United States
                      Securities and Exchange Commission
                            Washington, D.C. 20549

                                   FORM 40-F


(Check One:)

[ ]  REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES
     EXCHANGE ACT OF 1934

[X]  ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934


For the fiscal year ended 31st December 2003.    Commission File Number 1-15228




                               CP SHIPS LIMITED
            (Exact name of Registrant as specified in its charter)

                                 NEW BRUNSWICK
       (Province or other jurisdiction of incorporation or organization)

                4012                                           N.A.
    (Primary Standard Industrial                 (I.R.S. Employer Identification
Classification Code (if applicable))                 Number (if applicable))



                            62-65 Trafalgar Square
                                London WC2N 5DY
                                United Kingdom
                      telephone number: +44 20 7389 1100
   (Address and telephone number of Registrant's principal executive office)

                                 J.P. LaCasse
                          CP Ships (Americas) Limited
                     Suite 3300, 401 East Jackson Street,
                             Tampa, Florida 33602
                       telephone number: 1 813 276 4600
           (name, address (including zip code) and telephone number
       (including area code) of agent for service in the United States)

Securities registered or to be registered pursuant to Section 12(b) of the Act:


<PAGE>


<TABLE>
<CAPTION>
Title Of Each Class                                          Name Of Each Exchange On Which Registered
-------------------                                          -----------------------------------------
<S>                                                          <C>
Common Shares, no par value                                  New York Stock Exchange
Common Share Purchase Rights(1)

(1) Initially attached to and trade with Common Shares
</TABLE>




Securities registered or to be registered pursuant to Section 12(g) of the Act:

                                Title Of Class
                                --------------

                         10 3/8% Senor Notes due 2012

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act:

                                Title Of Class
                                --------------

                                     None

For annual reports, indicate by check mark the information filed with this Form:

[X]  Annual information form          [X]  Audited annual financial statements

     Indicate number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report.

     89,890,519 Common Shares were outstanding as of December 31, 2003

     Indicate by check mark whether the registrant by filing the information
contained in this Form is also thereby furnishing information to the
Commission pursuant to Rule 12g3 2(b) under the Securities Exchange Act of
1934 (the "Exchange Act"). If "Yes" is marked, indicate the file number
assigned to the Registrant in connection with such Rule.

     Yes                 82 -                 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 Exchange Act 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
                              ------


<PAGE>


Part A.


                                [LOGO OMITTED]









                               CP SHIPS LIMITED


                         2003 ANNUAL INFORMATION FORM

                             As of 31st March 2004

<PAGE>

<TABLE>
<CAPTION>
                                        TABLE OF CONTENT

<S>                                                                                            <C>
Forward Looking Statements......................................................................3
Currency Exchange Rates.........................................................................4
Corporate Structure.............................................................................5
General Development of the Business.............................................................6
       Significant Acquisitions.................................................................6
       Trends...................................................................................7
Narrative Description of the Business...........................................................8
       Overview.................................................................................8
       Competitive Strengths....................................................................9
       Strategy.................................................................................9
       Service.................................................................................10
       Markets and Trade Lanes.................................................................11
       Joint Service Agreements................................................................16
       Operations..............................................................................18
       Sales and Marketing.....................................................................23
       Customers...............................................................................24
       Competition.............................................................................24
       Employees ..............................................................................25
       Insurance...............................................................................25
       Security................................................................................26
       Regulatory Matters......................................................................26
       Environmental Regulations...............................................................29
Selected Consolidated Financial Information....................................................33
       Consolidated Statements of Income Data..................................................33
       Consolidated Balance Sheet Data.........................................................34
       Dividend Policy.........................................................................34
Management's Discussion and Analysis...........................................................35
Market for Securities..........................................................................35
Directors and Management.......................................................................35
       Directors...............................................................................35
       Management..............................................................................38
       Committees of the Board of Directors....................................................39
Description of Indebtedness and Other Obligations and Taxation of CP Ships
and subsidiaries...............................................................................41
       Indebtedness Corporate Structure........................................................41
       Revolving Credit Facility...............................................................42
       10 3/8% Senior Notes due 2012...........................................................43
       4% Convertible Senior Subordinated Notes due 2024.......................................44
       Pacific Class Vessel Loan...............................................................45
       Capital Leases..........................................................................46
       Operating Leases........................................................................47
       Capital Commitments.....................................................................49
       Taxation of CP Ships and subsidiaries...................................................50
Additional Information.........................................................................52
</TABLE>



                                                                             2
<PAGE>

                           FORWARD LOOKING STATEMENTS

          This Annual Information Form ("AIF") and the documents incorporated
by reference into it contain certain forward-looking information and
statements within the meaning of the United States Private Securities
Litigation Reform Act of 1995 relating, but not limited, to operations,
anticipated or prospective financial performance, results of operations,
business prospects and strategies of CP Ships Limited ("CP Ships"). These
statements can be found in General Development of the Business (Trends),
Narrative Description of the Business (Strategy, Ship Replacement Program) and
elsewhere in this document. Forward-looking information typically contains
statements with words such as "consider," "anticipate," "believe," "expect,"
"plan," "intend," "likely" or similar words suggesting future outcomes or
statements regarding an outlook on future changes in volumes, freight rates,
costs, achievable cost savings, the estimated amounts and timing of capital
expenditures, anticipated future debt levels and incentive fees or revenue, or
other expectations, beliefs, plans, objectives, assumptions, intentions or
statements about future events or performance. Readers should be aware that
these statements are subject to known and unknown risks, uncertainties and
other factors that could cause actual results to differ materially from those
suggested by the forward-looking statements.

