SOUNDINGS Safe Responsible Reliable Efficient

Harley Mar ine Serv ices, Inc.Har ley Mar ine Serv ices, Inc.

PRESS RELEASE HARLEY MARINE EXPANDS SERVICE INTO NEW PORT

Twelve Barges are added to the HMS Fleet for Petroleum

Transportation in the Gulf

SEATTLE, WA (February 1, 2011) – Harley Marine Services, a full

service marine transportation company, has expanded its service to

the American Gulf by acquiring the former MGI of Houston, Texas. This

business will be operated under Harley Marine Gulf incorporating all of the quality and safety

procedures established within the Harley Marine family of companies.

Formed in 1976, MGI has eight boats on long term charter but operate twelve double hull barges in

all. Four of the barges transfer product between terminals, and eight are bunker barges that work in

the Houston, Galveston and Lake Charles areas with two permanently stationed in Houston and two

in New Orleans. MGI has positioned itself well in the Gulf market and as part of Harley Marine will

surpass its commitment to provide superior petroleum transportation and bunker services to its cus-

tomer base.

The transaction extends Harley Marine’s geographical presence to the Gulf Coast and will open the

door to new opportunities to excel in the marine transportation industry. Harley Franco, Chairman

and CEO of Harley Marine Services states, ―MGI will be a welcomed addition to the Harley Marine

Family of Companies. HMS has always focused on safety, environmental stewardship, and cus-

tomer service. MGI will strengthen our position in the Gulf region and move us toward our goal in

becoming the leading provider of petroleum services nationally.‖ Harley Marine Gulf will stand out in

the industry by providing superior, quality customer service at all times. Their fleet is strategically

positioned within the Gulf so that it will respond to the customer demand at a moment’s notice.

Harley Marine Services is a full service marine transportation company providing quality services

along the United States West Coast, Alaska, New York/New Jersey Harbor and Gulf Coast including

the transportation and storage of petroleum products, ship assist and escort, and the transportation

of general cargo. Harley Marine companies aim to set the benchmark for quality operations by safe,

responsible, reliable, and efficient performance in the marine transportation and petroleum indus-

tries. For more information, please visit www.harleymarine.com.

FEBRUARY

HOLIDAYS

14th - Valentine’s Day

21st - Presidents Day

(HMS Offices will be closed in

observance of the holiday)

THUMBS UP

Thumbs Up to Michael Coleman, Port Captain at OTB for his assistance with the crew members on the Millennium Dawn and Ernest Campbell. We appreciate your help as always!

Thumbs Up to Wir Smith, for his huge helping hand to get So-Cal the barge computers and keeping everyone online. We thank you for your continued support!

Safe, Responsible, Rel iable, Ef f ic ient Page 2

CAPTAINS MEET AGAIN CARNIVAL SPLENDOR TRANSITS COAST TO DRYDOCK

When Captain Giorgio Pagano’s

vessel, Carnival Splendor,

suffered an engine room fire last

November while at sea with

thousands of passengers aboard,

he called Capt. Si Layfield and the

expert rescue towing team at

Millennium Maritime to help.

Since the passengers safely

disembarked the ship in San Diego,

mechanics, electricians and

computer specialists have been

busy repairing, rebuilding and

testing the ship’s propulsion and

control systems. The next task is

to drydock the ship in San

Francisco for inspection and repair.

Once again, Captain Pagano called Millennium Maritime for the San

Diego assist, coastwise escort and tow across San Francisco Bay to

the shipyard. Then came the delicate task of guiding the ship into

drydock.

To be prepared for every contingency and ensure a safe and

uneventful transit, a planning meeting was held the day before

scheduled departure. This brought Captains Pagano and Layfield

together again, the first time since their first meeting at sea. This time

to plan the voyage ahead, but also to reminisce their earlier adventure

when the Splendor was disabled by an engine room fire. Capt.

Jan-Erik Pedersen, Capt. Jonathan Mendes and Don Meberg were

instrumental in working with the Captains to develop a successful

voyage plan and address possible contingency.

When the Carnival Splendor arrived in San Francisco, there were no

television cameras, reporters, anxious relatives waiting on the shore

or Coast Guard escort. Just another routine arrival. Smooth, boring

and uneventful….and we all shared a can of leftover Spam for lunch.

