of certain maritime contracts, vessel mortgagors, suppliers of fuel, materials, goods and services to a vessel and shippers and consignees of cargo may be entitled to a maritime lien against that vessel for unsatisfied debts, claims or damages. In many circumstances, a maritime lien holder may bring an action to enforce its lien by "arresting" a vessel. In some jurisdictions, under the "sister ship" theory of liability, a claimant may arrest not only the vessel subject to the claimant's maritime lien, but also any "associated" vessel owned or controlled by the legal or beneficial owner of that vessel. The arrest of one or more of our vessels could result in a loss of cash flow or require us to pay substantial amounts to have the arrest lifted. Any interruption in our sailing schedule and our on-time performance could adversely affect our customer relationships.

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Governments could requisition our vessels during a period of war or emergency, resulting in a loss of earnings.

A government could requisition one or more of our vessels for title or for hire. Requisition for title occurs when a government takes control of a vessel and becomes its owner, while requisition for hire occurs when a government takes control of a vessel and effectively becomes its charterer at dictated charter rates. Generally, requisitions occur during periods of war or emergency, although governments may elect to requisition vessels in other circumstances. Although we would be entitled to compensation in the event of a requisition of one or more of our vessels, the amount and timing of payment would be uncertain. Government requisition of one or more of our vessels could have a material adverse effect on our cash flows and results of operations.

Risks Factors Relating to Our Business

Our competitive advantage in niche markets may be eliminated.

Our fleet primarily consists of vessels suited to niche markets not efficiently served by container ships or large dry bulk vessels. If the markets in which we successfully compete upgrade their port infrastructure to accommodate larger vessels, or if the volume of cargo shipped from these markets increases sufficiently, container ships or large dry bulk vessels would be able to serve these markets more efficiently. Because operators of container ships and large dry bulk vessels have significantly lower costs per cargo ton than we do, their entry into our markets could result in increased price competition and affect our ability to maintain our rates. Our future operating results could be adversely affected if we are unable to identify and efficiently serve new niche markets in the face of more effective competition in our current markets.

We depend upon a limited number of customers for a large part of our revenue.

Our top ten customers by revenue, accounted for, in the aggregate, 45.5% of our total 2008 consolidated revenue. We have Contracts of Affreightment with several of these customers. None of the customers accounted for more than 10% of revenue except for Dangote Industries Limited. The loss of any of these customers or a significant reduction in the amount of cargoes shipped using our vessels, including reductions or delays due to customer temporary stoppage, could adversely affect our results of operations.

As our fleet ages, the risks associated with older vessels could adversely affect our operations.

In general, the costs to maintain an ocean going vessel in good operating condition increase with the age of the vessel. As of December 31, 2008, the average age of the 47 vessels in our controlled fleet was 21 years. We estimate that the economic useful life of most multipurpose tweendeckers and handymax bulk carriers is approximately 30 years, depending on market conditions, the type of cargo being carried and the level of maintenance. Some of our dry bulk carriers are used to transport products such as coal, salt or fertilizer that may damage our vessels and reduce their useful lives, if we do not follow specified maintenance and cleaning routines. Older vessels may develop unexpected mechanical and operational problems despite adherence to regular survey schedules and proper maintenance. Due to improvements in engine technology, older vessels typically are less fuel-efficient than more recently constructed vessels. Cargo insurance rates increase with the age of a vessel. Governmental regulations and safety or other equipment standards related to the age of vessels may require expenditures for alterations or the addition of new equipment, to our vessels and may restrict the type of activities in which our vessels may engage. We cannot assure you that we will be able to operate our vessels profitably during the remainder of their projected useful lives or that we will be able to sell them profitably when we no longer can utilize them in our fleet.

Our vessel expenses are primarily inelastic, and any unexpected decrease in revenue would harm us.

Generally vessel expenses, such as fuel, lube oil, crew wages, insurance, bunkers, stores, repairs and maintenance do not vary significantly with the amount of cargo carried. As a result, a change in the tons of cargo carried or a decrease in freight rates would have a disproportionate effect on our operating and financial results. Any pronounced slowdown or decline in demand for shipping may require us to run voyages at less than full capacity in an effort to maintain all of our shipping routes. Our inability to fully book a ship would reduce revenue on each voyage while the vessel and voyage costs would remain fairly constant. We do not have long-term contracts with our customers and if we are unable to fully book our vessels, we may operate voyages at a loss. Additionally, we could be affected by factors beyond our control such as irrational pricing from the market. Accordingly our profitability and liquidity would be adversely affected.

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We may be required to record a significant charge to earnings if our long-lived assets or goodwill becomes impaired.

We are required to review long-lived assets for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Management performs impairment analyses when certain triggering events occur. Factors that would indicate potential impairment may include, but are not limited to, a significant decrease in the market value of the long-lived asset, a significant change in the long-lived asset’s physical condition, and operating or cash flow losses associated with the use of the long-lived asset. We may be required to record a significant charge to earnings in our financial statements during the period in which any impairment of our long-lived assets is determined.

Goodwill is required to be tested for impairment at least annually or when events or changes in circumstances indicate the carrying value may not be recoverable. Factors that may be considered a change in circumstances indicating that the carrying value of goodwill may not be recoverable include a decline in stock price and market capitalization, or other materially adverse events. We may be required to record a significant charge to earnings in our financial statements during the period in which any impairment of our goodwill is determined. This may adversely impact our results of operations. As of December 31, 2008, our goodwill was $8.4 million.

We are subject to regulation and liability under environmental laws that could require significant expenditures and adversely affect our financial condition, results of operations and cash flows.

Our business and the operation of our vessels are materially affected by government regulation in the form of international conventions, national, state and local laws and regulations in force in the jurisdictions in which the vessels operate, as well as in the country or countries of their registration. Because such conventions, laws, and regulations are often revised, we may not be able to predict the ultimate cost of complying with such conventions, laws and regulations or the impact thereof on the resale prices or useful lives of our vessels. Additional conventions, laws and regulations may be adopted, which could limit our ability to do business, cause us to incur the costs of retrofitting our vessels or result in financial penalties, thereby adversely affecting our financial condition, results of operations and cash flows.

We also are affected by the recently adopted requirements of the ISM Code. The ISM Code mandates an extensive "Safety Management System" that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for operating vessels safely and describing procedures for dealing with emergencies. Noncompliance with the ISM Code may subject shipowners or bareboat charterers to increased liability, may lead to decreases in available insurance coverage for affected vessels and may result in the denial of access to, or detention in, certain ports. Our owned vessels and Roymar, the technical manager for our vessels, are ISM Code certified. However, we cannot assure you that such certification will be maintained indefinitely.

We are required by various governmental and quasi-governmental agencies and other regulatory authorities to obtain permits, licenses and certificates in connection with our operations. Some countries in which we operate, have laws that restrict the carriage of cargoes depending on the registry of a vessel, the nationality of its crew and prior and future ports of call, as well as other considerations relating to particular national interest. We cannot assure you that any failure to comply with these requirements would not have a material adverse effect on our results of operations.

Vessel drydockings could adversely affect our operations.

We anticipate that we will have an average of approximately 19 vessels per year being drydocked, based on our current controlled fleet of 47 vessels and the requirement to drydock each vessel twice during a five-year cycle. During 2009, we expect to drydock 22 vessels, including one vessel which entered drydock in December 2008. In addition, we will need to reposition our vessels or charter-in outside vessels to accommodate our drydocking schedule and business needs. Approximately 25 of our vessels regularly trade in the Atlantic and Middle East region; consequently, drydocking our vessels in Chinese shipyards requires complex logistics planning. We are investigating having the drydockings done at shipyards closer to where some of our vessels trade. The loss of earnings while the vessel is being drydocked, as well as the repositioning of our vessels in response to the drydocking and the actual costs of the drydocking and possible charter-in expense in response to the drydocking, could have a material adverse effect on our cash flows and results of operations.

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Our vessels may suffer damage and we may need to unexpectedly drydock a vessel, which could adversely affect our operations.

If a vessel suffers damage, it may need to be repaired at a drydocking facility. The costs of drydock repairs are unpredictable and can be substantial. The loss of earnings while the vessel is being repaired and the repositioning of our vessels in response to the unexpected drydocking, as well as the actual costs of the repairs, could have a material adverse effect on our cash flows and results of operations. We may not have insurance that is sufficient to cover all of these costs or losses.

Construction delays or mechanical faults could affect our ability to replace aging vessels or grow our vessel fleet.

We depend on China Communications Construction Company and Nantong Yahua Shipbuilding Co. to construct and deliver the new multipurpose tweendeckers that we contracted to purchase on a timely basis and in good working order. The complicated nature of building these kinds of vessels involves risks. Delays or mechanical faults in vessel construction may affect our ability to increase cargo volumes on key routes or to win new customers and could necessitate unscheduled drydocks and repairs of vessels. Shipyard insolvency and other industrial actions could also delay or indefinitely postpone the timely delivery of new vessels. Construction delays or mechanical faults in new vessels could have a material adverse effect on our ability to replace aging vessels, our ability to grow our vessel fleet, our cash flows and our results of operations.

There are risks associated with the operation of secondhand vessels.

Part of our previous business strategy involved growing our fleet through the purchase of secondhand vessels. Current economic conditions and the current decline in demand for shipping services have caused us to reevaluate acquiring secondhand vessels. Pending any dramatic change in global economic conditions we have decided to suspend any further acquisitions of secondhand vessels. Secondhand vessels generally carry no warranties from the sellers or manufacturers. Although we inspected secondhand vessels prior to purchase, an inspection normally would not provide us with the same knowledge about their condition that we would have if they had been built for and operated exclusively by us. Secondhand vessels may have conditions or defects that we were not aware of when we bought the vessel and that may require us to undertake costly repairs. These repairs may require us to put a vessel into drydock, which would reduce our fleet utilization. The costs of drydock repairs are unpredictable and can be substantial. The loss of earnings while our vessels were being repaired and repositioned, as well as the actual cost of those repairs, would decrease our income from operations. We may not have insurance that is sufficient to cover all of these costs or losses and may have to pay drydocking costs not covered by our insurance. Our future operating results could be adversely affected if some of the secondhand vessels do not perform as we expect.

The market value of vessels can and does fluctuate significantly.

The shipping industry historically has experienced volatility in vessel valuations. The market value of vessels is highly volatile and will continue to fluctuate depending on economic and market conditions affecting the shipping industry and prevailing charter hire rates, vessel supply and rates of vessel scrapping, competition from other shipping companies and other modes of transportation, types, sizes and age of vessels, applicable governmental regulations and the cost of newbuildings. The market price for secondhand vessels during the past few years had been at all-time highs, and we paid accordingly to acquire vessels. The declining market prices of secondhand vessels, which began in late 2008, has continued into 2009, and may continue to decline. As shipping rates began to fall, the corresponding values for dry bulk and multipurpose vessels also began to fall. If the market value of our fleet declines, we may not be able to obtain additional financing or incur debt on terms that are acceptable to us or at all in connection with future vessel acquisitions or obtain additional debt financing for other purposes. A sharp decline in the value of our fleet could cause us to breach some of the covenants contained in the financing agreements relating to our current indebtedness. If we breach such covenants and we are unable to remedy the relevant breach, our lenders could accelerate our debt and foreclose on our controlled fleet. If the book value of our fleet is impaired due to unfavorable market conditions or a vessel is sold at a price below its book value, that decline would result in a loss that would adversely affect our operating results. A further decrease in the value of our fleet could result in the following: our income statement would include an impairment loss in income from continuing operations for the reduction of value of the assets; net income would be lower; long-term assets on our balance sheet would be reduced by the amount of the impairment; stockholders' equity would be reduced as a result of the impairment loss included in the income statement; our debt-to-equity ratio would be higher because stockholders' equity would be reduced; our debt-to-assets ratio would be higher; and our net interest could be higher if we are in violation of our loan-to-value ratio required by our loan covenants.

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We may not be able to grow our vessel fleet or effectively manage our growth.

A principal focus of our strategy is to continue to grow by increasing the number of vessels in our fleet and by taking advantage of changing market conditions, which may include increasing the frequency of service on routes we already operate or adding new routes and expanding into other regions. Our future growth will depend upon a number of factors, some of which we or our affiliated service company, TBS Commercial Group and Beacon, can control and some of which we, TBS Commercial Group or Beacon cannot control. These factors include our ability to:

·	identify vessels for acquisitions;
·	integrate any acquired vessels successfully with our existing operations;
·	hire, train and retain qualified personnel to manage and operate our growing business and fleet;
·	identify additional new markets and trade routes;
·	recruit, train and retain the port captains and other local staff required for our affiliated service companies to provide the necessary level of service in any new or expanded markets;
·	improve our operating and financial systems and controls; and
·	obtain required financing for our existing and new operations on acceptable terms.

The failure to effectively identify, purchase, develop and integrate any newly acquired vessels could adversely affect our business, financial condition and results of operations. Our current operating and financial systems may not be adequate as we expand the size of our fleet and our attempts to improve those systems may be ineffective. In addition, as we expand our fleet, our service companies will need to hire suitable additional management and administrative personnel and our affiliated service companies will need to recruit and train port captains and other local staff necessary to meet the needs of our growing business. We cannot assure you that we will be able to hire suitable employees as we expand our business. If our operating and financial systems are not effective or if we or our affiliated service companies cannot recruit and retain suitable employees as we grow, our future operations could be adversely affected.

We may be unable to pass along increased fuel costs to our customers.

A majority of our revenue is derived from freight voyages for which we bear the fuel expense, in contrast to charters, for which the charterer bears the fuel expense. Fuel expense represented approximately 51% of our voyage expense for the year ended December 31, 2008, compared to approximately 44% in the full year 2007 and 46% in the full year 2006. If we are unable to pass along increased fuel costs to our customers, high oil prices could adversely affect our results of operations.

Shortages of qualified crews, engineers and vessel captains could adversely affect our business.