          Although CP Ships believes it has reasonable basis for making the
forecasts or projections included in this AIF, readers are cautioned not to
place undue reliance on such forward-looking information. By its nature, the
forward-looking information of CP Ships involves numerous assumptions,
inherent risks and uncertainties, both general and specific, that contribute
to the possibility that the predictions, forecasts and other forward-looking
statements will not occur. These factors include, but are not limited to,
changes in business strategies; general global, political and economic and
business conditions, including the length and severity of any economic
slowdown in the countries and regions where CP Ships operates, including
seasonality, particularly in the United States, Canada, Latin America,
Australasia, Asia and Europe; the effects of competition and pricing
pressures; industry over-capacity; changes in demand for container shipping;
availability and cost of chartered ships; changes in laws and regulations,
including tax, environmental, employment, competition, anti-terrorism and
trade laws; difficulties in implementing a cost savings program; currency
exposures and exchange rate fluctuations, fuel price and interest rate
fluctuations; changes in access to capital markets and other sources of
financing; various events which could disrupt operations, including war, acts
of terrorism, severe weather conditions and external labour unrest, all of
which may be beyond CP Ships' insurance coverage; compliance with security
measures by governmental and industry trade practise groups and CP Ships'
anticipation of and success in managing the risks associated with the
foregoing.

          The above list of important factors affecting forward-looking
information is not exhaustive. CP Ships undertakes no obligation, except as
required by law, to update publicly or otherwise revise any forward-looking
information, whether as a result of new information, future events or
otherwise, or the above list of factors affecting this information.



                                                                             3
<PAGE>

                            CURRENCY EXCHANGE RATES

          Unless otherwise specified, the financial information relating to CP
Ships contained in this AIF is expressed in U.S. dollars. Certain financial
information originates in currencies other than U.S. dollars and has been
converted into U.S. dollars based on prevailing exchange rates, except for
financial information extracted from the consolidated financial statements of
CP Ships.
          The following tables set out, for each period indicated, the high,
low, average and period end exchange rate for U.S. dollars expressed in
Canadian dollars based on the noon buying rate in New York City as certified
by the New York Federal Reserve Bank for customs purposes:



                                             12 months ended 31st December
                                             -----------------------------

                                          2003           2002           2001
                                          ----           ----           ----

Canadian dollars per U.S. dollar
High in the period                       1.5750         1.6128         1.6023
Low in the period                        1.2923         1.5108         1.4933
Rate at end of period                    1.2923         1.5800         1.5925
Average rate for the period (1)          1.4013         1.5704         1.5487


                                                         2004
                                                         ----

                                         March        February        January
                                         -----        --------        -------

Canadian dollars per U.S. dollar
High in the period                       1.3480         1.3442         1.3340
Low in the period                        1.3080         1.3108         1.2690
Rate at end of period                    1.3100         1.3405         1.3265


----------
(1)     The average of the exchange rate on the last day of each month
        during the period.




          On 31st March 2004, the most recent practicable date prior to the
printing of this document, the noon buying rate in New York City as certified
by the New York Federal Reserve Bank for customs purposes was C$1.31 per
$1.00.



                                                                             4
<PAGE>

                              CORPORATE STRUCTURE

          CP Ships subsists under the New Brunswick Business Corporations Act
(Corporation number 515878). The registered office of CP Ships is located at
Brunswick House, 44 Chipman Hill, Saint John, New Brunswick, Canada E2L 4Z6.
The head office of CP Ships is located at 62-65 Trafalgar Square, London, WC2N
5DY, United Kingdom and its telephone number is +44-20-7389-1100.

          The diagram below illustrates the corporate structure of CP Ships
including CP Ships' principal subsidiaries, all of which are wholly owned,
directly or indirectly, and their jurisdiction of incorporation. Certain
subsidiaries of CP Ships which are not material to its business have not been
included in this chart.


                              {GRAPHIC OMITTED]


(1)  CP Ships owns a 100% interest in Racine Terminal (Montreal) Company and
     Cast Terminal Company indirectly through Montreal Gateway Terminals
     Company, which is incorporated in Nova Scotia.
(2)  CP Ships (Bermuda) Limited holds a 100% interest in (i) CP Ships (UK)
     Limited indirectly through three intermediate holding companies, one of
     which is incorporated in Bermuda and the other two in England and Wales,
     (ii) TMM Lines Limited, LLC and Lykes Lines Limited, LLC indirectly
     through two intermediate holding companies incorporated in Bermuda.
(3)  Owns and leases CP Ships' containers.
(4)  Services are marketed under the following brands: Canada Maritime, Cast,
     Contship Containerlines and ANZDL.
(5)  Services are marketed under the Italia Line brand.
(6)  Services are marketed under the Lykes Lines brand.
(7)  Services are marketed under the TMM Lines brand.



                                                                             5
<PAGE>

                      GENERAL DEVELOPMENT OF THE BUSINESS

          On 1st October 2001, CP Ships' former parent, Canadian Pacific,
reorganized and divided into five separate companies. As a result, CP Ships
became an independent publicly listed company on the TSX and NYSE on 3rd
October 2001. CP Ships' maritime roots date back to 1886 when Canadian Pacific
established a marine service to Asia to generate volume for the Pacific
terminal of its newly completed trans-Canada railway. Canadian Pacific began
operating a shipping business on the Atlantic in 1903. In 1968, Canadian
Pacific reorganized its North Atlantic shipping operations to concentrate on
container services and in 1984, co-founded Canada Maritime, purchasing the
minority interest in 1993.