Thanks Capt. Si! Another job well done.

Don Meberg

Harley Marine Services

Safe, Responsible, Rel iable, Ef f ic ient Page 3

Q-Factor

CAPTAIN’S RESPONSIBILITIES / AUTHORITY The Captain/Master is the supreme authority and management representative onboard the vessel. Company policies and procedures set management expectations for safe operations, but they do not relieve the Captain from his regulatory responsibilities. Assistance from the Company is given as advice to establish compliance with international, national, local and industry standards, leaving the final decision and responsibility with the Captain. The Captain is responsible for proper vessel safety, utilization and maintenance. It is the duty of the Captain to ensure all personnel on board understands their individual and team responsibilities when signing on. As the direct manager of the vessel, the Captain is to ensure that all tasks are completed as directed and meet the expectations of the Standard of Care, including but not limited to:

Watch keeping

Maintenance planning and follow-up

Emergency measures and drills

Cargo operations

All tasks relevant to the proper vessel utilization and safe operation. With regard to quality and safety policies, the Captain is the head of the quality and safety committee on board and is responsible for:

Implementing the quality and safety policy of the Company on basis of standards, conventions, codes and national legislation.

Motivating the crew in the execution of that policy.

Issuing appropriate orders and instructions to all crew members in a clear and simple manner.

Reviewing the quality and safety guide-lines and pollution prevention procedures.

Implementing regular quality and safety meetings to plan and review all progress regarding quality and safety onboard.

Master’s Review and Inspections and ensuring proper reporting to the Quality, Safety and Environmental Department.

Filing of all check-lists. The Captain shall ensure that all emergency procedures are defined and maintained through planning, training and drills to minimize the consequences if accidents / incidents should occur, including anti-pollution and safety measures, in the best interest of crew, vessel and marine environment. The Captain is to ensure that all lifesaving and safety equipment is kept in a proper working order according to regulations at all times. The Captain is responsible to report to the Company all defects and other matters which could affect the safe operation of the vessel or could present a risk of pollution, and which require the assistance of the Company to ensure that they are rectified and implemented onboard all vessels concerned.

Continued on following page...

Safe, Responsible, Rel iable, Ef f ic ient Page 4

Q-Factor

CAPTAIN’S RESPONSIBILITIES / AUTHORITY Continued from previous page...

The Captain is responsible for the seaworthiness of the vessel in accordance with rules and regulations issued by National Authorities, Flag States, Port States and Classification Societies. The Captain is responsible for safe navigation at all times, crew relationships, catering and welfare, good discipline, evaluation of crew performance, training, familiarization and working morale and has full authority to take the proper decision according to the circumstances.

The Captain is responsible for all necessary reporting and liaisons onboard. He represents the Company, the owners, as well as the charterers, and is the re-porting line to the Company, owners, charterers, and any third party as instructed or required. The Captain is responsible for any assigned accounting of the vessel, slop chest, provisions, control of purchasing, and if necessary to report any discrepancy. One of the Captain’s main functions are to keep professionally up to date, to provide his/her experience to the vessel’s crew in a way to increase safety, experience and professional updating.

Interrelations (Ship-Shore) The Captain is responsible for the feedback line of data from the vessel to the company or any third party, as described by policy, procedure, regulation or custom. As a summary we could say that: The Captain/Master is responsible for the seaworthiness, navigation, cargo and maintenance of the vessel, according to all mandatory regulations. He/she is responsible to identify all defects and to report them to the Company. The Captain will assist the shore based management with information. Good communication between both parties is, in this matter, vital. The Captain is responsible for all reporting obligations onboard such as, but not limited to:

Daily annotations in logbook

Soundings and report in logbook

Daily rounds and report in logbook

Safety rounds and report in logbook

Sanitary inspections and report in logbook

Safety drills, main safety maintenance and report in logbook

Main test and routines and report in logbook

Operational information and report in logbook

Reference: Harley Marine Operations Manual, Procedure 02-140, which also describes the duties and responsibilities of all crew members.