Newbuilding programs, including our own, have increased the demand for qualified crew, engineers and vessel captains to work on our vessels, and stringent certification standards required by national and international regulations, such as "Standards of Training, Certification and Watchkeeping for Seafarers" promulgated by the IMO, make it difficult to recruit qualified crewmembers. We use three unaffiliated manning agents, Aboitiz Jebsen Bulk Transport Corp., Intermodal Shipping, Inc., and Magsaysay Maritime Corp. to provide Filipino officers and non-officers to crew our vessels. If we are unable to recruit and retain enough crew, engineers or vessel captains with the appropriate skills, we may be unable to satisfy any increased demand for our shipping services, which could have an adverse effect on our business, financial condition and results of operations.

Rising crew costs may adversely affect our results of operations.

Crew costs are a significant operating expense for our operations. Crewing costs have increased as wage levels have increased in non-U.S. markets and may continue to increase. The cost of employing suitable crew is unpredictable and fluctuates based on events outside our control, including the supply and demand for crew and the wages paid by other shipping companies. Any increase in crew costs may adversely affect our profitability.

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We may have to pay tax on U.S. source income, which would reduce our earnings.

Under the U.S. Internal Revenue Code, as amended, or the Code, 50% of the gross shipping income of a corporation that owns or charters vessels, that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States is characterized as U.S. source shipping income. Our U.S. source shipping income will be subject to either a 4% U.S. federal income tax without allowance for any deductions or to a net basis tax, unless an exemption is available.

We currently qualify for exemption under Section 883 of the Code, because International and its subsidiaries currently are incorporated in jurisdictions that satisfy the country of organization requirement and we satisfy the publicly traded test by virtue of International’s Class A common shares being primarily traded on the NASDAQ Global Select Market. Further, the aggregate ownership of all non-qualified 5% shareholders is less than 50% of the total value of the Class A common shares. If at any time we fail to satisfy the publicly traded test and we were unable to qualify for another applicable exemption, our U.S. source shipping income would be subject to U.S. federal income tax, either under the gross tax or net tax regime, each of which is described above.

Our ability to continue to qualify for the exemption depends on circumstances related to the ownership of our common shares that are beyond our control and on interpretations of existing regulations of the U.S. Treasury Department. In particular, if 50% or more of our Class A common shares are held by one or more non-qualified U.S. shareholders, each of whom owns 5% or more of the shares, the exemption would not be available. At December 31, 2008, non-qualified U.S. shareholders who own 5% or more of our shares owned an aggregate of 20.4% of our Class A common shares. We cannot assure you that we will qualify for exemption under Section 883 in the future.

Changes in the Code, the Treasury regulations or the interpretation thereof by the Internal Revenue Service or the courts could also adversely affect our ability to take advantage of the exemption under Section 883.

We may be treated as a passive foreign investment company in the future, which would result in adverse tax consequences to holders of our Class A common shares.

Based upon the nature of our current and projected income, assets and activities, we do not believe that we are, and we do not expect the Class A common shares to be considered shares of, a passive foreign investment company, or PFIC, for U.S. federal income tax purposes. However, the determination of whether the Class A common shares constitute shares of a PFIC is a factual determination made annually, and we cannot assure you that we will not be considered a PFIC in the future. If we are treated as a PFIC, a holder of our Class A common shares would be subject to special rules with respect to any gain realized on the sale or other disposition of the Class A common shares and any "excess distribution" by us to the holder (generally, any distribution during a taxable year in which distributions to the holder on the Class A common shares exceed 125% of the average annual taxable distribution the holder received on the Class A common shares during the preceding three taxable years or, if shorter, the holder’s holding period for the Class A common shares). Under those rules, the gain or excess distribution would be allocated ratably over the holder’s holding period for the Class A common shares, the amount allocated to the taxable year in which the gain or excess distribution is realized and to taxable years before the first day we became a PFIC would be taxable as ordinary income, the amount allocated to each other year (with certain exceptions) would be subject to tax at the highest tax rate in effect for that year, and the interest charge generally applicable to underpayments of tax would be imposed in respect of the tax attributable to each such year.

The majority of our revenue is derived from operations outside the United States and may be adversely affected by actions taken by foreign governments or other forces or events over which we have no control.

We derive a significant portion of our voyage revenue from operations in Latin America, Asia, Africa and the Middle East. Our profitability will be affected by changing economic, political and social conditions in these regions. In particular, our operations may be affected by war, terrorism, piracy, expropriation of vessels, the imposition of taxes, increased regulation or other circumstances, any of which could reduce our profitability, impair our assets or cause us to curtail our operations. The economies of the Latin American countries where we conduct operations have been volatile and subject to prolonged, repeated downturns, recessions and depressions. Adverse economic or political developments or conflicts in these countries could have a material adverse effect on our operations.

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We have experienced losses and filed for bankruptcy in 2000.

We have incurred net losses in 2002 and 2003 and filed for bankruptcy in 2000. Our ability to generate net income is influenced by a number of factors that are difficult to predict, including changes in global and regional economic conditions and international trade. For example, the losses and bankruptcy in 2000 were attributable in part to the acute decline in the Asian and South American economies in 1998 and 1999. Future losses may prevent us from implementing our growth strategies.

Foreign currency exchange rates may adversely affect our results.

We are exposed to a variety of market risks, including the effects of changes in foreign currency exchange rates. We incur approximately 9% of our operating expenses in currencies other than U.S. dollars. At December 31, 2008, approximately 12% of our outstanding accounts payable were denominated in currencies other than U.S. dollars. Therefore, when the U.S. dollar weakens in relation to the currencies of the countries where we incur expenses, our U.S. dollar reported expenses increase and our income will decrease. Changes in the relative values of currencies occur from time to time and may, in some instances, have a significant effect on our operating results.

Risk Factors Related to Our Financings

Our indebtedness could affect our ability to provide strong results to the holders of our Class A common shares.

Our indebtedness could have important consequences to investors, including:

·	Increasing our vulnerability to general adverse economic and industry conditions by making it more difficult for us to react quickly to changing conditions;

·	Our level of debt may limit our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions and other general corporate requirements;

·	We may be required to use a substantial portion of our cash flow from operations for the payment of interest on our debt which would reduce our ability to use our cash flow to fund working capital, capital expenditures, acquisitions and general corporate requirements;

·	While most of our debt is covered under swap agreements, we do have some exposure to risks inherent in interest rate fluctuations because some of our borrowings are at variable rates of interest, which could result in a higher interest expense in the event of increases in interest rates;

·	Our current debt could limit our flexibility in planning for, or reacting to, changes in our business, and the industry in which we operate;

·	Our banks could demand mandatory prepayment or delivery of additional security in the event that the fair market value of the vessels falls below limits specified in the loan agreement; and

·	We could be at a competitive disadvantage compared with our competitors that have less indebtedness.

Our credit facilities require us to maintain specified financial ratios and satisfy financial covenants.

We may be required to take action to reduce our debt or to act in a manner contrary to our business objectives to meet these ratios and satisfy these covenants. Events beyond our control, including changes in the economic and business conditions in the markets in which we operate, may affect our ability to comply with these covenants. We cannot assure you that we will meet these ratios or satisfy these covenants or that our lenders will waive any failure to do so. A breach of any of the covenants or our inability to maintain the required financial ratios under our credit facilities would result in a default. If a default occurs under any of our credit facilities, the lender could elect to declare that debt, together with accrued interest and other fees, to be immediately due and payable and proceed against the collateral securing that debt, which constitutes all or substantially all of our assets. Moreover, any acceleration of the debt outstanding under the credit facilities or other agreements upon a declaration of default could result in a default under our other credit facilities. Based on current internal projections we anticipate that we will not meet the covenant requirements in 2010. At that time the Company will need to obtain additional waivers, modify the terms of the existing credit facilities or refinance our debt.

If we default under any of our loan agreements, we could forfeit our rights in our vessels and their charters.

We have pledged all of our vessels as security to the lenders under our loan agreements. Default under any of these loan agreements, if not waived or modified, would permit the lenders to foreclose on the mortgages over the vessels, and we could lose our rights in the vessels and their charters.

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Our credit facilities currently impose, and it is possible that any additional debt incurred could impose, significant operating and financial restrictions on us.

The indenture governing our asset-based revolving credit facility debt does, and in future agreements may, contain covenants that could limit our ability to finance our future operations or capital needs, make acquisitions or pursue available business opportunities.

Our credit facilities restrict, among other things, our ability to:

·	create certain liens;

·	create, incur or assume additional indebtedness;

·	make or hold certain investments;

·	merge, dissolve, liquidate consolidate or dispose of all or substantially all of our assets;

·	declare or pay dividends or make other distributions;

·	purchase, redeem, or retire any capital stock or other equity interest or return any capital;

·	materially change our business;

·	engage in transactions with affiliates;

·	enter into burdensome agreements; and

·	make capital expenditures without consent of the lender; and

In addition our credit facilities require us to:

·	maintain certain fixed charge and leverage ratios

·	maintain tangible net worth within defined limits

·	maintain minimum cash and cash equivalent balances and collateral coverage; and

·	make mandatory prepayment or deliver additional security that is required in the event that the fair market value of the vessels falls below limits specified in the loan agreement.

As a result of the current economic conditions and their impact on the shipping industry, and specifically the market value of vessels, we initiated discussions with all lenders of our credit facilities to obtain a waiver of the collateral coverage requirements and other financial covenants such as leverage, fixed interest coverage ratios and minimum net worth and cash balance requirements. During March 2009, the credit facilities were modified to waive the collateral coverage and all financial covenants through the fourth quarter of 2009, provided that we meet two additional covenants. The loan modifications introduced the requirement that the Company have an earnings before interest, depreciation and amortization to interest expense ratio of not less than 1.10 to 1.00, 1.35 to 1.00 and 1.75 to 1.00 at the end of the second, third and fourth quarters of 2009, respectively, and minimum end of month cash balance of not less than $40.0 million. In connection with the modification of the Bank of America credit facility, the amount available under the Bank of America Revolving Credit Facility was reduced from $125.0 million to $85.0 million. The interest rate margins on the Bank of America, The Royal Bank of Scotland, DVB Group Merchant Bank and AIG Commercial Equipment Finance, Inc credit facilities increased 1.75%. The interest rate margins on the Credit Suisse and the Commerzbank AG credit facilities increased 1.70% and 1.50%, respectively. The interest rate margins on the, Joh. Berenberg, Gossler & Co. KG credit facility did not change. The repayment term of each of the loans made under The Royal Bank of Scotland Credit Facility were modified from 40 quarterly installments after the drawdown of the respective delivery advance to 20 quarterly installments. The quarterly installments of $0.4 million due on each of the loans remained the same; however, the final payment due when the last quarterly payment is made increased from $8.3 million to $16.6 million. In connection with the loan modifications the Company incurred financing costs of $3.0 million.

If the requirements under the modified credit facilities are met, the lenders have agreed to waive existing financial covenants. Effective January 2, 2010 the original financial covenants will be reinstated. A protracted global recession, including further deterioration in general economic and business conditions, may affect the Company’s ability to meet those reinstated covenants. Failure to comply with any of the covenants under the credit facilities would result in a default. This could cause the lenders to accelerate the timing of payments and exercise their lien on essentially all of our assets, which would have a material adverse effect on our business, operations, financial condition and liquidity. Based on current internal projections we anticipate that we will not meet the covenant requirements in 2010. At that time the Company will need to obtain additional waivers or modify the terms of the existing credit facilities. The Company believes that it has sufficient liquidity to meet its needs over the next twelve months from December 31, 2008 based on its cash balance at December 31, 2008 of $131.2 million, the measures management is taking to manage the business during the global financial crisis, and operating cash flows.

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Despite current indebtedness levels, we may incur more indebtedness. This could further exacerbate the risks associated with our debt.

Based on our current commitment to our newbuilds and our secured credit facility with The Royal Bank of Scotland ("RBS"), we expect to draw down an additional $50 million during 2009 and $25 million in 2010 when specific milestones are met. Due to current market conditions we do not expect to draw down further on our revolving line of credit. Subject to specified financial and non-financial covenants limitations, the credit facility permits us to incur additional $10 million of borrowings based on market valuations of the vessels.

We will require a significant amount of cash, and our ability to generate sufficient cash depends upon many factors, some of which are beyond our control.

Our ability to make payments on and refinance our indebtedness, and to fund working capital needs and planned capital expenditures depends on our ability to generate adequate cash flow in the future. To some extent, this is subject to general economic, financial, competitive, and regulatory factors and other factors that are beyond our control. For example, we need to drydock vessels and make constant upgrades to vessels which could increase our working capital needs. We cannot give assurance that our business will continue to generate cash flow from operations at current levels or that our cash needs will not increase. If we are unable to generate sufficient cash flow from operations in the future to service our indebtedness and meet our other needs, we may have to refinance all or a portion of our existing indebtedness, obtain additional financing, reduce expenditures that we deem necessary to do business. We cannot give assurance that any refinancing of this kind would be possible or that any additional financing could be obtained or could be obtained on commercially reasonable terms. The inability to obtain additional financing could have a material adverse effect on our financial condition and on our ability to meet our financing obligations.

Variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Certain portions of some of our borrowings, primarily our RBS loan, are, and are expected to continue to be, at variable rates of interest and expose us to interest rate risk. Most of our loans are hedged. However, if interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remains the same, and our net income would decrease. Pursuant to the indenture governing certain loans, we were required to enter into interest rate swaps, involving the exchange of floating for fixed rate interest payments, or other forms of derivative transactions, to reduce interest rate volatility.

Risks Factors Relating to Our Corporate Structure

International, the issuer of our common shares, is a holding company and depends on the ability of its subsidiaries to distribute funds to it in order to meet its financial obligations.

International, the issuer of our common shares, is a holding company with no significant assets other than the shares of capital stock of its subsidiaries that conduct all of its operations and own all of its vessels. International derives all of its cash flow from dividends and other payments from its subsidiaries, which in turn derive all of their cash flows from payments from their direct and indirect operations.

We have relied, and will continue to rely, to a significant degree upon affiliated service companies.