          Since 1993, CP Ships has grown substantially both through organic
growth and through strategic acquisitions where it has established a record of
successfully improving the operations and the profitability of acquired
businesses. CP Ships focuses on maintaining and improving results of acquired
businesses by increasing volumes, enhancing operating efficiencies, reducing
costs, improving the organization and building brand strength.

Significant Acquisitions

          Since 1993, CP Ships has successfully completed the nine
acquisitions listed below. The remarks include the condition of each business
at the time of acquisition. Other than Ivaran Lines and CCAL, which have been
merged into Lykes Lines, each of the other acquired businesses continues as a
significant brand in CP Ships' current operations.


     Year     Acquisition                  Remarks
     ----     -----------                  -------
     1993     Canada Maritime              Purchase of 43% minority
     1995     Cast                         Bankrupt
     1997     Lykes Lines                  Bankrupt
     1997     Contship Containerlines      Profitable
     1998     Ivaran Lines                 Unprofitable
     1998     ANZDL                        Profitable
     1999     TMM Lines                    Unprofitable; 50/50 joint venture
     2000     TMM Lines                    Acquired the remaining 50%
     2000     CCAL                         Small
     2002     Italia Line                  Breakeven


          In January 1993, CP Ships acquired the 43% minority interest in
Canada Maritime which it did not already own. This acquisition permitted it to
plan more effectively as the sole shareholder.

          In April 1995, Cast was acquired out of a bankruptcy proceeding. A
new management team was appointed and Cast's service offering and organization
were revitalized. Both Canada Maritime and Cast operate services on the
TransAtlantic market between Europe and Montreal, serving the U.S./Canada
market.

          CP Ships acquired Lykes Lines in July 1997, also out of bankruptcy.
This acquisition extended its TransAtlantic coverage to the U.S. East and Gulf
Coasts. The same management team that had turned around Cast restructured
Lykes Lines' services, repositioned its marketing strategy, reorganized the
management structure and implemented cost reduction programs.

          The acquisition of Contship Containerlines in October 1997 provided
CP Ships with a platform to enter other markets, principally Australasia.
Contship Containerlines' Gulf-Mediterranean service complemented Lykes Lines'
service in that trade lane. Contship Containerlines also operates
Round-the-World Services.



                                                                             6
<PAGE>

          Ivaran, which was acquired in May 1998, extended CP Ships' coverage
to the U.S. East Coast and Gulf Coast-South America trade lanes. This
acquisition permitted it to secure trade lane economies of scale and cost
synergies. The Ivaran brand name was replaced by Lykes Lines in 2000.

          In December 1998, CP Ships acquired ANZDL, the market leader in the
U.S. West Coast-Australasia trade lane. ANZDL also offered CP Ships improved
economies of scale and operating and cost synergies in the Australasian
market.

          In January 1999, CP Ships formed the Americana Ships joint venture
with Transportacion Maritima Mexicana SA de CV ("TMMsa") in order to create a
strong regional competitor in the U.S. Gulf, Mexico, Central and South
American trade lanes. The 50/50 joint venture combined services in this
region, Lykes Lines and Ivaran Lines, with TMM Lines, the container shipping
business of TMMsa. Effective 1st January 2000, CP Ships acquired TMMsa's 50%
interest in the Americana Ships joint venture.

          In August 2000, CP Ships purchased Christensen Canadian African
Lines ("CCAL"), which provides services between Montreal and the U.S. East
Coast and South Africa, building on Lykes Lines' position in the South Africa
trade lane. CCAL now operates under the Lykes Lines brand name.

          In August 2002, CP Ships acquired from d'Amico Societa di
Navigazione S.p.A. and others all of the issued and outstanding shares of
Italia di Navigazione S.p.A., an Italian company headquartered in Genoa,
Italy. Italia Line operated services between the Mediterranean-West Coast
North America, Mediterranean-Central and South America, West Coast North
America-West Coast Central and South America, and Intra-Central and South
America. On 31st January 2004, the registered office of Italia was moved to
Delaware, USA and the name changed to Italia di Navigazione LLC.


Trends

          Between 1996 and 1998, container shipping capacity grew faster than
demand for container shipping services. This situation, coupled with the Asian
economic crisis in 1998, caused a sharp decline in industry profitability in
1998. In 1999, improved container volumes due to higher demand, combined with
lower deliveries of new ship capacity, led to an improved balance between
supply and demand and to higher freight rates, particularly in the Asian
export markets. In 2000, stable freight rates and a further improved balance
between supply and demand generally resulted in substantially improved
profitability among carriers. Since the Asian economic crisis in 1998, the
industry has demonstrated a greater willingness to rationalize services on all
trade lanes, mainly through joint service agreements and slot charter
agreements. Carriers also successfully adjusted to deregulation of the
industry in the United States that occurred in 1998. In 2001, growth in global
container shipping capacity outpaced the 3.8% growth in international
container trade growth which was adversely affected by the global economic
slowdown, particularly in the U.S. These combined factors had a negative
impact on the industry's profitability in 2001. In 2002, global container
capacity growth grew at 10.4% and growth in international container trade grew
at 10.2%, narrowing the gap between supply and demand.