Safe, Responsible, Rel iable, Ef f ic ient Page 5

2011 Harley Marine Safety Training

As we enter the New Year, we are also

preparing to begin a new round of safety

training at Fremont Maritime. This will be our

second year of training made available to our

employees. Last year was a big success with

Fremont. Crew feedback was very positive and

everyone took a lot of useful information away

from the training. Fremont traveled to Alameda

and Los Angeles and conducted the training on

site at the California ports as well. Thanks to

Jonathan Mendes and Dan Morrison in

Alameda, Andre Nault in Los Angeles, and Mike

Coleman and Tim Kline in Seattle for helping to

make the training a success in their ports. This

year we will also expand our training to the

crews at HMNY.

The STCW portion of the training last year covered fire fighting. The training was a combination of classroom

refresher and practical hands on training. This year, the STCW portion will cover First Aid, CPR, and AED. It

will also be a combination of classroom and practical training. Some of the other topics for this year will

include: fit testing for the half-mask respirators, H2S Awareness, Environmental Protection, and Shipboard

Emergency Procedures.

Fremont customizes the training to fit our industry as well as our company requirements. This is not generic

training. They train with the same equipment, or very similar to, what the crews have onboard their vessels.

Fremont also incorporates Harley Marine policies into the training to keep the training in line with how we

operate.

Fremont Maritime did a great job last year and we are looking forward to another successful year of safety

training with them.

Captain Scott Manley

2011 Harley Marine Safety Seminar Schedule

Instructor Lisa Whitley at one of our last safety training classes

Seattle Long Beach San Francisco

March 21-22 April 11-12 May 26-27

March 31-April 1 May 23-24 August 1-2

April 28-29 June 6-7 November 10-11

June 16-17 September 8-9

June 27-28 November 7-8

July 18-19

August 11-12

September 5-6

September 19-20

October 27-28

Safe, Responsible, Rel iable, Ef f ic ient Page 6

Safety Corner

Food Safety at Home and Aboard

At home or on the boat, food safety concerns revolve around three main functions:

food storage, food handling and cooking. Below are a few tips on food safety.

How much food do you have in the pantry, refrigerator or freezer that has been kept

for too long and you’re now not sure if it’s still good? As long as canned items are

stored in a cool, dry area (50 to 70 degrees) you’ll enjoy safe and tasty foods. Canned

high-acid foods such as juices, tomatoes, fruits, pickles and sauerkraut store well for

12 to 18 months. Canned meats and vegetables will store fine for two to five years.

Refrigerators should stay at 40°F (5°C) or less. Leftovers should be refrigerated as soon as possible (within

two hours after cooking). Even a small amount of contaminated food can cause illness. Date leftovers so

they can be used within a safe time. Generally, they remain safe when refrigerated for three to five days.

Foods in your freezer can last for up to a year, provided the temperature stays at 0 degrees or below. Beef

cuts and hamburger can keep their quality for up to a year, while pork products are best eaten in six months

or less.

To enjoy the best quality, use a permanent marker to write the purchase date on items before storing them.

And, remember—when in doubt, throw it out!

Kitchen or galley counters and other surfaces that come in contact with food should be cleaned with soap and

water and sanitized with a bleach solution. When a cutting board is used in your kitchen or galley to cut raw

meat, poultry or fish and it is going to be used to chop another food, the board must be washed with soap and

hot water and then sanitized. Make sure to keep dishcloths and sponges clean and replace them often as

they can contain bacteria.

When cooking meats use a digital or dial food thermometer to make sure a safe temperature is reached

Beef, lamb and veal — 145°F (63°C)

Pork and ground beef — 160°F (71°C)

Whole poultry and thighs — 180°F (82°C)

Poultry breasts — 170°F (77°C)

Ground chicken or ground turkey — 165°F (74°C)

Seafood should be thoroughly cooked to an internal temperature of at least — 145°F (63°C)

Fish that's ground or flaked, such as a fish cake, should be cooked to at least — 155°F (68°C)

Stuffed fish to at least — 165°F (74°C)

Wash hands with warm water and soap for at least 20 seconds before and after handling food, especially

raw meat, poultry and fish. If you have an infection or cut on your hands, wear rubber or plastic gloves.

Wash gloved hands just as often as bare hands because the gloves can pick up bacteria.

Paying attention to proper food storage, handling and cooking techniques both at home and onboard will

keep you, your family and fellow crewmembers safe and sound.