We have relied upon and continue to rely upon TBS Commercial Group, and Beacon affiliated service companies, for agency services that are critical to our business. See "Significant Related Party Transactions" under "Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Note 14 - Related Party Transactions" for additional information. TBS Commercial Group and Beacon employ sales and customer service professionals in more than ten countries who meet regularly with shippers and consignees to anticipate the needs and address the concerns of our customers. Our business, results of operations and liquidity may be materially adversely affected if we lose our relationship with TBS Commercial Group or Beacon, if they become unable to perform these services or if their key employees leave their respective companies.

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TBS Commercial Group is a privately held company, and there is little or no publicly available information about it.

The ability of TBS Commercial Group to continue providing critical services for our benefit will depend in part on its own financial strength. Circumstances beyond our control could impair its financial strength and, because TBS Commercial Group is privately held, it is unlikely that information about its financial strength would become public. As a result, an investor in our Class A common shares might have little advance warning of problems affecting TBS Commercial Group, even though these problems could have a material adverse effect on us.

The interests of our controlling shareholders could be adverse to your interests as a public shareholder.

The individuals who control us and TBS Commercial Group could use their controlling interests in us and in TBS Commercial Group to shift revenues and operating income from us to TBS Commercial Group, for their individual benefit and contrary to the interests of our public shareholders. For example, these individuals could cause us to pay above-market fees to TBS Commercial Group or permit TBS Commercial Group to take advantage of corporate opportunities. We cannot assure you that these potential conflicts of interest will be handled in the best interests of our public shareholders.

Agreements between us and our affiliated service company may be less favorable to us than agreements that we could obtain from unaffiliated third parties.

The individuals who control us and TBS Commercial Group have the ability, subject to the approval of the Compensation Committee of our Board of Directors, to amend the existing agreements to their benefit as owners of TBS Commercial Group and against the interests of our public shareholders. If that happens, our public shareholders may have difficulty enforcing their rights under Bermuda law. In addition, either party may terminate the agreements under which TBS Commercial Group provides these services to us.

Risk Factors Related to Our Common Shares

We are a Bermuda company, and it may be difficult for shareholders to enforce judgments against us or our directors and executive officers.

TBS International Limited is a Bermuda exempted company formed in 1997. As a result, the rights of holders of our common shares will be governed by Bermuda law and our memorandum of association and bye-laws. The rights of shareholders under Bermuda law may differ from the rights of shareholders of companies incorporated in other jurisdictions. A substantial portion of our assets are located outside the United States. As a result, it may be difficult for investors to enforce in the United States judgments obtained in U.S. courts against us based on the civil liability provisions of the U.S. securities laws. It is doubtful whether courts in Bermuda will enforce judgments obtained in other jurisdictions, including the U.S., against us or our directors or officers under the securities laws of those jurisdictions or entertain actions in Bermuda against us or our directors or officers under the securities laws of other jurisdictions.

Our bye-laws restrict shareholders from bringing legal action against our officers and directors.

Our bye-laws contain a broad waiver by our shareholders of any claim or right of action, both individually and on our behalf, against any of our officers or directors. The waiver applies to any action taken by an officer or director, or the failure of an officer or director to take any action, in the performance of his or her duties, except with respect to any matter involving any fraud or dishonesty on the part of the officer or director.

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We have anti-takeover provisions in our bye-laws that may discourage a change of control.

Our bye-laws contain provisions that could make it more difficult for a third party to acquire us without the consent of our Board of Directors. These provisions will provide for:

·	restrictions on the time period in which directors may be nominated,
·	our Board of Directors to determine the powers, preferences and rights of our preference shares and to issue the preference shares without shareholder approval, and
·	an affirmative vote of the holders of shares carrying at least 66% of the votes attaching to our issued and outstanding shares for certain "business combination" transactions that have not been approved by our Board of Directors.

These provisions could make it more difficult for a third party to acquire us, even if the third party's offer may be considered beneficial by many shareholders. As a result, shareholders may be limited in their ability to obtain a premium for their shares.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Our fleet is described in Item 1. Business - Fleet Overview. All of our vessels are mortgaged to secure our credit facilities.

At December 31, 2008 we leased two properties, which are used by TBSI’s service company subsidiaries, TBS Shipping Services and Roymar, for the administration of their operations. Our principal office, which is leased through our subsidiary TBS Shipping Services, is located in Yonkers, New York and is approximately 15,000 square feet. The office space is leased from our chairman and chief executive officer. Upon the expiration of the present lease which expired on December 31, 2008, we renegotiated our lease on January 5, 2009, to extend the lease term to December 31, 2009. The five one-year renewal options were extended one year to December 31, 2014. This was done to give TBS Shipping Services more flexibility in developing its long term facility plan. The lease provides for monthly rent of $20,000, plus operating expenses including real estate taxes. Through our subsidiary Roymar we lease approximately 12,520 square feet of office space located in Scarsdale, New York including an additional 2,000 square feet of space leased in July 2008 for approximately $5,000 per month. In November 2008 Roymar renewed and extended its lease term to November 30, 2010 at a monthly rent of approximately $27,000 plus an additional charge for real estate tax escalations.

We had leased undeveloped land in the Calhoun County Navigation District, Port Comfort, Texas. The lease had a term of ten years expiring December 31, 2016, and provided for monthly rent of $6,000. In May 2008 the lease was cancelled with no lease cancellation costs.

We believe that our facilities are generally adequate for current and anticipated future use.

Item 3. Legal Proceedings

We are periodically a defendant in cases involving personal injury, property damage claims and other matters that arise in the normal course of business. While any pending or threatened litigation has an element of uncertainty, we believe that the legal proceedings pending against us, individually or in the aggregate, will not materially adversely affect our consolidated financial position, results of operations or cash flows.

Item 4. Submission of Matters to a Vote of Security Holders

During the fourth quarter of 2008, no matters were submitted to a vote of security holders through the solicitation of proxies or otherwise.

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PART II

From the start of trading of our stock on June 24, 2005, the Company's Class A common shares traded on the NASDAQ Global Market (formerly the NASDAQ National Market) under the symbol "TBSI". The Company's Class B common shares are not publicly traded. We transferred the listing of our Class A common shares from the NASDAQ Global Market to the NASDAQ Global Select Market on October 11, 2007.

The following table sets forth for the periods indicated, the high and low prices for the common shares as reported on the NASDAQ Global Select Market beginning October 11, 2007 and as reported on the NASDAQ Global Market prior to October 11, 2007:

Year Ended December 31, 2008	HIGH			LOW
Fourth Quarter		$	13.23		$	3.62
Third Quarter		$	38.49		$	12.73
Second Quarter		$	59.11		$	31.89
First Quarter		$	39.82		$	20.19

Year Ended December 31, 2007	HIGH			LOW
Fourth Quarter		$	71.03		$	29.51
Third Quarter		$	44.49		$	27.71
Second Quarter		$	28.40		$	11.98
First Quarter		$	11.99		$	8.16

The graph and accompanying table below sets forth a comparison of the change in the cumulative total shareholder return on the Company's Class A common shares against the cumulative total return of the NASDAQ Composite Index, a broad-based market index, and the NASDAQ Transportation Index, a peer group of common stocks of companies in the transportation industry. The graph covers the period from the closing price on the date of our initial public offering (June 24, 2005) to the year end closing price from December 31, 2005, to December 31, 2008, assuming an initial investment of $100. Such returns are based on historical results and are not intended to suggest future performance.

	Cumulative Return Comparison
	June 24, 2005		December 31, 2005		December 31, 2006		December 31, 2007		December 31, 2008

TBS International Limited ("TBSI")		100.00		65.42		86.11		325.71		98.82
NASDAQ Transporation Index		100.00		117.70		124.67		129.06		90.98
NASDAQ Composite Index		100.00		107.21		117.42		128.94		76.67

As of March 13, 2009, there were 12,891 holders of record of our Class A common shares and 16 holders of record of our Class B common shares.

Dividend and Dividend Policy

We have not declared or paid and do not anticipate declaring or paying any cash dividends on our common shares in the foreseeable future. Because International is a holding company with no material assets other than the stock of its subsidiaries, its ability to pay dividends will depend on the earnings and cash flow of its subsidiaries and their ability to pay dividends to International. Provisions of our debt instruments and related loan agreements for our syndicated credit facilities allow the subsidiaries borrowing under the credit facilities to pay dividends to us but restrict us from declaring or making dividends or other distributions that would result in a default of the credit facility or exceed 50% of our prior year's consolidated net income. These restrictions may restrict International's ability to pay dividends on our common shares.

The timing and amount of future cash dividends, if any, would be determined by our Board of Directors and would depend upon our earnings, financial condition, cash requirements and obligations to lenders at the time. Pursuant to Bermuda law, we cannot declare or pay a dividend, or make a distribution out of contributed surplus, if after such a declaration, payment or distribution, there are reasonable grounds for believing that we are: a) unable to pay our liabilities as they become due, or b) that the realizable value of our assets would be less than the aggregate of our liabilities, our issued share capital and our share premium accounts.

Equity Compensation Plans

Information regarding our equity compensation plans as of December 31, 2008 is disclosed in "Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters" and in "Note 15 -- Stock Plans" to our consolidated financial statements.

The Company's Equity Incentive Plan permits stock grant recipients to elect a net settlement. In June 2008, an officer of the Company elected to receive on a net settlement basis 25,000 Class A common shares, from a previously issued stock grant which vested in June 2008. Under the terms of a net settlement, the Company retained a specified number of shares to cover the recipient's estimated statutory minimum tax liability. The retained shares are held in the Company's treasury ("Treasury Stock"). In the case of the officer's stock grant, 10,000 Class A common shares were retained as Treasury Stock. On December 31, 2008, there are 10,000 Treasury Stock shares held by the Company valued at $389,000.

The Bermuda Monetary Authority has classified us as a non-resident of Bermuda for exchange control purposes. Accordingly, there are no Bermuda exchange control restrictions on our ability to engage in transactions in currencies other than Bermuda dollars, to transfer funds in and out of Bermuda or to pay dividends to non-Bermuda residents who are shareholders, other than in Bermuda dollars. The Bermuda Monetary Authority has given its consent for the issue and free transferability of all of our common shares to and between non-residents of Bermuda for exchange control purposes and for the issue or transfer of up to 20% of our shares to persons resident in Bermuda, provided our shares remain listed on an appointed stock exchange. The issue and transfer of more than 20% of our shares involving any persons resident in Bermuda for exchange control purposes may require prior authorization from the Bermuda Monetary Authority. Approvals or permissions given by the Bermuda Monetary Authority do not constitute a guarantee by the Bermuda Monetary Authority as to our performance or our creditworthiness. Accordingly, in giving such consent or permissions, the Bermuda Monetary Authority shall not be liable for the financial soundness, performance or default of our business.

Under current law, no income, withholding or other taxes or stamp, registration or other duties are imposed in Bermuda upon the issue, transfer or sale of our shares, or payments made in respect of the shares. As of the date hereof, there is no Bermuda income or profits tax, withholding tax, capital gains tax, capital transfer tax, estate duty or inheritance tax payable in respect of capital gains realized on a disposition of securities issued by us or in respect of distribution by us with respect to our securities. There currently is no reciprocal tax treaty between Bermuda and the United States.

The selected historical consolidated financial data presented below should be read in conjunction with the consolidated financial statements and notes thereto and Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, included elsewhere in this Report.

			Year Ended December 31,
			2008			2007			2006			2005			2004
			(In thousands, except for share and per share amounts)
Revenue
	Voyage revenue (1)		$	518,907		$	261,509		$	187,147		$	173,881		$	156,442
	Time charter revenue			83,883			88,365			63,114			71,456			50,746
	Logistics revenue (2)			7,000			668
	Other revenue			1,843			2,379			1,460			979			267
Revenue				611,633			352,921			251,721			246,316			207,455

Operating expenses
	Voyage (1)			172,929			89,241			81,389			73,576			59,340
	Logistics (2)			5,717			557
	Vessel			110,354			85,958			63,205			68,711			77,145
	Depreciation of vessels
		and other fixed assets (3)		73,479			36,022			29,867			19,537			11,005
	Management fees												2,624			4,414
	General and administrative			39,879			38,703			27,256			17,618			7,347
	Loss (gain) from sale of vessels (4)						814			(2,180	)
	Operating expenses			402,358			251,295			199,537			182,066			159,251
Income from operations				209,275			101,626			52,184			64,250			48,204

Other (expenses) and income
	Interest expense			(17,228	)		(10,394	)		(11,577	)		(9,346	)		(5,148	)
	Interest and other income			2,048			983			1,810			752			111
	(Loss) on early extinguishment of debt (5)			(2,318	)					(3,357	)
	Gain on sale and insurance recovery of vessel (6)						6,034
		Total other (expenses) and income		(17,498	)		(3,377	)		(13,124	)		(8,594	)		(5,037	)

Net income				191,777			98,249			39,060			55,656			43,167

Amount allocated to participating preferred shareholders													(5,706	)		(11,843	)
Net income available for common shareholders			$	191,777		$	98,249		$	39,060		$	49,950		$	31,324


Net income per common share
	Basic		$	6.55		$	3.51		$	1.40		$	2.28		$	3.07
	Diluted		$	6.54		$	3.50		$	1.39		$	2.05		$	1.54
Weighted average common shares outstanding
	Basic (7)			29,263,292			28,029,340			27,998,843			21,870,160			10,187,795
	Diluted (7) (8)			29,316,132			28,066,736			28,088,310			24,310,909			20,385,775

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	December 31,
	2008		2007		2006			2005			2004
	(In thousands)
Balance Sheet Data:
Cash and cash equivalents	$	131,150	$	30,498	$	12,007		$	27,158		$	21,674
Working capital		104,311		1,744		(3,816	)		(866	)		10,831
Total Assets		1,041,685		559,113		403,091			344,671			159,929
Total Debt		383,074		180,166		125,804			105,737			38,511
Obligations under capital leases, including
current portion						21,355			24,703			34,642
Total shareholders' equity		598,296		319,563		223,604			184,207			65,996

	Year Ended December 31,
	2008		2007		2006			2005			2004
Other Operating Data:
Controlled vessels (at end of period) (9)		47		36		34			31			18
Chartered vessels (at end of period) (10)				1		1			6			10
Voyage Days (11)		14,904		11,868		12,119			10,885			8,892
Vessel days (12)		16,337		13,236		12,701			11,264			9,138
Tons of cargo shipped (in thousands)		9,315		6,621		4,368			3,170			3,658
Revenue per ton (13)	$	55.70	$	39.49	$	42.85		$	54.85		$	42.77
Tons of cargo shipped, excluding
aggregates (in thousands) (14)		5,109		3,447		3,227			3,092			2,837
Revenue per ton, excluding
aggregates (13) (14)	$	88.08	$	68.79	$	54.67		$	56.02		$	52.31
Chartered -out days		3,004		3,659		4,301			4,257			2,780
Chartered -out rate per day	$	27,924	$	24,150	$	14,674		$	16,785		$	18,254

(1)

To conform to the 2008 presentation, we revised our Statement of Operations for 2007, 2006, 2005, and 2004 for despatch, which were included in voyage expense, to voyage revenue. This revision did not impact net income. Despatch of $2,684, $1,865, $1,715, and $1,352 were changed from voyage expense to voyage revenue for 2007, 2006, 2005, and 2004 respectively.

