1299716--3/15/2006--U.S._Shipping_Partners

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Risks Inherent in Our Business We may not have sufficient available cash to enable us to pay the minimum quarterly distribution following establishment of cash reserves and payment of fees and expenses, including payments to our general partner. The amount of cash we have available for distribution to unitholders depends primarily on our cash flow and not solely on profitability. Our business would be adversely affected if we failed to comply with the Jones Act provisions on coastwise trade, or if those provisions were modified or repealed. Because we must make substantial expenditures to comply with mandatory drydocking requirements for our fleet, and because these expenditures may be higher than we currently anticipate, we may not have sufficient available cash to pay the minimum quarterly distribution in full. The cost of bringing our fleet into compliance with OPA 90 will be significant; this may cause us to reduce the amount of our cash distributions or prevent us from raising the amount of our cash distributions. The amount of estimated maintenance capital expenditures our general partner is required to deduct from basic surplus each quarter is based on our current estimates and could increase in the future. Capital expenditures and other costs necessary to operate and maintain our vessels tend to increase with the age of the vessel and may also increase due to changes in governmental regulations, safety or other equipment standards. If we are unable to fund our capital expenditures, we may not be able to continue to operate some of our vessels, which would have a material adverse effect on our business and our ability to pay the minimum quarterly distribution. A decline in demand for refined petroleum, petrochemical and commodity chemical products, particularly in the coastal regions of the United States, or a decrease in the cost of importing refined petroleum products, could cause demand for U.S. flag tank vessel capacity and charter rates to decline, which would decrease our revenues, profitability and cash available for distribution. Marine transportation has inherent operating risks, and our insurance may not be adequate to cover our losses. Because we obtain some of our insurance through protection and indemnity associations, we may also be subject to calls, or premiums, in amounts based not only on our own claim records, but also the claim records of all other members of the protection and indemnity associations. The failure or inability of Hess to make support payments could adversely affect our business and cash available for distribution. The termination of the Hess support agreement could adversely affect our ability to make cash distributions. We rely on a limited number of customers for a significant portion of our revenues. The loss of any of these customers could adversely affect our business and operating results. We may not be able to renew our long-term contracts when they expire. We have a limited number of vessels, and any loss of use of a vessel could adversely affect our results of operations. Increased competition in the domestic tank vessel industry could result in reduced profitability and loss of market share for us. Delays or cost overruns in the construction of a new vessel or the retrofit or drydock maintenance of existing vessels could adversely affect our business. Cash flows from new or retrofitted vessels may not be immediate or as high as expected. Our purchase of existing vessels involves risks that could adversely affect our results of operations. We may not be able to grow or effectively manage our growth. We are subject to complex laws and regulations, including environmental regulations, which can adversely affect the cost, manner or feasibility of doing business. We depend upon unionized labor for the provision of our services. Any work stoppages or labor disturbances could disrupt our business. Our employees are covered by federal laws that may subject us to job-related claims in addition to those provided by state laws. We depend on key personnel for the success of our business and some of those persons face conflicts in the allocation of their time to our business. Terrorist attacks have resulted in increased costs and any new attacks could disrupt our business. Changes in international trade agreements could affect our ability to provide marine transportation services at competitive rates. Risks Inherent in an Investment in Us Our general partner and its affiliates have conflicts of interest and limited fiduciary duties, which may permit them to favor their own interests to the detriment of our unitholders. Our partnership agreement limits our general partner s fiduciary duties to unitholders and restricts the remedies available to unitholders for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty. Even if unitholders are dissatisfied, they cannot initially remove our general partner without its consent. We may issue additional common units without your approval, which would dilute your ownership interests. Our partnership agreement currently limits the ownership of our partnership interests by individuals or entities that are not U.S. citizens. This restriction could limit the liquidity of our common units. Our general partner has a limited call right that may require you to sell your common units at an undesirable time or price. Our partnership agreement restricts the voting rights of unitholders owning 20% or more of our common units. Our debt levels may limit our flexibility in obtaining additional financing and in pursuing other business opportunities. Our credit facility contains operating and financial restrictions which may restrict our business and financing activities. Restrictions in our credit facility limit our ability to pay distributions upon the occurrence of certain events. We can borrow money under our amended and restated credit facility to pay distributions, which would reduce the amount of revolving credit available to operate our business. Costs due our general partner and its affiliates will reduce available cash for distribution to you. You may not have limited liability if a court finds that unitholder action constitutes control of our business. The control of our general partner may be transferred to a third party without unitholder consent. The members of United States Shipping Master LLC, including our executive officers, and their affiliates may engage in activities that compete directly with us. The price of our units may fluctuate significantly, and you could lose all or part of your investment. We will incur increased costs as a result of being a public partnership. Our tax treatment depends on our status as a partnership for federal income tax purposes, as well as our not being subject to entity-level taxation by states. If the IRS were to treat us as a corporation or if we were to become subject to entity-level taxation for state tax purposes, then our cash available for distribution to you would be substantially reduced. We have a subsidiary that will be treated as a corporation for federal income tax purposes and subject to corporate-level income taxes. If the IRS or a state tax authority contests the tax positions we take, the market for our common units may be adversely impacted, and the costs of any contest will be borne by our unitholders and our general partner. You may be required to pay taxes on your share of our income even if you do not receive any cash distributions from us. Tax gain or loss on the disposition of our common units could be different than expected. Tax-exempt entities, regulated investment companies and foreign persons face unique tax issues from owning common units that may result in adverse tax consequences to them. We will treat each purchaser of units as having the same tax benefits without regard to the units purchased. The IRS may challenge this treatment, which could adversely affect the value of the common units. You will likely be subject to state and local taxes and return filing requirements as a result of investing in our common units. The sale or exchange of 50% or more of our capital and profits interests will result in the termination of our partnership for federal income tax purposes.

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1299716--3/15/2006--U.S._Shipping_Partners_L.P.