Safe, Responsible, Rel iable, Ef f ic ient Page 7

FEBRUARY

ANNIVERSARIES

Harley Marine NY

John Curtin - 3 years

Harley Marine Services

Stephanie Gullickson - 6 years

Brenna Fitzsimmons - 1 year

Nancy Xiong Moua - 1 year

Millennium Maritime

Louis Mungaray - 4 years

Olympic Tug & Barge

Larry Gladsjo - 17 years

Adam Goodfellow - 14 years

John Kochis - 13 years

James Heckathorn - 5 years

Joe Hoats - 5 years

Tad Prus - 4 years

Joseph Allnoch - 3 years

Timothy Brown - 3 years

Andrew Pugh - 3 years

Steven Eggleston - 2 years

Pacific Coast Maritime

Chris Iszler - 14 years

Public Service Marine

Urban Alexander - 10 years

Starlight Marine Services

Douglas Anderson - 5 years

Jason Vogel - 5 years

Jordan May - 4 years

Timothy Whitehouse - 2 years

Westoil Marine Services

Vince Logrande - 11 years

Rosie Chavez - 5 years

Giuseppe Logrande - 5 years

Erick Willson - 5 years

Anthony D’Aquanno - 4 years

HMS Health Insurance Plan Document

The updated HMS Health Insurance Plan Document is now available

digitally in the PAF system under the Employee Manual tab. The plan

document is a book containing information on the HMS Health

Insurance plan, the provisions and any exclusions.

The updated plan provisions contained herein supersede the prior

Health Insurance Plan Document for Harley Marine Services. By

providing this document, Harley Marine Services revokes any and

all plan provisions which are inconsistent with those contained herein.

If you have any questions regarding the information within the plan

document or its location on the PAF system, please contact either the

HR department or your supervisor at anytime.

Harley Marine Services

Human Resources Department

Continually improving our environmental footprint….

2011 has brought about a new initiative at Harley Marine to

lessen our environmental impact even further by trading in old

company trucks for new, hybrid vehicles. The hybrid technology

allows the vehicles to switch between electric and fuel energy or

a combination of both. This ultimately produces fewer emissions

by requiring less fuel. You should start to see the new vehicles

arrive at our docks and the older pieces get retired.

Safe, Responsible, Rel iable, Ef f ic ient Page 8

A New Year and New Season in Dutch Harbor

As I usually do, I make a trip to Dutch Harbor at the beginning

of the new fishing season, commonly known as ―A Season‖.

Half the battle in making this trip is just getting to Dutch Harbor.

After arriving in Anchorage on Monday, January 24th, I went to

Peninsula Airways to check in for my Dutch Harbor flight. The

check in agent wanted to check my bag but I said "No, I want to

hand carry because I have medicine in it." From years of

experience, you do not want to check a bag to go to Dutch

Harbor because they usually leave most luggage behind for the

cargo plane so they can maximize passenger load on the Saab

30-seater turboprop. If you are lucky, your bag will make it on

the plane in the same day. I made the mistake once last year to

trust them and you know what happened. Got it the next day.

If you hand carry, your bag has to go on the luggage cart and

then in the plane's cargo space, much like Horizon Airlines does on the West Coast.

We finally boarded our 2 p.m. departure at 2:30 p.m. for the three hour flight to Dutch Harbor. I have yet to have

an on-time departure in the many years of flying there. After boarding, the pilot announced we were going to

stop in King Salmon on the way to top off on fuel to give us the extra flying time if needed to make more than

one approach to Dutch Harbor. We landed at King Salmon an hour later and had to remain on board while they

did a quick re-fuel. Off again for Dutch Harbor and halfway there the pilot announces we are going to land at

Cold Bay because the weather in Dutch Harbor has deteriorated. Landing there was a real experience this

time. There were high winds and very limited visibility on the approach to the runway. We bounced around a lot

and finally the wheels hit the runway and we were there. They took all the passengers off the plane this time to

the very small waiting room that Peninsula Airways has there. We were all expecting to re-board the plane and

return to Anchorage to make the attempt to get into Dutch Harbor on Tuesday. After 20 minutes they re-

boarded the plane and we were off to Dutch Harbor as the weather had lifted some. After one hour in the air we

started our descent through heavy fog and wind. The pilot descended and made his approach just under the

fog layer and at a very low altitude. As usual the great pilots that fly this run made a text book approach and

landing. We arrived at 6:45 p.m., just before the airport would close because of darkness.