(2)	TBS Logistics represents revenue and related costs for cargo and transportation management services as part of our Five Star Service to customers which began operations in the fourth quarter 2007.

(3)

Depreciation and amortization expense through December 31, 2004 was computed on the basis of 25-year useful lives for our vessels. Beginning on January 1, 2005 we changed the estimated useful life of our vessels to 30-years. The change in estimated useful life reflects our expected commercial life of a vessel. The impact of this change in estimate for 2004 would have been a decrease in depreciation expense and consequently an increase in net income of $4.8 million. As a result, basic earnings per share would have increased by $0.47 and diluted earnings per share would have increased by $0.24 per share for the year ended December 31, 2004.

(4)	The 2007 and 2006 loss (gain) on sale of vessels represents the loss on the sale of the Maya Princess of $0.8 million and gain on the sale of the Dakota Belle, of $2.2 million.

(5)

In 2008 the loss on extinguishment of debt represents the write off of unamortized deferred finance costs in connection with the March 2008 refinancing of the Bank of America syndicated credit facility. In 2006 the loss on early extinguishment of debt represents the write-off of unamortized debt finance costs of $1.3 million and the payment of loan prepayment fees of $2.1 million when we repaid most of our then existing credit facilities in July 2006 with our $140.0 million syndicated credit facility.

(6)

For the year ended December 31, 2007, we had a gain on the sale and insurance recovery of the Huron Maiden. The vessel was severely damaged in a grounding accident on an uncharted rock while on passage near Indonesia on March 9, 2007. On April 4, 2007, the vessel was declared a constructive total loss. Accordingly, we received a net amount of $8.0 million from our Hull & Machinery/Increased Value insurances after a scrap value credit of $2.0 million. We retained the proceeds on the sale of the vessel for scrap, which was sold and delivered to the buyer on May 4, 2007 for $2.8 million. After expenses in connection with the accident and the sale of the vessel of approximately $1.2 million we realized a gain on the casualty and sale of the vessel of approximately $6.0 million.

(7)

Basic and diluted weighted average common shares for 2004 reflect the 2.5 to 1 adjustment for the consolidation and redesignation of common shares made June 29, 2005. During the year ended December 31, 2005, the convertible preference shares would have added 2,498,103 common shares on a weighted average basis, respectively, to diluted shares outstanding. These shares were not included in the diluted earnings per share calculation because the effect would have been anti-dilutive.

(8)

Diluted weighted average common shares outstanding for 2008, 2007 and 2006 includes 52,840, 37,396 and 89,467 weighted average common shares, respectively, relating to the restricted Class A common shares granted to our employees and independent directors. Diluted weighted average common shares outstanding for 2005 includes 2,387,497 weighted average common shares issuable under the exercise of warrants and 53,252 weighted average common shares relating to the restricted Class A common shares granted to our Chief Financial Officer and to our independent directors at the time of our initial public offering. Diluted weighted average common shares outstanding for 2004 includes 10,197,980 common shares issuable on the exercise of exercisable warrants.

(9)	Controlled vessels are vessels that we own or charter-in with an option to purchase. As of December 31, 2008, two vessels in our controlled fleet were chartered-in with an option to purchase.

(10)	Represents both vessels that we charter-in under short-term charters (less than one year at the start of the charter) and charter-in of vessels under long-term charters without an option to purchase.

(11)	Represents the number of days controlled and time-chartered vessels that were operated by us, excluding off-hire days.

(12)

Represents the number of days that relate to vessel expense for controlled and time-chartered vessels. Vessel expense relating to controlled vessels is based on a 365-day year. Vessel expense relating to chartered-in vessels is based on the actual number of days we operated the vessel, excluding off-hire days.

(13)

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. Average revenue per ton for 2007, 2006, 2005 and 2004 were reduced from the amounts previously reported due to the reclassification of despatch. See comment number one above.

(14)

Aggregates represent high-volume, low-freighted cargo. Including aggregates, therefore, can overstate the amount of tons that we carry on a regular basis and reduce our revenue per ton. We regularly carried aggregates in all years represented in the table above except 2005 when we temporarily suspended the transport of aggregates. We believe that the exclusion of aggregates better reflects our cargo shipped and revenue per ton data for our principal services.

The following is a discussion of our financial condition at December 31, 2008 and 2007 and our results of operations comparing the years ended December 31, 2008 and 2007 and years ended December 31, 2007 and 2006. You should read this section in conjunction with our consolidated financial statements including the related notes to those financial statements included elsewhere in this Annual Report.

To conform to the 2008 presentation, we revised the 2007 and 2006 Consolidated Statements of Income and related supporting schedules for despatch. Despatch of $2.7 million and $1.9 million for 2007 and 2006, respectively, which were previously classified as voyage expense, are now included in voyage revenue. This revision did not impact net income. We also revised the 2007 and 2006 Consolidated Statements of Cash Flows to classify drydock expenditures as an operating activity rather than an investing activity, in the amounts of $6.2 million and $1.4 million, respectively.

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. 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 customer. This distinguishes us from traditional dry cargo shipping companies. In the fourth quarter of 2007, we augmented our ocean transportation services by establishing logistics operations that provide fully-integrated cargo and transport management services. Logistics operations are presented separately because of its recent growth.

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. Additionally, we expect to take delivery of two newbuild vessels in 2009 and four new build vessels in 2010 for which we have arranged funding. Early in 2008, we actively pursued opportunities to build additional Roymar Class ships in China for delivery through 2011. In October, 2008 we suspended these efforts in response to the current shipping market turmoil. Current economic conditions and the decline in demand for shipping services have caused us to suspend any further acquisitions of secondhand vessels.

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.

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.

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Management performs impairment analyses of long-lived assets when certain triggering events occur such as: significant decreases in the assets’ market value or changes in the assets’ physical condition, and operating or cash flow losses associated with the use of the long-lived assets, combined with a history of operating or cash flow losses. Impairment is recognized when the estimate of undiscounted future cash flows expected to be generated by the asset is less than its carrying amount. Measurement of the impairment loss is calculated based upon comparison of the fair value to the carrying value of the asset. Historically, both freight rates and vessel values tend to be volatile. The carrying value of our fleet may not represent their fair market value at any point in time since the market prices of second-hand vessels tend to fluctuate. Our impairment calculations contain uncertainties because they require management to make assumptions for estimated cash flows. These assumptions are based on historical trends as well as future expectations. Although management believes that the assumptions used to evaluate potential impairment are reasonable and appropriate, such assumptions are highly subjective. Our analysis showed that there was no impairment of long-lived assets at December 31, 2008. We will continue to monitor the shipping environment and update our impairment analyses. See following "Summary of Critical Accounting Policies".

As of December 31, 2008, due to the economic climate, we concluded there was an indication of possible impairment of our goodwill. Accordingly, we performed an impairment analysis of goodwill, which indicated that there was no impairment at December 31, 2008.

Our loan agreements with our various credit facilities contain both financial and non-financial covenants. Further, mandatory prepayment or delivery of additional security is required in the event that the fair market value of the vessels falls below limits specified in the loan agreements. As of December 31, 2008 we were in compliance with all financial covenants relating to minimum net worth, leverage, fixed interest coverage ratios and minimum cash balance requirements. 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 - "Liquidity and Capital Resources" and "Note 11 - Financing" for detailed information.

Management is taking measures to manage our business during the global financial crisis and to position us to take advantage of the eventual recovery. These measures include: eliminating 2008 bonus payments to our executives and employees, freezing salary at 2008 levels, instituting a cost cutting program, prepaying debt, negotiating loan modifications, reducing capital expenditures and scaling back the accelerated steel renewal and reinforcement program.

In the last year, our fleet has grown from 36 to 47 vessels. These vessels must be drydocked twice during a five-year cycle. Thus, our controlled fleet of 47 vessels at December 31, 2008, would require approximately 94 drydockings over five years for an average of 19 vessels per year.

We maintain and upgrade our vessels to a higher standard. We accelerated the timing of steel renewals and replacements for vessels drydocked in 2007 and 2008. We expected that these renewals and reinforcements would have been required in the next five to ten years, and we believe the accelerated steel renewal and reinforcements will reduce the cost of future drydockings. Going forward our drydocking program will only address deficiencies identified and recommendations made by classification surveyors.

During 2008, 17 vessels, requiring approximately 3,400 metric tons of steel, were in drydock for 791 days. A summary by quarter is as follows:

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

First Quarter 2008	5 (a)	147	days	827	MT
Second Quarter 2008	5	192	days	1,058	MT
Third Quarter 2008	5	229	days	797	MT
Fourth Quarter 2008	2	223	days	696	MT

(a) Including one vessel that entered into drydock during December 2007.

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Presented in the table below is our preliminary quarterly drydock schedule for vessels we anticipate to be in drydock during 2009, including an estimated number of drydock days and metric tons of steel renewal. Our estimates are based on current and anticipated congestion in the repair shipyards, which could be adversely affected by unanticipated weather or congestion in the shipyard. Further, our 2009 drydock schedule is subject to changes based on unanticipated commercial needs of our business.

	Anticpated Number of vessels entering drydock during quarter	Anticipated Number of drydock days during quarter		Estimated (MT) of steel to be installed

First Quarter 2009	8 (a)	207	days	620	MT
Second Quarter 2009	3	109	days	275	MT
Third Quarter 2009	6	157	days	540	MT
Fourth Quarter 2009	5	204	days	482	MT

(a) Including one vessel that entered into drydock during December 2008.

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.

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. Prior to 2008, the revenues and related voyage expenses for voyages in progress were recognized on the percentage of service completed at the balance sheet date by prorating the estimated final voyage revenue and expenses using the ratio of voyage days completed through the balance sheet date to total voyage days. The impact of recognizing voyage expenses ratably over the length of each voyage was not materially different from the method of recognizing such costs as incurred in accordance with EITF Issue 91-9, method 5, on both a quarterly and annual basis. For voyages in progress at December 31, 2008 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.

Voyage revenue consists of freight charges paid to our subsidiaries for the transport of customers' cargo. Freight rates are set by the market and depend on the relationship between the demand for ocean freight transportation and the availability of appropriate vessels. The key factors driving voyage revenue are the number of vessels in the fleet, freight voyage days, revenue tons carried and the freight rates.

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 expense 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 unrelated 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 that originally were negotiated during our Chapter 11 proceeding with representatives of the holders of our then outstanding First Preferred Ship Mortgage Notes and were approved by our Board of Directors. Renewal of the current management agreements with Beacon and TBS Commercial Group and approval of 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. The Compensation Committee of our Board of Directors approved, effective October 1, 2007, additional commissions of 1.25% of freight revenue for commercial agency services provided by subsidiaries of Beacon and TBS Commercial Group and an increase of approximately 33 1/3% in port agency fees for agency services provided by most subsidiaries of TBS Commercial Group and Beacon.

Lack of Historical Operating Data for Vessels Before their Acquisition

Consistent with shipping industry practices, there is no historical financial due diligence process when we acquire secondhand vessels other than the inspection of the physical condition of the vessels and examination of classification society records. Accordingly, we do not obtain the historical operating data for the vessels from the sellers because that information is not material to our decision to make acquisitions, nor do we believe it would be helpful to potential investors in our common shares in assessing our business or profitability.

Most vessels are sold under a standardized agreement, which, among other things, provides the buyer with the right to inspect the vessel and the vessel's classification society records. The standard agreement does not give the buyer the right to inspect, or receive copies of, the historical operating data of the vessel and does not provide for financial information or historical results for the vessel to be made available to the buyer. Prior to the delivery of a purchased vessel, the seller typically removes from the vessel all records, including past financial records and accounts related to the vessel. In addition, the technical management agreement between the seller's technical manager and the seller is automatically terminated and the vessel's trading certificates are revoked by its flag state following a change in ownership.

Consistent with shipping industry practice, we treat the acquisition of a vessel, whether acquired with or without charter, as the acquisition of an asset rather than a business. Due to the differences between the prior owners of these vessels and the Company with respect to the routes we operate, the shippers and consignees we serve, the cargoes we carry, the freight rates and charter hire rates we charge and the costs we incur in operating our vessels, we believe that our operating results will be significantly different from the operating results of the vessels while owned by the prior owners.

The Financial Accounting Standards Board issued Emerging Issues Task Force (EITF) 98-3 states that "for a transferred set of activities and assets to be a business, it must contain all of the inputs and processes necessary for it to continue to conduct normal operations after the transferred set is separated from the transferor, which includes the ability to sustain a revenue stream by providing its output to customers." The purchase of a vessel alone cannot operate or generate revenue or constitute a business operation without the significant inputs and processes that we provide, as described below:

·	We provide our own captains, senior officers and crew to the vessels.
·	The vessels are managed by our subsidiary Roymar. All of the functions of vessel management, from technical ship management to crewing, vessel maintenance and drydocking, are conducted by Roymar, in a manner different from the prior manager, according to our exacting standards.
·	The necessary commercial activities - maintaining customer relationships, providing local teams of commercial agents and port captains, offering transportation management skills and logistics solutions - are provided by our subsidiary TBS Shipping Services and our affiliate TBS Commercial Group in a manner different from the former owners.
·	The vessels will operate under our trade name and carry our distinctive native peoples’ naming convention.

