The board has nominated eight candidates to serve a one-year term each. If elected, their terms would expire at the Company's 2006 annual meeting of shareholders.

We note that five of the eight directors are either affiliated with the Company or are insiders. We believe this raises serious concerns about the objectivity and independence of the board and its ability to perform its proper oversight role. We prefer boards with a significantly lower percentage of affiliates and insiders. However, Thomas Crowley, Jr. beneficially owns 64.4% of the Company?s common stock, 100% of the Company's class N stock and 99.9% of the Company's series A preferred stock. Mr. Crowley has advised the Company that it intends to vote all of its voting common stock in favor of each of the eight director nominees and thus will ensure their election without action on the part of any other shareholder. We suspect that most, if not all, shareholders both understand and accept the nature and extent of Mr. Crowley's control over the Company and the composition of its board.

We believe it is important for shareholders to be mindful of the following issues:

In December 2004, three institutional investors (Frankling Resources, Oppenheimer + Close and Wynfield Capital) filed a class action and derivative lawsuit in Delaware alleging that the Company has breached its fiduciary duty by discriminating in favor of the controlling Crowley family against the interests of minority stockholders. The plaintiffs are understood to have participated in the Crowley Shareholder Forum, which was organized by corporate governance crusader Gary Lutin and shareholderforum.com. It is also important to note that while some shareholders reportedly see a need for court intervention, most would prefer a more constructive resolution. (Crowley Clan Comes Under Investor Fire; TradeWinds, 12/3/04). According to the plaintiffs the Company has "engaged in a series of transactions designed to perpetuate and/or to enhance the Crowley family's control, to limit the information available to the company's public stockholders and to operate the company in a manner reflective of a closely-held family corporation and not a corporation with unaffiliated public stockholders" (TradeWinds, December 3, 2004). As proof, the lawsuit cites Company funded insurance policies on behalf of the Crowley family that date back at least to 1992 and by November 1998 reached a face value of $141million. The funding of the policies was stopped in 2002 over concerns that the paid premiums would not comply with Sarbanes Oxley. Since no decision has been rendered by the court, we refrain from recommending to withhold votes based on these allegations at this time. We will monitor this issue going forward.

In May 2004, the Company paid $6.3 million to settle asbestos-related illness claims by former seaman. Other claims, known since 1996, have yet to be resolved. In respone, the Company is pushing insurers to get back the $6.3 million (TradeWinds, August 17, 2004).

We recommend withholding votes from the following nominees up for election this year based on the following issues:

Nominee BOWLES serves as a member of the compensation committee. In our view, both the audit and compensation committees should consist solely of independent directors. In addition, to these issues of concern, due to the lack of a two-thirds independent board, we recommend withholding votes from this nominee based on his status as an affiliate.

Nominee THOMAS CROWLEY also serves as chairman, president and CEO and the board does not have an independent lead or presiding director. We view an independent chairman as better able to oversee the executives of the Company and set a pro-shareholder agenda without the management or other conflicts that an executive insider or affiliated director might face. This, in turn, leads to a more proactive and effective board of directors in our view. When the position of chairman of the board is held by either an insider or affiliate, we believe that it is the responsibility of the nominating and/or governance committee to appoint an independent lead or presiding director to ensure proper oversight. In the absence of a nominating and/or governance committee, however, we recommend withholding from the chairman of the board, Mr. Crowley, on this basis.

Nominee DEPOLO serves as the chairman of the audit committee. The audit committee did not put the selection of the auditor up for shareholder ratification at the 2005 annual meeting, an omission which we believe constitutes a failure to fulfill the committee's duty to shareholders. Given that audit fees are reasonable in proportion to non-audit fees, we recommend withholding votes only from the chair of the audit committee this year. We believe that the audit committee should allow shareholders to ratify its selection of the independent auditor going forward.

Nominee WOLFE is a partner of Orrick, Herrington & Sutcliffe, which provides legal services to the Company. We question the need for the Company to engage in professional services relationships with its directors. We view such relationships as potentially creating conflicts for directors, as they may be forced to weigh their own interests in relation to shareholder interests when making board decisions. In addition, a company's decision regarding where to turn for the best professional services may be compromised when doing business with the law firm of one of the company's directors.

In addition, Mr. Wolfe serves as chairman of the compensation committee. In our view, both the audit and compensation committees should consist solely of independent directors. In addition to these issues of concern, due to the lack of a two-thirds independent board, we recommend withholding votes from this nominee based on his status as an affiliate.

We do not believe there are substantial issues for shareholder concern as to any other nominee.

Accordingly, we recommend that shareholders vote:

WITHHOLD: Bowles; Crowley; Depolo; Wolfe