          In 2003 global container capacity growth was 9.4% with strong growth
in international container trade at 12.1%, driven by growth in the Asian
markets. This strong demand led to improved trading conditions in 2003 and
improved industry profitability.

          CP Ships recorded a substantial improvement in profits during 2003
despite significant pressure on costs and strong competition in most of our
trade lanes. Both volume and revenue were CP Ships records. Container
carryings at 2.2 million teu were 9% higher than 2002, reflecting strong
growth in TransAtlantic, Latin America and Asia, partly offset by lower volume
in Australasia. Revenue at $3.14 billion was 17% higher than $2.69 billion in
2002. The average freight rate, which excludes inland transport and slot
charter revenue, increased 7% in 2003 due to better market conditions in most
trade lanes. These improvements were partially offset by higher operating
costs. Cost per teu for 2003 was up by 6% compared to 2002 due mainly to three
factors: firstly, the estimated net effect of the weaker US$ was adverse by
$56 million; secondly, fuel



                                                                             7
<PAGE>

costs were up $71 million, of which $38 million was from higher price;
thirdly, charters for 26 ships were renewed in 2003, nearly all at higher
rates with an estimated adverse impact of $17 million. The annualized effect
of these charter renewals is $34 million. Other operating expenses including
terminal and inland transport were also higher due to price inflation. The
overall increase was partly offset by the cost reduction program.

          Assuming continued solid growth in the world economy, CP Ships
believes that the balance of supply and demand in the global container
shipping industry should remain favourable. CP Ships expects continued strong
volume and further freight rate improvements will continue to outweigh the
negative effect on our costs of a weaker US$ and charter renewals, and we
therefore expect that earnings in 2004 will be higher than in 2003.


                     NARRATIVE DESCRIPTION OF THE BUSINESS

Overview

          CP Ships is one of the world's leading container shipping companies,
offering its customers door-to-door as well as port-to-port containerized
services for the international transportation of a broad range of industrial
and consumer goods, including raw materials, semi-manufactured and finished
goods. It operates a fleet of 80 ships in 22 trade lanes focusing on four
principal markets. In 2003, the Company transported 2.2 million twenty foot
equivalent units ("teu"), the standard measure of volume in the industry, on
behalf of approximately 23,700 customers. Based on standing capacity, CP Ships
ranks as the eleventh largest carrier in the world, giving it the economies of
scale available to global carriers.

          In 2003, the Company had revenue of $3.14 billion and EBITDA(1) of
$250 million before an exceptional charge of $10 million related to its
organizational restructuring in Europe.

          CP Ships is a regional specialist that offers direct services to a
wider range of ports within a particular market than is generally offered by
global carriers. This approach, together with its global scale, allows it to
provide customers with the local expertise and market presence of a regional
specialist combined with many of the operating advantages of a global carrier.
CP Ships provides scheduled services in its four principal markets:
TransAtlantic, Australasia, Latin America and Asia, which it serves through
seven well-recognized brands: Canada Maritime, Cast, Contship Containerlines,
ANZDL, Lykes Lines, TMM Lines and Italia Line.

          CP Ships operates in an industry whose annual volume growth has on
average exceeded global gross domestic product growth by two to three times
over the last 20 years. Since its introduction in the 1950's, the container
shipping industry has facilitated world trade because of its simplicity,
efficiency and low cost, becoming an integral part of the global sourcing
strategies for many of the world's major manufacturers and retailers.

          Over the last seven years, CP Ships considers it has outperformed,
on the basis of return on capital employed ("ROCE"), in both weak as well as
strong market conditions, the average ROCE of those carriers in the top 20 for
which data is publicly available, due to its business model based on its
competitive strengths and strategy which are discussed below.




          --------------------------------------------------------------------
          (1) EBITDA is earnings before interest, tax, depreciation,
          amortization, exceptional items and minority interest and equals
          operating income before exceptional items plus depreciation and
          amortisation. EBITDA, which is considered to be a meaningful measure
          of operating performance, does not have a standardised meaning under
          Canadian GAAP and may not be comparable with similar measures used
          by others.



                                                                             8
<PAGE>

Competitive Strengths

          CP Ships considers it has the following strengths which allow it to
compete successfully:

          Leading market position. CP Ships believes it is the largest carrier
based on market share in a majority of its 14 core trade lanes. This leading
market position has been achieved by focusing on customers and customer
service through its well-recognized and highly-regarded brands.

          Regional focus. The Company's regional focus provides more reliable
and frequent service schedules, flexible and timely responses to changes in
local market conditions, the ability to offer customized services, greater
trade lane economies of scale and premium pricing for its services. These
attributes, along with its strong market position, provide it with a measure
of protection from new competitors on its core trade lanes.

          Low cost operator. A combination of global scale economies and trade
lane scale economies based on strong market position has allowed CP Ships to
reduce its costs significantly. Savings in costs associated with ship
networks, terminals and stevedoring, the container fleet, inland transport and
administration have contributed to a 19% reduction in cost per teu from 1996
to 2002. Cost per teu increased in 2003 compared to 2002 by 6%, mainly due to
increased fuel and charter costs and the depreciation of the U.S. dollar,
which increased the reported amount of the substantial portion of CP Ships'
costs incurred in other currencies, such as the euro, Canadian dollar and GB
Pound. CP Ships remains committed to its cost savings programs.