The revenue-producing activity of the vessels we purchase will be generated from carrying cargoes for our customers on the routes we serve. The vessels we purchase are operated by different parties than their former owners, serve different customers, carry different cargoes, charge different rates, cover different routes and, in all respects engage in a different business with different revenues, costs and operating margins.

In short, only the vessels are being purchased. Profitable operation of the vessels will depend on our skill and expertise.

Results of Operations

Year ended December 31, 2008 compared to year ended December 31, 2007

			Year Ended December 31,
			2008						2007						Increase (Decrease)
			In Thousands			As a % of Total Revenue			In Thousands			As a % of Total Revenue			In Thousands			Percentage
Voyage revenue			$	518,907			84.8		$	261,509			74.1		$	257,398			98.4
Time charter revenue				83,883			13.7			88,365			25.0			(4,482	)		(5.1	)
Logistics revenue				7,000			1.2			668			0.2			6,332
Other revenue				1,843			0.3			2,379			0.7			(536	)		(22.5	)
	Total revenue			611,633			100.0			352,921			100.0			258,712			73.3

Voyage expense				172,929			28.3			89,241			25.3			83,688			93.8
Logistics				5,717			0.9			557			0.2			5,160
Vessel expense				110,354			18.0			85,958			24.4			24,396			28.4
Depreciation and amortization				73,479			12.1			36,022			10.2			37,457			104.0
General and administrative				39,879			6.5			38,703			11.0			1,176			3.0
Loss from sale of vessel										814			0.2			(814	)		(100.0	)
	Total operating expenses			402,358			65.8			251,295			71.3			151,063			60.1
Income from operations				209,275			34.2			101,626			28.7			107,649			105.9
Other (expenses) and income
	Interest expense			(17,228	)		(2.8	)		(10,394	)		(2.9	)		(6,834	)		65.7
	Loss on extinguishment of debt			(2,318	)		(0.4	)								(2,318	)
	Gain on sale and insurance
		recovery of vessel								6,034			1.7			(6,034	)		(100.0	)
	Other income (expense)			2,048			0.4			983			0.3			1,065			108.3
Net income			$	191,777			31.4		$	98,249			27.8		$	93,528			95.2

Voyage revenue

The table below shows key metrics related to voyage revenue:

		Year Ended December 31,
		2008		2007		Increase (Decrease)
Voyage Revenue (in thousands)		$	518,907	$	261,509	$	257,398	98.4	%
Number of vessels (1)			33		22		11	50.0	%
Freight voyage days (2)			11,900		8,209		3,691	45.0	%
Days on hire (3)			12,141		8,292		3,849	46.4	%
Revenue tons carried (thousands) (4)
	For all cargoes		9,315		6,621		2,694	40.7	%
	Excluding aggregates		5,109		3,447		1,662	48.2	%
	Aggregates		4,206		3,174		1,032	32.5	%
Freight Rates (5)
	For all cargoes	$	55.70	$	39.49	$	16.21	41.0	%
	Excluding aggregates	$	88.08	$	68.79	$	19.29	28.0	%
Daily time charter equivalent rates (6)		$	29,526	$	21,658	$	7,868	36.3	%

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(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.
(5)	Weighted average freight rates measured in dollars per revenue ton. Average freight rates for 2007 were reduced from the amounts previously reported due to the reclassification of despatch. See comments in general section above.
(6)	Daily Time Charter Equivalent or "TCE" rates are defined as voyage revenue less voyage expenses during the year divided by the number of available freight voyage days during the year. Voyage expenses include: fuel, port call, commissions, stevedore and other cargo related and miscellaneous voyage expenses. To conform with the 2008 presentation daily time charter equivalent rates for 2007 was revised to exclude intercompany commissions and management fees eliminated in consolidation. 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.

Voyage revenue in 2008 increased primarily due to an increase in revenue tons carried coupled with an increase in freight rates. Approximately 63% of the increase in voyage revenue is attributable to the increase in revenue tons carried, with the balance of approximately 37% due to higher freight rates on cargoes carried.

Revenue tons carried in 2008 increased 2.7 million tons or 40.7% to 9.3 million tons from 6.6 million tons carried in 2007. We increased our TBS Middle East service in 2008, which increased the aggregate bulk cargo we carried and, consequently, was the principal reason for the increase in revenue tons. Aggregate bulk cargo accounted for 38% of the increase in revenue tons carried.

Freight rates, not under contracts, are set by the market and depend on both the demand for ocean freight transportation and the availability of appropriate vessels. A Contract of Affreightment ("COA") obligates the charterers to transport a specified quantity, at a specified rate over a specified number of voyages or period. In 2008 and 2007, we had COAs under which we carried approximately 6.4 million revenue tons and 4.2 million revenue tons and generated approximately $230.4 million and $89.6 million of voyage revenue, respectively. As of December 31, 2008 we had outstanding COAs to transport approximately 3.2 million revenue tons on contracts expiring through December 2009.

Average freight rates for 2008 increased $16.21 per ton or 41.0% to $55.70 per ton as compared to $39.49 per ton in 2007. The increase was principally caused by higher rates for the aggregates carried. Excluding aggregates, average freight rates would have been $88.08 per ton and $68.79 per ton for 2008 and 2007, respectively.

The following table shows voyage revenues attributed to our principal cargoes:

		Year Ended December 31,
		2008				2007				Increase (Decrease)
Description		In Thousands		As a % of Total Voyage Revenue		In Thousands		As a % of Total Voyage Revenue		In Thousands			%
Steel products		$	128,472		24.8	$	91,182		34.9	$	37,290			40.9
Metal concentrates			92,824		17.9		38,772		14.8		54,052			139.4
Agricultural products			86,650		16.7		45,247		17.3		41,403			91.5
Aggregates			68,884		13.3		24,406		9.4		44,478			182.2
Other bulk cargo			59,031		11.3		19,866		7.6		39,165			197.1
Project cargo			22,900		4.4		2,757		1.1		20,143
Rolling stock			19,498		3.7		13,110		5.0		6,388			48.7
Automotive products			10,833		2.1		5,345		2.0		5,488			102.7
General cargo			15,012		2.9		5,769		2.2		9,243			160.2
Fertilizers			8,286		1.6		9,709		3.7		(1,423	)		(14.7	)
Other			6,517		1.3		5,346		2.0		1,171			21.9
	Total voyage revenue	$	518,907		100.0	$	261,509		100.0	$	257,398			98.4

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Time charter revenue

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

	Year Ended December 31,
	2008		2007		Increase (Decrease)
Time Charter Revenue (in thousands)	$	83,883	$	88,365	$	(4,482	)	(5.1	)%
Number of vessels (1)		8		10		(2	)	(20.0	)%
Time Charter days (2)		3,004		3,659		(655	)	(17.9	)%
Daily charter hire rates (3)	$	27,924	$	24,150	$	3,774		15.6	%
Daily time charter equivalent rates (4)	$	26,134	$	23,078	$	3,056		13.2	%

(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 year reduced principally by commissions divided by the number of available time charter days during the year. Commission for vessels that are time chartered out for the year ended December 31, 2008 and December 31, 2007 were $3.6 million and $3.9 million, respectively. For the year ended December 31, 2008, time charter voyages include fuel cost of $1.8 million related to fuel price differentials caused by volatility in the fuel market and the cost for ballasting vessels to time charter delivery ports. To conform with the 2008 presentation daily time charter equivalent rates for 2007 were revised to exclude intercompany commissions and management fees elimiated in consolidation. No deduction is made for vessel or general and administrative expenses. 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. No voyage expenses are deducted because they are not applicable.

The decrease in time charter revenue in 2008 was the result of a decrease in the number of time charter-out days. The decrease in time charter-out days is due mainly to the reduced number of vessels available for time charter-out because of the increased use of our controlled vessels in our established voyage business.

An increase in average charter hire rates offset the decrease in the time charter-out days in 2008. Charter hire rates are set, to a significant degree, by the market and depend on the relationship between the demand for ocean freight transportation and the availability of appropriate vessels. The increase in average time charter rates for 2008 as compared to 2007 was reflective of the strong worldwide shipping markets for most of 2008.

Logistics revenue and expenses

Logistics revenues represent revenues from cargo and transportation management services provided in connection with our Five Star Service. We initiated logistics support services in the fourth quarter of 2007. The logistics operating margin was approximately 18.3% in 2008.

Voyage expense consists of costs attributable to specific voyages. The number of voyage days is a significant determinant of voyage expense, which consists of fuel costs, commissions, port call, stevedoring and miscellaneous voyage expense.

The principal components of voyage expense are as follows:

		Year Ended December 31,
		2008						2007						Increase (Decrease)
		In Thousands		As a % of Voyage Expense		As a % of Voyage & Time Charter Revenue		In Thousands		As a % of Voyage Expense		As a % of Voyage & Time Charter Revenue		In Thousands		As a % of 2007 Expense		As a % of Voyage & Time Charter Revenue
Fuel expense		$	87,342		50.5		14.5	$	39,427		44.2		11.3	$	47,915		121.5		3.2
Commission expense			29,779		17.2		4.9		16,285		18.2		4.7		13,494		82.9		0.2
Port call expense			27,511		15.9		4.6		17,225		19.3		4.9		10,286		59.7		(0.3	)
Stevedore and other
	cargo-related expense		18,273		10.6		3.0		11,072		12.4		3.2		7,201		65.0		(0.2	)
Miscellaneous voyage
	expense		10,024		5.8		1.7		5,232		5.9		1.5		4,792		91.6		0.2
	Voyage expense	$	172,929		100.0		28.7	$	89,241		100.0		25.6	$	83,688		93.8		3.2

Voyage expense increased in 2008 primarily due to an increase in fuel expense, which resulted from higher average fuel costs, an increase in fuel consumption and higher average port call costs.

Fuel expense increased $47.9 million in 2008 primarily due to an increase in the average price paid per metric ton ("MT"). In 2008, the average price paid per MT increased $112 or approximately 28% to $514 per MT compared to the average price paid per MT of $402 per MT during 2007. Consumption increased 72,006 MT to 169,991 MT for the year, compared to 97,985 MT in 2007. The increase in consumption is directly related to the increase in freight voyages. Average fuel cost per freight voyage day was $7,340 during 2008 and $4,803 during 2007.

The increase in commission expenses in 2008 is attributable to increased revenues and to a lesser extent a higher commission rate paid to our unconsolidated affiliate TBS Commercial Group, which became effective October 1, 2007. The rate increase to TBS Commercial Group accounted for approximately 31% of the commission increase.

Port call expense varies from period to period depending on the number of port calls, port days and cost structure of the ports called upon. The increase in port call expense in 2008 is primarily due to additional port calls and port days by vessels. The number of port calls increased to 1,201 port calls for 2008 from 894 port calls for 2007 and the total aggregate port days in 2008 was 6,301 as compared to 3,970 port days in 2007.

Stevedore and other cargo-related expenses fluctuate based on cargo volumes and the shipping terms under which the cargo is booked. Stevedore and other cargo-related cost increased in 2008 due to a higher percentage of cargo being booked under "full liner" terms and a combination of "free-in, free-out" terms. For analysis purposes we group cargoes into three categories: (1) cargo booked under "free-in, free-out" terms which are shipments that the customer pays all or part of the costs of loading and unloading, (2) cargo booked under "full liner" terms, which are shipments where we bear the costs of loading and unloading and (3) a combination of free-in free-out and full liner terms.

Vessel expense consists of costs we incur to own and maintain our fleet that are not allocated to a specific voyage, such as charter hire rates for vessels we charter-in, maintenance, insurance and crewing expenses for vessels we own or control.

The principal components of vessel expense are as follows:

	Year Ended December 31,
	2008				2007				Increase (Decrease)
	In Thousands		As a % of Vessel Expense		In Thousands		As a % of Vessel Expense		In Thousands			Percentage
Owned vessel expense	$	91,377		82.8	$	56,856		66.2	$	34,521			60.7
Chartered-in vessel expense		11,551		10.5		22,905		26.6		(11,354	)		(49.6	)
Controlled vessel expense		6,363		5.7		6,073		7.1		290			4.8
Space charter expense		1,063		1.0		124		0.1		939
Vessel expense	$	110,354		100.0	$	85,958		100.0	$	24,396			28.4

The increase in vessel expense in 2008 was primarily due to an increase in our fleet of owned and controlled vessels. Vessel expense as a percentage of total revenue decreased 6.0% to 18% of total revenue for 2008 as compared to 24% of total revenue for 2007, primarily due to the increase in revenue resulting from higher freight rates.

The increase in owned vessel expense was due to an increase in the average operating expense day rate of $1,187 per day to $5,807 for 2008 as compared to $4,620 per day for 2007. The average operating expense day rate, increased principally because of increases in crew cost, insurance and maintenance and repairs. The owned vessel expense increase was also due to an increase in the average number of controlled vessels, which increased the number of vessel days. Vessel days are the total days we operated our controlled vessels which increased 3,430 days to 15,736 during 2008 from 12,306 days during 2007.

The decrease in chartered-in vessel expense was due to a decrease in the average charter-in rate per day we paid to charter in vessels. The average charter-in rate per day decreased $5,409 per day to $19,220 per day in 2008 as compared to $24,629 per day for 2007. We chartered-in vessels for 601 days during 2008 as compared to 930 days during 2007 because of an increase in our controlled fleet, which decreased our demand for charter-in vessels.

Controlled vessel charter expense relates to a sale-leaseback transaction entered on January 31, 2007 for the Seminole Princess and Laguna Belle, which were chartered back under a bareboat charter party. Controlled vessel expense increased in 2008 as compared to 2007 because we chartered-in the vessels for the full year during 2008. Charter-in days increased to 365 days per vessel in 2008 as compared to 336 days per vessel in 2007.