So here I am in the Grand Aleutian writing this while the wind is blowing and it is snowing sideways and is well

below freezing. The Gyrfalcon departed for Akutan early this a.m. and left the car for me at the airport. They

will arrive back early Tuesday a.m. to put the barge to the buoy and then pick up the pilot and myself to berth

the Maersk/SeaLand vessel.

Thumbs up to the present Gyrfalcon crew who work in these weather conditions daily. We are just starting the

―A Season‖ and are back to the three ship calls a week plus one and soon two weekly runs to Akutan to deliver

empty 40’ containers and pick up loaded ones. I complain because I have a lengthy trip out here and these

guys work in this all the time and still maintain good morale, a strong safety record, and a can-do attitude. The

present crew consists of Captain Chris Iszler, Chief Mate Paul Hanson, Chief Engineer Mark Hurst, AB

Deckhand Dennis Pinfold, Deckhand/Crane Opeator Bob Johnston, and Cook/Deckhand Rick Bostwick.

Jim Weimer

General Manager

Pacific Coast Maritime

Safe, Responsible, Rel iable, Ef f ic ient Page 9

Retirement Planning – 4Q2010 Market Commentary

Equity markets finished 2010 strong, as the stock

market rally that began in September carried over

into a robust 4th quarter. Although the market

remains below the all time highs reached in 2007, in

December the S&P 500 officially recouped the

losses sustained since the September 2008 financial crisis.

The 3rd quarter rally appeared to be driven by strong corporate balance

sheets and earnings prospects. The 4th quarter rally appeared to be

driven largely by two key events. The first event was the Federal

Reserve’s announcement of a second round of ―quantitative easing.‖ In

November the Fed announced it would commit an additional $600 billion

to the purchase of government bonds, in an attempt to provide further

monetary stimulus to the recovery and drive down bond yields (and the

interest rates pegged to those yields).

Congress provided the second event by passing an eleventh hour

package of tax cuts as the year drew to a close. The compromise deal

extended Bush-era income and investment tax cuts to all Americans for

two years. The measure also extends benefits for unemployed workers,

cut the Social Security payroll tax, extended a series of business tax

breaks through 2011, and clarified estate taxes for two years. While the

long term wisdom of the package remains debatable, there is little doubt

that allowing all the Bush-era tax cuts to expire (effectively hiking tax rates

for 2011) would have been devastating to the still fragile recovery.

The unemployment rate ticked up again in Q4, to 9.8% versus 9.6% last

quarter. However, it is important to note that the economy actually

continues to gain jobs, and has had 11 consecutive months of private

sector net job creation. Although jobs are not being created as quickly as

hoped and would be needed for a strong recovery, 1.2 million net new jobs

have been created since the recovery began in 2009. Progress remains

slow on this front when you consider that approximately 8.5 million jobs

were lost during the recession, but nonetheless progress is continuing.

The increase in the unemployment rate remains a reflection of workers

re-entering the ―actively seeking employment‖ labor pool.

Administrative Questions

If you have questions regarding

your quarterly statement,

participant website, or plan

provisions, please contact your

plan administrator:

G. Russell Knobel & Associates

1-800-822-9205

Investment Questions

If you have questions or need

guidance with the fund options

in your retirement plan, please

contact your plan education

specialist:

Kibble & Prentice

Melody Prescott

1-206-676-7421

melody.prescott@kpcom.com

Plan Eligibility

As a reminder, you are eligible to

enter your retirement plan if you

are age 21 or older, and have

completed 1 year of service.