          Diversified customer base. CP Ships has approximately 23,700
customers which are diversified both by geography and by industry. Its largest
customer represented 2.1% of its revenue in 2003, and its top ten customers
accounted for only 8.5%. This diversity protects CP Ships against the adverse
effect of relying on a single customer or industry.

          Successful track record of acquisitions. CP Ships has successfully
completed nine acquisitions since 1993 mainly involving the turn-around of
under performing businesses. It has successfully integrated those businesses,
improving both services and profitability. Acquisitions have contributed to a
compound annual growth of revenue of 25% since 1994.

          Experienced management team. CP Ships' senior management team
average over 20 years experience in the container shipping industry. The large
majority of the management team has worked for CP Ships or with its acquired
businesses for many years. Incentives are provided to senior management
through share-based compensation and to all staff (including senior
management) through cash incentives based on operating income.


Strategy

          Six principal strategies underpin CP Ships' business model.

          Concentration on container shipping. CP Ships concentrates on
container shipping services, which allows management to focus and to plan for
and quickly respond to often rapidly changing economic, political and trade
conditions in what is a truly international business.

          Focus on regional markets. CP Ships has built strong positions in a
number of regional markets. It is the leading carrier in the majority of its
core trade lanes, which allows it to offer the best schedules and services to
its customers and to maximize trade lane economies of scale.

          Pursue selective acquisitions. Since 1993, nine acquisitions have
been executed and integrated successfully, often involving the turnaround of
under-performing businesses. CP Ships' revenue is now seven times larger than
in 1994. In a relatively fragmented and cyclical industry, there will likely
be further



                                                                             9
<PAGE>

acquisition opportunities. CP Ships expects to continue to pursue a
disciplined acquisition strategy that enables it either to grow in its
existing markets or to carefully expand into new markets, thereby helping it
to achieve further economies of scale that improve operating performance.
          Furthermore, as a way of leveraging strong regional positions and
adding value to our core container services, CP Ships intends to selectively
and modestly develop logistics services. In March 2004, CP Ships announced the
planned acquisition of Montreal based ROE Logistics, a family owned business
specializing in providing a range of freight forwarding, customs brokerage,
logistics, warehousing and distribution services

          Enhance strong brands. CP Ships offers two or more of its
well-recognized brands in nearly all of its trade lanes. It intends to
strengthen its brands by continuing to respond to the evolving needs of its
customers by selectively expanding its services, improving service frequencies
and transit times, improving the efficiency of its inland transportation
networks and implementing effective training and staff retention programs. CP
Ships considers that its multiple branding approach results in higher levels
of service and customer loyalty and is one of the best ways to build and
retain market share.

          Provide supply chain solutions. Integrated door-to-door or
intermodal container transportation is the largest component in the logistics
supply chains of international trade. CP Ships continues to emphasize
consistently reliable, tailor-made intermodal supply chain solutions for its
customers to strengthen customer relationships and protect operating margins.

          Reduce costs. Delivering low-cost, high-quality service is a key to
success in the highly competitive container shipping industry. CP Ships
reduced its cost per teu by 14% from 1996 to 2003, and remains committed to
its cost savings programs.


Service

          CP Ships provides port-to-port and door-to-door ocean container
shipping services with 27 weekly sailings and eight non-weekly sailings
covering more than 145 ports on six continents. It emphasizes the provision of
door-to-door services to its customers. A typical shipment generally involves
the following steps:

o    A customer makes a booking at a price and on other terms which usually
     have been agreed previously or determined under contract.

o    The customer service department checks the existing customer profile and
     updates equipment, scheduling and transport requirements.

o    CP Ships arranges for an inland transport provider to position an empty
     container at the customer's (exporting) plant or warehouse at an agreed
     time.

o    Once the container is filled, the nominated inland transport operator
     picks up and moves the container by truck, rail, barge, feeder ship, or
     combination thereof, from the customer's loading point to a marine
     terminal in time to meet a particular sailing.

o    The container is received by the marine terminal and is loaded directly
     into a pre-determined slot in the ship using specialist cranes or is
     stored at the terminal until loaded onto its scheduled ship.

o    The ship sails at a fixed time according to a pre-set schedule on fixed
     day of the week sailings.

o    The container is discharged at the marine terminal in the destination
     port, again according to the pre-set schedule. Just-in-time shipments and
     containers moving in high-density corridors move directly from ship to
     rail or truck, subject to satisfying the requirements of local customs.
     Otherwise,



                                                                            10
<PAGE>

     containers are stored at the arrival terminal for customs clearance and
     arrangement of inland transport.

o    Delivery of a full container to a customer's (importing) premises is
     co-ordinated with an inland transport provider.

o    After unloading the cargo at the importer's plant or warehouse, the empty
     container moves directly to an exporter's warehouse for reloading or to a
     depot to await future use.