Depreciation and amortization

The increase in depreciation and amortization expense to $73.5 million in 2008 from $36.0 million in 2007 was due principally to additional depreciation and amortization on vessel improvements and drydockings made during 2008. The growth of our owned/controlled fleet, which increased to an average of 43 vessels for the year ended December 31, 2008 as compared to an average of 34 vessels for the year ended December 31, 2007, also added to the increase in depreciation and amortization.

General and administrative expense

The $1.2 million increase in general and administrative expense in 2008 as compared to 2007 is primarily made up of a $2.6 million, a $1.6 million and a $0.7 million increase in professional fees, miscellaneous expense, and travel and representation, respectively, offset by a $4.0 million decrease in salary and related expenses. Salaries and related expenses decreased principally due to management's decision to eliminate our 2008-bonus in response to current worldwide economic conditions and its impact on the shipping industry. Our bonus program, under which employees may receive an annual cash bonus payment based on our annual operating performance, is discretionary. For the year ended December 31, 2007, we gave bonuses to our officers and employees of $10.2 million. We had previous made provisions for a 2008 bonus of approximately $15.1 million. The elimination of the bonus was offset by an increase in salaries and related expenses of $4.3 million due to increases in staff levels, which increased to approximately 170 employees at December 31, 2008 from approximately 130 employees at December 31, 2007, to manage the growth of our business. Higher non-cash stock-based compensation, which increased to $2.4 million from $0.5 million for the years ended December 31, 2008 and 2007, respectively, also added to the increase in salaries and related expenses.

Loss from sale of vessels

The loss in 2007 represents the sale, on March 13, 2007, of the vessel Maya Princess for $13.0 million. The loss on sale was $0.8 million after deducting the cost of vessel and improvements less accumulated depreciation, and other closing costs.

Income from operations

The increase in income from operations was mainly attributable to an increase in revenue resulting from increased freight rates and increased revenue tons carried. Freight and charter hire rates increased due to strong market conditions in the ocean transport industry through September 30, 2008. The charter hire rates declined during the fourth quarter of 2008 which partially offset earlier revenue increases. Operating expenses increased in 2008 as previously described for voyage expense, vessel expense, depreciation, and general and administrative expenses. The increase in revenue was greater than the increase in operating expenses causing our operating margin to increase to 34.2% for 2008 from 28.7% for 2007.

Interest expense increased $6.8 million for the year ended December 31, 2008 as compared to the same period in 2007 principally due to higher debt levels, increased costs related to our interest swap contracts and higher bank fees. These increases were offset by a reduction in interest rates and a decrease in our borrowing costs when we repaid our capital lease obligation with loan proceeds having lower borrowing costs. Our average effective interest rate decreased to approximately 5.5% for 2008 compared to approximately 8.1% for 2007.

For the year ended December 31, 2008, our debt levels averaged $280.2 million as compared to $114.5 million during the same period in 2007. The increase in the average debt level for 2008 is attributable to debt incurred to fund vessel acquisitions and $75.0 million borrowed during the fourth quarter of 2008 under the Bank of America revolving credit facility. During 2008, we capitalized interest of $3.6 million directly related to The Royal Bank of Scotland credit facility for the new vessel building program and interest of $2.3 million imputed on construction in progress payments funded with cash flows from operations and other debt, as required by generally accepted accounting principals.

Loss on extinguishment of debt

The $2.3 million loss on extinguishment of debt in 2008 was due to the write-off of unamortized deferred financing costs in connection with the March 2008 refinancing of our original Bank of America credit facility.

Gain on sale and insurance recovery of vessel

The Huron Maiden was severely damaged in a grounding accident on an uncharted rock while on passage near Indonesia on March 9, 2007. On April 4, 2007, the vessel was declared a constructive total loss. Accordingly, we received a net amount of $8.0 million from our Hull & Machinery/Increased Value insurances after a scrap value credit of $2.0 million. We retained the proceeds on the sale of the vessel for scrap, which was sold and delivered to the buyer on May 4, 2007 for $2.8 million. After deducting the cost of vessel and improvements less accumulated depreciation and expenses incurred in connection with the accident and the sale of the vessel the Company realized a gain on the sale of the vessel and insurance recovery of approximately $6.0 million.

Results of Operations

Year ended December 31, 2007 compared to year ended December 31, 2006

		Year Ended December 31,
		2007						2006						Increase (Decrease)
		In Thousands			As a % of Total Revenue			In Thousands			As a % of Total Revenue			In Thousands			Percentage
Voyage revenue		$	261,509			74.1		$	187,147			74.3		$	74,362			39.7
Time charter revenue			88,365			25.0			63,114			25.1			25,251			40.0
Logistics revenue			668			0.2									668
Other revenue			2,379			0.7			1,460			0.6			919			62.9
	Total revenue		352,921			100.0			251,721			100.0			101,200			40.2

Voyage expense			89,241			25.3			81,389			32.3			7,852			9.6
Logistics			557			0.2									557
Vessel expense			85,958			24.4			63,205			25.1			22,753			36.0
Depreciation and amortization			36,022			10.2			29,867			11.9			6,155			20.6
General and administrative			38,703			11.0			27,256			10.8			11,447			42.0
Gain (loss) from sale of vessels			814			0.2			(2,180	)		(0.9	)		2,994			(137.3	)
	Total operating expenses		251,295			71.3			199,537			79.2			51,758			25.9
Income from operations			101,626			28.7			52,184			20.8			49,442			94.7
Other (expenses) and income
	Interest expense		(10,394	)		(2.9	)		(11,577	)		(4.6	)		1,183			(10.2	)
	Loss on early extinguishment of debt								(3,357	)		(1.3	)		3,357			(100.0	)
	Gain on sale and insurance recovery of vessel		6,034			1.7									6,034
	Interest and other income		983			0.3			1,810			0.7			(827	)		(45.7	)
Net income		$	98,249			27.8		$	39,060			15.6		$	59,189			151.5

Table of Contents

The table below shows key metrics related to voyage revenue:

		Year Ended December 31,
		2007		2006		Increase (Decrease)
Voyage Revenue (in thousands)		$	261,509	$	187,147	$	74,362		39.7	%
Number of vessels (1)			22		21		1		4.8	%
Freight voyage days (2)			8,209		7,818		391		5.0	%
Days on hire (3)			8,292		8,102		190		2.3	%
Revenue tons carried (thousands) (4)
	For all cargoes		6,621		4,368		2,253		51.6	%
	Excluding aggregates		3,447		3,227		220		6.8	%
	Aggregates		3,174		1,141		2,033		178.2	%
Freight Rates (5)
	For all cargoes	$	39.49	$	42.85	$	(3.36	)	(7.8	)%
	Excluding aggregates	$	68.79	$	54.67	$	14.12		25.8	%
Daily time charter equivalent rates (6)		$	21,658	$	13,794	$	7,864		57.0	%

(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.
(5)	Weighted average freight rates measured in dollars per revenue ton. Average freight rates for 2007 and 2006 were reduced from the amounts previously reported due to the reclassification of despatch. See comments in general section above.
(6)	Daily Time Charter Equivalent or "TCE" rates are defined as voyage revenue less voyage expenses during the year divided by the number of available freight voyage days during the year. Voyage expenses include: fuel, port call, commissions, stevedore and other cargo related and miscellaneous voyage expenses. To conform with the 2008 presentation daily time charter equivalent rates for 2007 and 2006 were revised to exclude intercompany commissions and management fees elimiated in consolidation. No deduction is made for vessel or general and administrative expenses. 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.

Voyage revenue increased in 2007 primarily due to an increase in revenue tons carried offset by a decrease in freight rates.

Revenue tons carried for 2007 increased 2,253,694 tons or 51.6% to 6,621,473 tons from 4,367,779 tons for 2006. We expanded our TBS Middle East service in 2007, which increased the aggregate bulk cargo we carried and, consequently, was the principal reason for the increase in revenue tons. We also started the Mediterranean Service during the third quarter of 2007, which increased the number of voyages and, consequently, the revenue tons carried during 2007 as compared to 2006.

Freight rates, not under contracts, are set by the market and depend on the relationship between the demand for ocean freight transportation and the availability of appropriate vessels. We had COAs for 2007 and 2006 under which we carried approximately 4,213,506 revenue tons and 1,947,261 revenue tons and generated $89.6 million and $56.1 million of voyage revenue, respectively. COA's outstanding at December 31, 2007 expire through May 2009.

Average freight rates for 2007, as compared to 2006, decreased $3.36 per ton or 7.8% to $39.49 per ton for 2007 from $42.85 per ton for 2006. The decrease in average freight rates in 2007 was principally caused by an increase in the proportion of low freighted aggregates carried to the total revenue tons carried. Excluding this type of bulk cargo, average freight rates would have been $68.79 per ton and $54.67 per ton for 2007 and 2006, respectively.

Table of Contents

The following table shows revenues attributed to our principal cargoes:

		Year Ended December 31,
		2007				2006				Increase (Decrease)
Description		In Thousands		As a % of Total Voyage Revenue		In Thousands		As a % of Total Voyage Revenue		In Thousands			%
Steel products		$	91,182		34.9	$	68,408		36.6	$	22,774			33.3
Agricultural products			45,247		17.3		22,736		12.1		22,511			99.0
Metal concentrates			38,772		14.8		27,078		14.5		11,694			43.2
Aggregates			24,406		9.3		10,719		5.7		13,687			127.7
Other bulk cargo			19,866		7.6		14,022		7.5		5,844			41.7
Rolling stock			13,110		5.0		9,737		5.2		3,373			34.6
Fertilizers			9,709		3.7		6,271		3.4		3,438			54.8
General cargo			5,769		2.2		6,872		3.7		(1,103	)		(16.1	)
Automotive products			5,345		2.1		4,566		2.4		779			17.1
Project cargo			2,757		1.1		11,883		6.3		(9,126	)		(76.8	)
Other			5,346		2.0		4,855		2.6		491			10.1
	Total voyage revenue	$	261,509		100.0	$	187,147		100.0	$	74,362			39.7

Time charter revenue

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

	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Debt Obligations (1)	$	383,074	$	56,945	$	155,724	$	120,197	$	50,208
Estimated variable interest payments (2 )		55,665		28,941		12,667		10,959		3,098
Operating Lease obligations (3)		30,278		7,897		11,194		10,746		441
Other Purchase obligations (4) (5)		103,700		65,200		38,500
Total contractual cash obligations	$	572,717	$	158,983	$	218,085	$	141,902	$	53,747

Owning Subsidiary	Hull Number	Total		Less than 1 year		1-3 years
Argyle Maritime Corp.	NYHS200720	$	7,800	$	7,800	$
Caton Maritime Corp.	NYHS200721		14,800		14,800
Dorchester Maritime Corp.	NYHS200722		14,800		7,000		7,800
Longwoods Maritime Corp.	NYHS200723		21,800		14,000		7,800
McHenry Maritime Corp.	NYHS200724		21,800		14,000		7,800
Sunswyck Maritime Corp.	NYHS200725		21,800		7,000		14,800
	Total	$	102,800	$	64,600	$	38,200

Financial Covenants	Status 12/31/08

Minimum Consolidated Tangible Net Worth - $583.5 million [$235 million plus 75% of net income per quarter for all quarters after September 30, 2007 ($170.2 million) plus 100% of increases to shareholders equity ($95.7 million)].	$583.5 million

Maximum Consolidated Leverage Ratio - Not more than 3.00 to 1.00	1.09 to 1.00

Minimum Consolidated Fixed Charge Coverage Ratio – Not less than 1.50 to 1.00	2.78 to 1.00

Minimum Cash Liquidity - $15 million [Qualified cash as defined in the agreement plus unused portion under the revolving credit facility].	$181.1 million

	For the Year Ended
	December 31,
	2008			2007
	(in millions)

Vessels purchased	$	313.7		$	88.4
Vessel improvements and other equipment		49.3			44.4
Construction in progress		63.2			60.6
Other fixed assets		3.5			3.9
Sub total		429.7			197.3
Less: Vessel deposits paid in prior years		(14.8	)		(1.7	)
Total Vessel acquisitions / capital improvement	$	414.9		$	195.6

	For the Year Ended December 31,
	2007			2006
	(in millions)

Vessels purchased	$	88.4		$	73.9
Vessels improvements and vessel equipment		50.6			18.0
Construction in progress, excluding deferred
financing costs of $2.0 million in 2007		60.6			0.3
Other fixed asset additions, principally computer equipment		3.9			5.5
		203.5			97.7
Less drydock expenditurs reclassifed to Cash flows form operating activities		(6.2	)		(1.4	)
Less Vessel deposit paid in 2006 for a vessel delivered in 2007		(1.7	)
Total Vessel acquisitions / capital improvement	$	195.6		$	96.3

TBS INTERNATIONAL LIMITED
2008 FORM 10-K
Table of Contents
				Page
			Part I
Item 1	Business
		A	Overview	4
		B	Our Business Strategy	6
		C	Fleet Overview	7
		D	Classification and Inspection	9
		E	Operations Management, Ship Management and Commercial Agents	10
		F	Employees and Labor Relations	11
		G	Customers	11
		H	Competition	12
		I	Environmental and Other Regulations	13
		J	Security	14
		K	Insurance	14
		L	Taxation	15
		M	Website Access to Reports	16

Item 1A	Risk Factors			17
Item 1B	Unresolved Staff Comments			30
Item 2	Properties			30
Item 3	Legal Proceedings			30
Item 4	Submission of Matters to a Vote of Security Holders			30

			Part II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			31
Item 6	Selected Financial Data			33
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations			36
Item 7A	Quantitative and Qualitative Disclosures about Market Risk			63
Item 8	Financial Statements and Supplementary Data			63
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			63
Item 9A	Controls and Procedures			64
Item 9B	Other Information			64

			Part III
Item 10	Directors, Executive Officers and Corporate Governance			65
Item 11	Executive Compensation			67
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			67
Item 13	Certain Relationships and Related Transactions and Director Independence			67
Item 14	Principal Accounting Fees and Services			67

			Part IV
Item 15	Exhibits, Financial Statement Schedules Index			68
	Signatures

·	Cash and cash equivalents and charter hire and claims receivable - The carrying amount reported in the accompanying consolidated balance sheets for cash and cash equivalents and charter hire and claims receivables approximates their fair value due to the current maturities.
·	Short-term debt - The carrying amount reported in the accompanying consolidated balance sheets for short-term debt approximates its fair value due to the current maturity of such instruments and their variable rates.
·	Long-term debt - The carrying amount of the our long-term debt approximates fair value due to the variable interest rates on bank borrowings and based on the current rates offered to us for debt of the same remaining maturities.
·	Interest Rate Swap - We utilize certain derivative financial instruments to manage interest rate risk. Derivative instruments are entered into for periods consistent with related underlying exposures and do not constitute positions independent of those exposures. We do not enter into contracts for speculative purposes, nor is it a party to any leveraged derivative instruments. We are exposed to credit loss in the event of nonperformance by the counterparties on derivative contracts. We minimize our credit risk on these transactions by dealing only with leading, credit-worthy financial institutions and, therefore, we do not anticipate nonperformance.