Safe, Responsible, Rel iable, Ef f ic ient Page 10

FEBRUARY BIRTHDAYS

HARLEY MARINE NY

Scott Hellmann 2/1

Erick Ocasio 2/4

Brian Kelly 2/5

Shane Harris 2/22

MILLENNIUM MARITIME

Phillip Ruan 2/5

Chad Thomas 2/24

OLYMPIC TUG & BARGE

Joe Elton 2/3

Akiva Kurland 2/4

Joel Russell 2/5

David Ponce 2/6

Johnny Parckys 2/12

Daniel Colvin 2/13

Leah Nelson 2/13

Andy Borowski 2/15

James Berge 2/16

Wayne Allen 2/17

Neil Billingsley 2/17

Steve Carleton 2/20

John Lennon 2/20

Demir Gumusyazici 2/21

Robert Harmeling 2/27

Ron Rustad 2/28

PACIFIC COAST MARITIME

Dennis Pinfold 2/28

STARLIGHT MARINE SERVICES

Tom Larsen 2/5

Robert Zidek 2/16

Richard Sheldon 2/19

Timothy Whitehouse 2/27

WESTOIL MARINE SERVICES

Mark Abercrombie 2/7

Brent Ralph 2/8

Erick Willson 2/20

Rhett Cian Hansen

sporting his Harley

Marine gear at only

7 months.

Rhett is the beautiful

baby of Heather

Holmes, our Seattle

Administrative Assistant.

Welcome to the Harley Marine Family...

Nash Reagan Layfield

Birth date: January 20, 2011

Weight: 7lbs 12oz.

Length: 19"

Proud Parents: Briana & Si Layfield and big brother Beck.

Si is a Captain for Millennium Maritime.

Safe, Responsible, Rel iable, Ef f ic ient Page 11

Winter at Harley Marine NY

Welcome to the Harley Marine Family…

Maxwell James Hilton

Birth date: January 25, 2011

Weight: 6lbs. 6oz.

Length: 18.5 inches

Proud Parents: Brad and Diana Hilton.

Brad is a deckhand at

Olympic Tug & Barge

in Portland.

The Millennium Dawn has recently undergone a

repower at SHIPYARD in Los Angeles, CA.

By doing so, she can now run at 4400

Horsepower and pull 60 kips. This will enhance

her capabilities in the Port of Los Angeles and

Long Beach while servicing ships as they enter

and leave the ports. Harley Marine plans on

completing the re-power package for the other

harbor boats including the John Quigg and Tim

Quigg. By year’s end, all of our boats will have

increased their horsepower by 1000 pounds.

JANUARY EMPLOYEE OF THE MONTH

Olympic Tug & Barge

Steve Springman

Olympic Tug & Barge would like to recognize Steve Springman as the January

Employee of the Month. He has been employed at Harley Marine since 1990

and is currently working in the Purchasing Department. Steve puts in a

tremendous amount of effort on a daily basis in his position and has an

extensive knowledge base from tools to pumps to light bulbs. He provides any

and all supplies a boat may need for continual operation. Even if you’re not

exactly sure what you may need, Steve will have the answer. Thank you for

your hard work and dedication, your efforts are appreciated.

Starlight Marine Services

Charlotte Koskelin

Starlight Marine Services would like to recognize Charlotte Koskelin as the

January Employee of the Month. Charlotte has been employed as the

Administrative Assistant at Starlight since March of 2010. During that time

Charlotte has consistently adapted and excelled in her role at SMS. Her

dedication, follow through and attention to detail is remarkable. Her

contributions to SMS as well as our other offices has been outstanding.

Charlotte's professionalism is appreciated by all. Congratulations Charlotte!

Millennium Maritime

Pat Lopez

Millennium Maritime would like to recognize Pat Lopez as the January

Employee of the Month. Pat has been with Millennium Maritime for 11 years.

He is instrumental with tug inspections and keeping all of them in compliance,

recently he assisted with the Ernest Campbell SIRE Inspection. Pat is always

available to fill in as needed and helps where he can. Millennium Maritime

Management proudly honors Pat as the Employee of the Month.

JANUARY NEW HIRES

Harley Marine NY

Robert Soleau, Engineer

Francis Regan, Mate

Harley Marine Services

Peter Cho, Staff Accountant

Millennium Maritime

Chad Thomas, Captain

Westoil Marine Services

Michael McCormick, Shoreside Mechanic

910 SW Spokane Street

Seattle, WA 98134

(206) 628-0051

www.HarleyMarine.com

Editor: Stephanie Gullickson

sgullickson@harleymarine.com

Harley Marine Services, Inc.