Markets and Trade Lanes

          As at 31st December 2003, CP Ships operated in the following trade
lanes of its principal markets under the following brand names:


<TABLE>
<CAPTION>
Principal Market       Services     Trade Lanes                                 Brands
----------------       --------     ---------------------------------------     -----------------------------------
<S>                    <C>          <C>                                         <C>
TransAtlantic             12        US/Canada via Montreal-North Europe         Canada Maritime, Cast
                                    US/Canada via Montreal-Mediterranean        Canada Maritime, Cast
                                    West Coast North America-Mediterranean      Lykes Lines, TMM Lines, Contship
                                                                                Containerlines, Italia Line
                                    US East Coast-North Europe                  Lykes Lines, TMM Lines
                                    Gulf-North Europe                           Lykes Lines, TMM Lines
                                    Gulf-Mediterranean                          Lykes Lines, TMM Lines, Contship
                                                                                Containerlines, Italia Line

Australasia                6        Europe and US East Coast-Australasia        Contship Containerlines, ANZDL,
                                                                                Lykes Lines
                                    US West Coast-Australasia                   ANZDL, Contship Containerlines
                                    TransTasman                                 ANZDL, Contship Containerlines

Latin America             10        North Europe-East Coast South America       Lykes Lines, TMM Lines, Contship
                                                                                Containerlines
                                    Mediterranean-East Coast South America      Lykes Lines, Contship Containerlines,
                                                                                Italia Line
                                    US East Coast-East Coast South America      Lykes Lines, TMM Lines
                                    Gulf-East Coast South America               Lykes Lines, TMM Lines
                                    Gulf-Caribbean                              Lykes Lines, TMM Lines

                                    Mexico-Central  America-West  Coast         Lykes Lines, TMM Lines, Italia Line
                                    South America
                                    Mediterranean-West Coast South America      Lykes Lines, TMM Lines
                                    Panama-West Coast South America             Lykes Lines, TMM Lines, Italia Line

Asia                       5        Asia-Americas                               Lykes Lines, TMM Lines, Canada
                                                                                Maritime
                                    Europe-India/Pakistan                       Contship Containerlines
                                    US East Coast-India                         Contship Containerlines, Lykes Lines

</TABLE>


          In addition to its four principal markets, CP Ships also operates in
the North America-West/South Africa trade lane and provides a small break-bulk
service between Asia-Latin America-Caribbean, both under the Lykes Lines and
TMM Lines brands.



                                                                            11
<PAGE>

          The following tables illustrate volume and revenue for CP Ships'
principal markets for the last three years. Percentages of total are shown for
both volume and revenue for 2003.



                               Volume By Market

                       2003                           2002           2001
                      Volume           % of          Volume         Volume
Market              (teu 000s)        Total        (teu 000s)     (teu 000s)
------------------  ------------  -------------  --------------  ------------
TransAtlantic          1,163             53           1,039            942
Australasian             304             14             334            348
Latin American           239             11             174            162
Asian                    453             21             424            331
Other                     36              1              37             59
                          --              -              --             --
Total                  2,195            100           2,008          1,842
                       =====            ===           =====          =====


                              Revenue By Market

                       2003                           2002            2001
                     Revenue          % of          Revenue         Revenue
Market             ($ millions)       Total       ($ millions)    ($ millions)
------------------  ------------  -------------  --------------  ------------
TransAtlantic          1,577              50          1,328           1,323
Australasian             516              16            531             549
Latin American           297              10            238             244
Asian                    636              20            508             435
Other                    110               4             82              95
                         ---               -             --              --
Total                  3,136             100          2,687           2,646
                       =====             ===          =====           =====


TransAtlantic Market

          In 2003, 53% of CP Ships' volume was in the TransAtlantic market,
where it provided services under the Canada Maritime, Cast, Contship
Containerlines, Italia Line, Lykes Lines and TMM Lines brands. CP Ships offers
12 services on the TransAtlantic, of which 10 are fixed-day weekly sailings,
providing the most comprehensive service network in the market. Through
efficient links to an extensive inland transportation network in North
America, Mexico and Europe, CP Ships provides its customers with the choice of
seamless door-to-door services as well as port-to-port service options.

          Within the TransAtlantic market, CP Ships is the leader in the
US/Canada via Montreal-North Europe and the US/Canada via
Montreal-Mediterranean trade lanes with five weekly services, using a fleet of
owned ice-strengthened container ships which are designed to operate
throughout the year. Two ice-strengthened newbuilds were introduced in the
second half of 2003 in the Montreal-North Europe trade lane. The consequent
cascading of ships that took place within the services including the
Montreal-Mediterranean trade lanes served to modernise, upgrade and improve
each of the five weekly services. The Montreal Gateway provides a more direct
route to Canada and the U.S. Midwest and accesses a more cost effective
Canadian infrastructure, including CP Ships' operated terminals in Montreal
and Canadian Pacific Railways' rail network than alternate services via the
U.S. East Coast.

          CP Ships' Gulf trade lanes serve U.S. and Mexican ports in the Gulf
of Mexico with three weekly services and one nine day service. Its regional
focus on the Gulf within the TransAtlantic market and its market share are
strengthened by the strong brand recognition of Lykes Lines in the U.S. Gulf,
TMM Lines in Mexico and Italia Line in the Mediterranean.



                                                                            12
<PAGE>

          CP Ships also operates two weekly services in the US East
Coast-North Europe trade lane and with the acquisition of Italia Line, CP
Ships has increased its presence on the West Coast North America-Mediterranean
trade lane where it operates a 10 day service.