Year	Average Unhedged Debt Balance		Estimated Interest Change
	(in thousands)

2009	$	161,563	$	1,616
2010	$	186,554	$	1,866
2011	$	176,610	$	1,766
2012	$	117,676	$	1,177
2013	$	64,118	$	641

Name	Age	Title
Joseph E. Royce	64	President, Chief Executive Officer, Chairman and Director
Gregg L. McNelis	53	Senior Executive Vice President, Chief Operating Officer and Director
Lawrence A. Blatte	79	Senior Executive Vice President
Ferdinand V. Lepere	57	Executive Vice President and Chief Financial Officer
James W. Bayley	68	Vice President and Director
John P. Cahill	50	Director
Randee E. Day	60	Director
William P. Harrington	51	Director
Peter S. Shaerf	54	Director
Alexander Smigelski	51	Director

	Report of Independent Registered Public Accounting Firm		F-1

	Consolidated Balance Sheets as of December 31, 2008 and December 31, 2007		F-2

	Consolidated Statements of Operations for the Years ended December 31, 2008, December 31, 2007 and December 31, 2006		F-3

	Consolidated Statements of Cash Flows for the Years ended December 31, 2008, December 31, 2007 and December 31, 2006		F-4

	Consolidated Statements of Changes in Shareholders' Equity for the Years ended December 31, 2008, December 31, 2007 and December 31, 2006		F-5

	Notes to Consolidated Financial Statements		F-6 - F-33

			Incorporated by Reference
Exhibit Description		Filed Herewith	Form	File No.	Exhibit	Filing Date
2.1	Third Amended Joint Plan of Reorganization of Debtors Under Chapter 11 of the Bankruptcy Code		S-1/A	333-123157	2.1	4/19/2005
3.1	Amended and Restated Memorandum of Association of TBS International Limited		10-Q	000-51368	3.1	8/7/2008
3.2	Bye-Laws of TBS International Limited as amended on June 17, 2008		10-Q	000-51368	3.2	8/7/2008
4.1	Form of Class A Common Share Certificate		S-1/A	333-123157	4.1	5/16/2005
4.2	Form of Class B Common Share Certificate		S-1/A	333-123157	4.2	5/16/2005
10.1	Umbrella Agreement, dated December 5, 2003, between TBS International Limited and Arkadia Shipping Inc.		S-1/A	333-123157	10.7	4/19/2005
10.2	Form of Memorandum of Agreement related to sale-leaseback financings with Arkadia Shipping Inc.		S-1/A	333-123157	10.8	4/19/2005
10.3	Form of Bareboat Charter related to sale-leaseback financings with Arkadia Shipping Inc.		S-1/A	333-123157	10.9	4/19/2005
10.4	Management Agreement, dated February 8, 2001, by and among TBS Shipping International Limited, TBS Worldwide Services Inc., its indirect and direct subsidiaries, TBS Commercial Group Ltd. and Beacon Holdings Ltd.		S-1/A	333-123157	10.10	4/19/2005
10.5	Form of Commercial Agency Agreement with TBS Worldwide Services Inc. and its direct and indirect subsidiaries		S-1/A	333-123157	10.11	4/19/2005
10.6	Form of Stock Purchase Agreement for acquisition of Roymar Ship Management, Inc. between TBS International Limited and Joseph E. Royce, Gregg L. McNelis, Lawrence A. Blatte and Captain Alkis N. Meimaris		S-1/A	333-123157	10.12	5/16/2005
10.7	Form of Stock Purchase Agreement for acquisition of TBS Shipping Services Inc. between TBS International Limited and Joseph E. Royce, Gregg L. McNelis, Lawrence A. Blatte and Captain Alkis N. Meimaris		S-1/A	333-123157	10.13	5/16/2005
10.8	Employee Share Purchase Plan		S-1/A	333-123157	10.15	5/16/2005
10.9	Credit Agreement, dated July 31, 2006, by and among Albemarle Maritime Corp., Arden Maritime Corp., Asia-America Ocean Carriers Ltd., Birnam Maritime Corp., Bristol Maritime Corp., Chester Shipping Corp., Darby Navigation Corp., Dover Maritime Corp., Frankfort Maritime Corp., Glenwood Maritime Corp., Hansen Shipping Corp., Henley Maritime Corp., Hudson Maritime Corp., Kensington Shipping Corp., Newkirk Navigation Corp., Oldcastle Shipping Corp., Rector Shipping Corp., Remsen Navigation Corp., Sheffield Maritime Corp., Sherman Maritime Corp., Sterling Shipping Corp., Stratford Shipping Corp., Vernon Maritime Corp., Windsor Maritime Corp., as Borrowers, and TBS International Limited, as a Guarantor, TBS Shipping Services Inc. as Administrative Borrower, Bank of America, N.A. as Administrative Agent, Swing Line Lender and L/C Issuer, the other lenders thereto, Citibank, N.A., as Syndication Agent, Westlb AG New York Branch, as Documentation Agent, and Banc of America Securities LLC as Sole Lead Arranger and Sole Book Manager		8-K	000-51368	10.1	8/4/2006
10.10	Amendment No. 1, dated as of January 23, 2007, to Credit Agreement dated July 31, 2006		8-K	000-51368	10.1	1/26/2007
10.11	Form of Restricted Share Award Agreement under the TBS International Limited 2005 Equity Incentive Plan*		8-K	000-51368	10.2	1/26/2007
10.12	Form of Bonus Share Award Agreement under the TBS International Limited 2005 Equity Incentive Plan*		8-K	000-51368	10.3	1/26/2007
10.13	Memorandum of Agreement dated as of January 24, 2007 by and between Fairfax Shipping Corp. and Adirondack Shipping LLC for the sale of the vessel Seminole Princess		10-K	000-51368	10.1	3/12/2007
10.14	Memorandum of Agreement dated as of January 24, 2007 by and between Beekman Shipping Corp. and Rushmore Shipping LLC for the sale of the vessel Laguna Belle		10-K	000-51368	10.2	3/12/2007
10.15	Bareboat Charter Agreement, dated as of January 24, 2007, between Fairfax Shipping Corp and Adirondack Shipping LLC		10-K	000-51368	10.3	3/12/2007
10.16	Bareboat Charter Agreement, dated as of January 24, 2007, between Beekman Shipping Corp and Rushmore Shipping LLC		10-K	000-51368	10.4	3/12/2007
10.17	Loan Agreement, dated March 29, 2007, among Argyle Maritime Corp., Caton Maritime Corp., Dorchester Maritime Corp., Longwoods Maritime Corp., McHenry Maritime Corp., Sunswyck Maritime Corp. as Borrowers, certain lenders, and The Royal Bank of Scotland plc. as Mandated Lead Arranger, Bookrunner, Agent, Security Trustee and Swap Bank		8-K	000-51368	10.1	4/2/2007
10.18	Guarantee Facility Agreement, dated March 29, 2007, among Argyle Maritime Corp., Caton Maritime Corp., Dorchester Maritime Corp., Longwoods Maritime Corp., McHenry Maritime Corp., Sunswyck Maritime Corp. and The Royal Bank of Scotland plc.		8-K	000-51368	10.2	4/2/2007
10.19	Overall Agreement relating to the construction of six multipurpose vessels, dated February 2007, between TBS International Limited and China Communications Construction Company Ltd and Nantong Yahua Shipbuilding Co., Ltd. (Confidential treatment has been requested for portions of this agreement)		10-Q	000-51368	10.1	5/15/2007
10.20	Shipbuilding Contract between Argyle Maritime Corp. and China Communications Construction Company Ltd and Nantong Yahua Shipbuilding Co., Ltd. (Confidential treatment has been requested for portions of this agreement)		10-Q	000-51368	10.2	5/15/2007
10.21	Shipbuilding Contract and Addendum between Caton Maritime Corp. and China Communications Construction Company Ltd and Nantong Yahua Shipbuilding Co., Ltd. (Confidential treatment has been requested for portions of this agreement)		10-Q	000-51368	10.3	5/15/2007
10.22	Shipbuilding Contract and Addendum between Dorchester Maritime Corp. and China Communications Construction Company Ltd and Nantong Yahua Shipbuilding Co., Ltd. (Confidential treatment has been requested for portions of this agreement)		10-Q	000-51368	10.4	5/15/2007
10.23	Shipbuilding Contract and Addendum between Longwoods Maritime Corp. and China Communications Construction Company Ltd and Nantong Yahua Shipbuilding Co., Ltd. (Confidential treatment has been requested for portions of this agreement)		10-Q	000-51368	10.5	5/15/2007
10.24	Shipbuilding Contract and Addendum between McHenry Maritime Corp. and China Communications Construction Company Ltd and Nantong Yahua Shipbuilding Co., Ltd. (Confidential treatment has been requested for portions of this agreement)		10-Q	000-51368	10.6	5/15/2007
10.25	Shipbuilding Contract between Sunswyck Maritime Corp. and China Communications Construction Company Ltd and Nantong Yahua Shipbuilding Co., Ltd. (Confidential treatment has been requested for portions of this agreement)		10-Q	000-51368	10.7	5/15/2007
10.26	Amendment Number 1, dated June 27, 2007, to Shipbuilding Contract between Argyle Maritime Corp. and China Communications Construction Company Ltd and Nantong Yahua Shipbuilding Co., Ltd.		10-Q	000-51368	10.1	8/10/2007
10.27	Amendment Number 2, dated June 27, 2007, to Shipbuilding Contract between Caton Maritime Corp. and China Communications Construction Company Ltd and Nantong Yahua Shipbuilding Co., Ltd.		10-Q	000-51368	10.2	8/10/2007
10.28	Amendment Number 2, dated June 27, 2007, to Shipbuilding Contract between Dorchester Maritime Corp. and China Communications Construction Company Ltd and Nantong Yahua Shipbuilding Co., Ltd.		10-Q	000-51368	10.3	8/10/2007
10.29	Amendment Number 2, dated June 27, 2007, to Shipbuilding Contract between Longwoods Maritime Corp. and China Communications Construction Company Ltd and Nantong Yahua Shipbuilding Co., Ltd.		10-Q	000-51368	10.4	8/10/2007
10.30	Amendment Number 2, dated June 27, 2007, to Shipbuilding Contract between McHenry Maritime Corp. and China Communications Construction Company Ltd and Nantong Yahua Shipbuilding Co., Ltd.		10-Q	000-51368	10.5	8/10/2007
10.31	Amendment Number 1, dated June 27, 2007, to Shipbuilding Contract between Sunswyck Maritime Corp. and China Communications Construction Company Ltd and Nantong Yahua Shipbuilding Co., Ltd.		10-Q	000-51368	10.6	8/10/2007
10.32	Restricted stock grant agreement for 100,000 shares granted to Ferdinand Lepere under the TBS International Limited 2005 Equity Incentive Plan*		10-Q	000-51368	10.7	8/10/2007
10.33	TBS International Limited 2005 Equity Incentive Plan, as amended*		10-Q	000-51368	10.1	11/9/2007
10.34	TBS International Limited 2005 Equity Incentive Plan - Form of Share Unit Award Agreement*		10-Q	000-51368	10.2	11/9/2007
10.35	Loan Agreement, dated December 7, 2007, by and among Claremont Shipping Corp. and Yorkshire Shipping Corp., and Credit Suisse as Lender		10-K	000-51368	10.37	3/14/2008
10.36	Loan Agreement, dated January 16, 2008, by and among Bedford Maritime Corp, Brighton Maritime Corp, Hari Maritime Corp, Prospect Navigation Corp, Hancock Navigation Corp, Columbus Maritime Corp and Whitehall Marine Transport Corp. as Borrowers, TBS International Limited as Guarantor, the banks and financial institutions named thereto as Lenders, DVB Group Merchant Bank (Asia) Ltd. as Facility Agent and Security Trustee, The Governor and Company of the Bank of Ireland as Payment Agent, DVB Bank AG, The Governor and Company of the Bank of Ireland and Natixis as Swap Banks and Mount Washington LLC as Arranger		10-K	000-51368	10.38	03/14/2008
10.37	Loan Agreement, dated February 29, 2008 by and among Amoros Maritime Corp., Lancaster Maritime Corp. and Chatham Maritime Corp. as Borrowers, TBS International Limited as Parent Guarantor, and AIG Commercial Equipment Finance, Inc., as Lender		10-K	000-51368	10.39	03/14/2008
10.38	Lease of Real Property, dated January 1, 2008, between Joseph E. Royce as Landlord and TBS Shipping Services Inc. as Tenant for premises located at 612 East Grassy Sprain Road, Yonkers, New York 10710		10-K	000-51368	10.40	03/14/2008
10.39	Amended and Restated Credit Agreement dated as of March 26, 2008, by and among Albemarle Maritime Corp, Arden Maritime Corp, Avon Maritime Corp, Birnam Maritime Corp, Bristol Maritime Corp, Chester Shipping Corp, Darby Navigation Corp, Dover Maritime Corp, Elrod Shipping Corp, Exeter Shipping Corp, Frankfort Maritime Corp, Glenwood Maritime Corp, Hansen Shipping Corp, Henley Maritime Corp, Hudson Maritime Corp, Montrose Maritime Corp, Oldcastle Shipping Corp, Rector Shipping Corp, Remsen Navigation Corp, Sheffield Maritime Corp, Sherman Maritime Corp, Sterling Shipping Corp, Stratford Shipping Corp, Vernon Maritime Corp, Windsor Maritime Corp, and the other persons named thereto as Borrowers, TBS International Limited as a Guarantor, TBS Shipping Services Inc. as Administrative Borrower, Bank of America, N.A. as Administrative Agent, Swing Line Lender and L/C Issuer, the other lenders named thereto, Citibank, N.A. and DVB Group Merchant Bank (Asia) Ltd. as co-Syndication Agents, TD Banknorth, N.A. as Documentation Agent, and Banc of America Securities LLC as Sole Lead Arranger and Sole Book Manager		10-Q	000-51368	10.1	05/09/2008
10.40	2005 Equity Incentive Plan, Form of Restricted Share Award Agreement *		10-Q	000-51368	10.2	05/09/2008
10.41	2005 Equity Incentive Plan, Form of Share Unit Award Agreement *		10-Q	000-51368	10.3	05/09/2008
10.42	First Amendment to June 29, 2005 Letter Agreement Granting Restricted Shares to Ferdinand V. Lepere *		10-Q	000-51368	10.4	05/09/2008
10.43	Lease agreement, dated January 1, 2009, between Joseph E. Royce, Landlord and TBS Shipping Services Inc., tenant for premises located at 612 East Grassy Sprain Road, Yonkers, New York 10710	X		000-51368	10.1
21.1	Subsidiaries of the Registrant	X		000-51368	21.1
23.1	Consent of PricewaterhouseCoopers LLP	X			23.1
31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities and Exchange Act, as amended	X		000-51368	31.1
31.2	Certification of the Chief Financial and Accounting Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities and Exchange Act, as amended	X		000-51368	31.2
31.3	Certification of the Chief Accounting Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities and Exchange Act, as amended	X		000-51368	31.3
32	Certification of Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X		000-51368	32