<TABLE>
<CAPTION>
Trade Lanes                         Services      Company Ships     Frequency     Brands
-----------                         --------      -------------     ---------     ------
<S>                                 <C>           <C>              <C>           <C>
US/Canada via Montreal-North            3               7           3 x weekly    Canada Maritime, Cast
Europe

US/Canada via                           2               6           2 x weekly    Canada Maritime, Cast
Montreal-Mediterranean

West Coast North                        1               6           1 x 10 days   Lykes Lines, TMM Lines, Contship
America-Mediterranean                                                             Containerlines, Italia Line

US East Coast-North Europe              2               1           2 x weekly    Lykes Lines, TMM Line

Gulf-North Europe                       3               8           3 x weekly    Lykes Lines, TMM Line

Gulf-Mediterranean                      1               5           1 x 9 days    Lykes Lines, TMM Lines, Contship
                                                                                  Containerlines, Italia Line
</TABLE>

          CP Ships believes that its extensive low cost service network,
regional multi-brand focus, door-to-door capabilities, and significant volume
and trade lane economies of scale strengthen its position as the leading
carrier in the TransAtlantic market.

Australasian Market

          CP Ships operates six services in three trade lanes in the
Australasian market through its Contship Containerlines, ANZDL and Lykes Lines
brands. The Australasian market accounted for 14% of CP Ships' volume in 2003.
CP Ships is a leader in its Australasian trade lanes.

          In January 2003, following two years of planning, CP Ships in
cooperation with P&O Nedlloyd, CMA-CGM, Hamburg Sud, Hapag Lloyd and Marfret,
substantially restructured the services within the Europe-Australiasia and
Round-the-World trade lanes. CP Ships, with its partners, now operates two
separate fixed-day weekly Round-the-World services, one eastbound and the
other westbound. These services link Australia, New Zealand and the Pacific
Islands with Northern and Mediterranean Europe and the U.S. East Coast. The
new services are supported by 22 vessels, 10 of which are new purpose-built
larger vessels with a high reefer capacity. These changes achieve a more
consistent market coverage, offer better schedule integrity through improved
frequency and better transit times with the deployment of fewer ships at lower
cost.

          In the US West Coast-Australasia trade lane, two weekly services are
operated. CP Ships also operates two services in the TransTasman trade lane
under the ANZDL and Contship Containerlines brands. One service operates two
ships and the other operates on a slot charter basis. In addition, a number of
CP Ships' other mainline services also serve the TransTasman trade lane.



                                                                            13
<PAGE>

<TABLE>
<CAPTION>
Trade Lanes                        Services     Company Ships     Frequency     Brands
-----------                        --------     -------------     ---------     ------
<S>                                <C>          <C>               <C>           <C>
Europe and US East                    2               6            2 x weekly   Contship Containerlines, ANZDL,
Coast-Australasia                                                               Lykes Lines

                                      2               6            2 x weekly   ANZDL, Contship Containerlines
US West Coast-Australasia

TransTasman                           2               2            1 x 14 days  ANZDL, Contship Containerlines
                                                                   1 x weekly
                                                                   (plus
                                                                   various
                                                                   mainline
                                                                   services)
</TABLE>


Latin American Market

          The Latin American market accounted for 11% of volume in 2003 with
ten services in eight trade lanes. The North American services are marketed
under the Lykes Lines and TMM Lines brands and the European services under the
Lykes Lines, TMM Lines, Italia Lines and Contship Containerlines brands. Lykes
Lines and TMM Lines also market services in the Asia-Americas trade lane
(which is discussed in "Asian Market" below) as well as the Gulf-North Europe
and Gulf-Mediterranean services included in the TransAtlantic market, all of
which call at Mexican ports.

          During the fourth quarter of 2003, the Gulf-West Coast South America
service, formerly the Italia relay was discontinued and replaced by three slot
charter arrangements (described below) to improve performance.

          Mediterranean-West Coast South America service operated by Compania
Sudamericana de Vapores ("CSAV") and Compania Chilena de Navegacion
Interoceanica SA ("CCNI") covering the Mediterranean-West Coast South America
tradelane and the West Coast North America-Mediterranean trade;

          Panama-West Coast South America service operated by P&O Nedlloyd,
which connects West Coast South America with the Caribbean via Manzanillo
International Terminal relay;

          Mexico-Central America-West Coast South America service operated by
MSC. The Asia to Central America and West Coast South America trades will now
be served on this arrangement via Manzanillo, Mexico relay following the
termination notice on the Asia-West Coast North America-Mexico-West Coast
South America service, which is to be terminated.



                                      14
<PAGE>

<TABLE>
<CAPTION>
Trade Lanes                       Services      Company Ships     Frequency     Brands
-----------                       --------      -------------     ---------     ------
<S>                                <C>          <C>              <C>            <C>
North Europe-East Coast South        2                2           1 x weekly    Contship Containerlines, Lykes
America                                                           1 x 8 days    Lines, TMM Lines

Mediterranean-East Coast             1           Slot charter     1 x weekly    Contship Containerlines, Lykes
South  America                                                                  Lines, Italia Line

US East Coast-East Coast             2           Slot charter     2 x weekly    Lykes Lines, TMM Lines
South  America

Gulf-East Coast South America        1                4           1 x weekly    Lykes Lines, TMM Lines


Gulf-Caribbean                       1                3           1 x weekly    Lykes Lines, TMM Lines

Mediterranean-West Coast
South America                        1           Slot Charter     1 x 14 days   Lykes Lines, TMM Lines, Italia Line

Mexico-Central America-West          1           Slot Charter     1 x 8 days    Lykes Lines, TMM Lines, Italia Line
Coast South America

Panama-West Coast South              1           Slot Charter     1 x 7 days    Lykes Lines, TMM Lines, Italia Line
America
</TABLE>


Asian Market

          The Asian market accounted for 21% of CP Ships' volume in 2003. Its
presence in Asia was established with the acquisition of Contship
Containerlines in 1997 and expanded with the formation of the Americana Ships
joint venture in January 1999. At present CP Ships operates five services in
three trade lanes.