																Accumulated
																Other Com-
												Additional				prehensive
	Common Shares			Treasury Stocks				Warrants				Paid-in		Retained		Income
	Shares	Amount		Shares	Amount			Shares		Amount		Capital		Earnings		(Loss)		Total

Balance at December 31, 2005	27,694,957	$	277						288,853	$	21	$	87,586	$	96,323			$	184,207
Net income															39,060				39,060
Unrealized gain on cash flow hedges																42			42
Comprehensive income																			39,102
Stock-based award activity	29,500												295						295

Balance at December 31, 2006	27,724,457		277						288,853		21		87,881		135,383	42			223,604
Net income															98,249			$	98,249
Unrealized loss on cash flow hedges																(2,939	)		(2,939	)
Comprehensive income																			95,310
Stock-based award activity	31,000												649						649
Balance at December 31, 2007	27,755,457		277						288,853		21		88,530		233,632	(2,897	)	$	319,563
Net income															191,777				191,777
Unrealized gain on securities available for sale
Unrealized loss on cash flow hedges																(10,830	)		(10,830	)
Comprehensive income																			180,947
Stock based compensation	154,500		2										2,434						2,436
Secondary public offering,
net of expenses	2,000,000		20										95,719						95,739
Increase in Warrants due to
anti-dilutive provisions									23,050
Treasury stock				10,000		(389	)												(389	)
Balance at December 31, 2008	29,909,957	$	299	10,000	$	(389	)		311,903	$	21	$	186,683	$	425,409	(13,727	)	$	598,296

TBS International Limited (Bermuda)
	Westbrook Holdings Ltd And Its Subsidiaries (Marshall Islands)
		Ablemarle Maritime Corp. - Mohawk Princess
		Amoros Maritime Corp.. - Hopi Princess
		Arden Maritime Corp. - Tayrona Princess
		Avon Maritime Corp. - Wichita Belle
		Bedford Maritime Corp. -Apache Maiden
		Beekman Shipping Corp. - Laguna Belle
		Birnham Maritime Corp. - Sioux Maiden
		Brighton Maritime Corp. - Kickapoo Belle
		Bristol Maritime Corp. - Tuscarora Belle
		Chatham Maritime Corp. - Zuni Princess
		Chester Shipping Corp. - Tamoyo Maiden
		Claremont Shipping Corp. - Arapaho Belle
		Columbus Maritime Corp. - Seneca Maiden
		Cumberland Navigation Corp. - Fox Maiden
		Darby Navigation Corp. - Nyack Princess
		Dover Maritime Corp. - Aztec Maiden
		Dyker Maritime Corp. - Caribe Maiden
		Elrod Shipping Corp. - Nanticoke Belle
		Exeter Shipping Corp. - Alabama Belle
		Fairfax Shipping Corp. - Seminole Princess
		Frankfort Maritime Corp. - Shawnee Princess
		Glenwood Maritime Corp. - Miami Maiden
		Grainger Maritime Corp. - Ottawa Princess
		Hancock Navigation Corp. - Kiowa Princess
		Hansen Shipping Corp. - Ainu Princess
		Hari Maritime Corp. - Navajo Princess
		Hartley Navigation Corp.- Canarsie Princess
		Henley Maritime Corp. - Tuckahoe Maiden
		Hudson Maritime Corp. - Chesapeake Belle
		Jessup Maritime Corp.- Savannah Belle
		Lancaster Maritime Corp. - Mohave Maiden
		Leaf Shipping Corp. - Management Company
		Montrose Maritime Corp. - Yakima Princess
		Oldcastle Shipping Corp. - Taino Maiden
		Pacific Rim Shipping Corp. - Philippine
		Prospect Navigation Corp. - Inca Maiden
		Quentin Navigation Corp.- Houma Belle
		Rector Shipping Corp. - Siboney Belle
		Remsen Navigation Corp. - Maori Maiden
		Sheffield Maritime Corp. - Manhattan Princess
		Sherman Maritime Corp. - La Jolla Belle
		Sherwood Shipping Corp.- Zia Belle
		Sterling Shipping Corp. - Biloxi Belle
		Stratford Shipping Corp. - Iroquois Maiden
		Vedado Maritime Corp. - Tupi Maiden
		Vernon Maritime Corp. - Mohegan Princess
		Whitehall Marine Transport Corp. - Cherokee Princess
		Windsor Maritime Corp. - Shinnecock Belle
		Yorkshire Shipping Corp.- Oneida Princess
		Argyle Maritime Corp. - Rockaway Belle (New Vessel Building)
		Caton Maritime Corp. - Dakota Princess ( New Vessel Building)
		Dorchester Maritime Corp. (New Vessel Building)
		Longwoods Maritime Corp. (New Vessel Building)
		Mchenry Maritime Corp. (New Vessel Building)
		Sunswyck Maritime Corp. (New Vessel Building)
	Transworld Cargo Carriers Sa (Marshall Islands)
	TBS Worldwide Services, Inc (Marshall Islands)
		TBS African Ventures Limited
			GMTBS Africa line, Ltd (Hong Kong - 50%)
		TBS Eurolines, Ltd
		TBS Latin America Liner, Ltd
		TBS Middle East Carriers, Ltd
		TBS North America Liner, Ltd
		TBS Ocean Carriers, Ltd
		TBS Pacific Liner, Ltd
	Mercury Marine Ltd. (Formerly TBS Logistics Ltd) (Marshall Islands)
	Roymar Ship Management, Inc (New York)
	TBS Shipping Services Inc (New York)
		Compass Chartering Corp. (New York)
			Azalea Shipping & Chartering Inc (New York)
		TBS US Enterprises LLC (Delaware)
		TBS Energy Logistics (Delaware)
		TBS Logistics Incorporated (Texas)
	TBS Warehouse & Equipment Holdings Ltd. (Marshall Islands)
		TBS Warehouse & Distribution Group Ltd(Marshall Islands)
			Panamerican Port Services SAC (50% ownership)
	TBS Mining Limited (Marshall Islands)
		GAT-TBS Consorcio S.A. (50% ownership)
	TBSI New Ship Development Corp. (Marshall Islands)

		Useful
Description		Life
Vessel		Remaining vessel life, 4 -21 years
Vessel improvements		Remaining vessel life, 4 -21 years
Vessel equipment		2-5 years
Other fixed assets including grabs		3-10 years

	Balance at				Write-offs Net of			Balance at
	Beginning of Year		Additions		Recoveries			End of Year
December 31, 2008	$	490	$	54	$	(44	)	$	500
December 31, 2007	$	443	$	81	$	(34	)	$	490
December 31, 2006	$	694	$	0	$	(251	)	$	443

Company	Vessel	Date Vessel Delivered	Purchase Price		Estimated Useful Life at Time of Acquisition
Hartley Navigation Corp.	Canarsie Princess	June 17, 2008	$	30,300		7.5
Dyker Maritime Corp.	Caribe Maiden	March 11, 2008		23,000		9.8
Cumberland Navigation Corp.	Fox Maiden	August 22, 2008		35,250		7.4
Amorous Maritime Corp.	Hopi Princess	February 15, 2008		18,360		6.9
Quentin Navigation Corp.	Houma Belle	June 18, 2008		34,020		7.5
Lancaster Maritime Corp	Mohave Maiden	February 19, 2008		26,000		6.9
Yorkshire Shipping Corp.	Oneida Princess	February 11, 2008		32,000		20.9
Grainger Maritime Corp.	Ottawa Princess	March 25, 2008		23,000		9.8
Vedado Maritime Corp.	Tupi Maiden	August 11, 2008		44,000		14.4
Sherwood Shipping Corp.	Zia Belle	December 12, 2008		20,600		19.1
Chatham Maritime Corp.	Zuni Princess	January 29, 2008		26,000		6.9
Vessel Acquisitions for the year ended December 31, 2008			$	312,530

	Interest Rate December 31, 2008			December 31, 2008		December 31, 2007
Bank of America - term credit facility				$		$	50,446
Bank of America - revolving credit facility							70,375
Bank of America - term credit facility,
expires December 31, 2011		2.71	%		95,000
Bank of America - revolving credit facility,		4.08% - 4.15	%
expires March 26, 2012		4.08% - 4.15	%		75,000
The Royal Bank of Scotland credit facility							4,345
The Royal Bank of Scotland credit facility,
new vessel buildings, expires December 31, 2020		3.21	%		75,000		35,000
Credit Suisse credit facility,
expires December 12, 2017 and February 19, 2018	3.22% & 3.30		%		31,750		20,000
DVB Group Merchant Bank (Asia) Ltd credit facility,
expires January 23, 2013		6.33	%		60,324
AIG Commercial Equipment Finance, Inc. credit facility,
expires April 1, 2012		5.00	%		29,750
Commerzbank AG credit facility,
expires June 2, 2011		3.72	%		6,500
Berenberg Bank credit facility,
expires June 19, 2012		3.33	%		9,750
Debt balance				$	383,074	$	180,166

(in thousands)	Amount of Gain or (Loss) Recognized in OCI on Derivatives (Effective Portion)

Derivatives in SFAS 133 Cash Flow Hedging Relationships	December 31, 2008			December 31, 2007

Interest rate contracts	$	(13,727	)	$	(2,897	)

(in thousands)
		Level 1	Level 2		Level 3
Liabilities
	Interest rate contracts	$	$	15,432	$

			Accrued
	Accounts		and Other
Period	Payable		Liabilities		Total

December 31, 2008	$	1,530	$	1,293	$	2,823
December 31, 2007	$	709	$	1,679	$	2,388

	Number of Share Units			Number of Restricted Shares			Weighted-Average Fair Value at Grant Date		Aggregate Value at Grant Date

Non-vested at December 31, 2005					104,500
Granted
Forfeited
Vested					(29,500	)
Non-vested at December 31, 2006					75,000
Granted, restricted shares					79,500		$	34.01	$	2,704
Granted, share units		15,000					$	31.19	$	468
Forfeited
Vested					(31,000	)
Non-vested at December 31, 2007		15,000			123,500
Granted, restricted shares					26,000		$	33.80	$	879
Granted, share units
Forfeited
Vested		(5,000	)		(37,500	)
Non-vested at December 31, 2008		10,000			112,000

			Office
At December 31, 2008	Vessel Hire		Premises		Total
2009	$	7,331	$	566	$	7,897
2010		5,530		298		5,828
2011		5,366				5,366
2012		5,380				5,380
2013		5,366				5,366
Thereafter		441				441
	$	29,414	$	864	$	30,278

		TBS INTERNATIONAL LIMITED
		(Registrant)


		/s/ Joseph E. Royce
		Joseph E. Royce President, Chief Executive Officer, Chairman and Director

		/s/ Ferdinand V. Lepere
		Ferdinand V. Lepere Executive Vice President, Chief Financial Officer

		/s/ Frank J. Pittella
		Frank J. Pittella Chief Accounting Officer


/s/ Joseph E. Royce		/s/ Ferdinand V. Lepere
Joseph E. Royce, President, Chief Executive Officer, Chairman and Director		Ferdinand V. Lepere, Executive Vice President, Chief Financial Officer


/s/ Frank J. Pittella		/s/ Gregg L. McNelis
Frank J. Pittella, Chief Accounting Officer		Gregg L. McNelis, Senior Executive Vice President,
		Chief Operating Officer and Director


/s/ James W. Bayley		/s/ John P. Cahill
James W. Bayley, Vice President and Director		John P. Cahill, Director


/s/ Randee E. Day		/s/ William P. Harrington
Randee E. Day, Director		William P. Harrington, Director


/s/ Alexander Smigelski		/s/ Peter S. Shaerf
Alexander Smigelski, Director		Peter S. Shaerf, Director