          CP Ships operated three services in the Asia-Americas trade lane.
One service between Asia and the West Coast North America and Mexico, one
between Asia and the West Coast North America, Mexico and West Coast South
America and, launched during 2003, a fixed day weekly service between North
East Asia including China and Vancouver, BC deploying five ships. This third
Asia-Americas route strengthened market presence and created further operating
efficiencies by using existing organizations in Asia and North America. CP
Ships tendered a termination notice on the Asia-West Coast North America,
Mexico, West Coast South America service with a phase out from December 2003
to February 2004. In February 2004, a new service between Asia and Vancouver
and Oakland was announced. Scheduled to start in April, it complements the
existing Asia-Vancouver service, further strengthening market presence in the
Asia-Americas trade lane where trade growth is expected to remain strong.

          On the Asia-North Europe and Asia-Mediterranean trade lanes, CP
Ships did not renew its slot charter agreement with CMA-CGM which terminated
in March 2003.

          On the Europe-Indian Subcontinent trade lane, CP Ships continues to
co-operate with P&O Nedlloyd and CMA-CGM, providing two of the seven vessels
deployed in a fixed-day weekly service. Hapag Lloyd and Hamburg Sud also
participate on the service, through means of slot charter arrangements.
Safmarine withdrew from the service in July 2003, but sustained growth in the
Indian economy has allowed the remaining members of the Agreement to
successfully absorb the capacity vacated by Safmarine. The Service scope
covers Europe, Red Sea, Arabian Gulf, Pakistan and India.



                                                                            15
<PAGE>

          The US East Coast - India Service is fixed-day weekly, operated in
conjunction with CMA-CGM, Shipping Corporation of India and APL. CP Ships
contribute two of the seven vessels operated in the service. The service
connects the U.S. East Coast, Mediterranean, Sri Lanka and India.


<TABLE>
<CAPTION>
Trade Lanes                  Services      Company Ships     Frequency         Brands
-----------                  --------      -------------     ---------         ------
<S>                          <C>           <C>               <C>               <C>
Asia-Americas                    3               11           3 x weekly       Lykes Lines, TMM Lines, Canada
                                                                               Maritime

Europe-India/Pakistan            1               2            1 x weekly       Contship Containerlines, Lykes lines

US East Coast-India              1               1            1 x weekly       Contship Containerlines, Lykes Lines
</TABLE>


The Westabout Europe and US East Coast - Australasia service, which is in the
Australasian market, calls at South East Asian ports en route to North Europe
and the Mediterranean


Other Markets

          Other markets comprised approximately 1% of CP Ships' 2003 volumes.
Lykes Lines operates a roll-on roll-off ("Ro Ro") service between North
America and West/South Africa. Ro Ro ships are designed to handle cargo that
is driven on and off the ship, as well as containers that are lifted by cranes
on and off the ship.

          CP Ships also operates an Asia-West Coast Latin America-Caribbean
break-bulk service. Other markets activities also include the two terminals in
Montreal that CP Ships operates for Canada Maritime and Cast and their service
partners, together with sub-chartering out of ships that are temporarily
surplus to needs.

<TABLE>
<CAPTION>
Trade Lanes                   Services     Company Ships     Frequency     Brands
-----------                   --------     -------------     ---------     ------
<S>                           <C>          <C>               <C>           <C>
North America-West/South         1               5           1 x 15 days   Lykes Lines, TMM Lines
Africa
                                 1               1           1 x 30 days   Lykes Lines, TMM Lines
Break-bulk service
</TABLE>


Joint Service Agreements

          In nearly all of its trade lanes, CP Ships participates in joint
services with other container shipping companies either by contributing ships
to a joint service agreement or by entering into slot charters. It generally
prefers to contribute owned or chartered ships into a joint service agreement
where the economic benefits justify the capital investment. By operating its
own ships within a joint service, CP Ships believes it is better able to
influence important decisions regarding investment in ship and schedule
improvements, including number, size, and quality of ships deployed, sailing
frequency, port calls and port rotations. It also believes that lower costs
can be achieved by operating its own ships compared to chartering space from
other carriers.

          The following describes selected joint service agreements to which
CP Ships is a party:

o    US/Canada via Montreal-North Europe trade lane: CP Ships operates two
     services in partnership with Orient Overseas Container Line ("OOCL")
     under the St. Lawrence Co-ordinated Service, which was established in
     1981. Canada Maritime provides four ships and OOCL provides two ships. In
     December 2002, CP Ships and OOCL agreed to charter a fixed number of
     slots to members of the



                                                                            16
<PAGE>

     Canex consortium: Maersk Sealand, Mediterranean Shipping Company and P&O
     Nedlloyd. The two year agreement took effect from January 2003. At the
     same time, Canex moved its existing service to CP Ships' Montreal Gateway
     Terminals.

o    US East Coast-North Europe and Gulf-North Europe trade lanes: Since
     October 2000, the Lykes Lines and TMM Lines brands have been operating
     two joint weekly services in the US East Coast-North Europe trade lane
     and three joint weekly services in the Gulf-North Europe trade lane with
     the Grand Alliance, one of the three principal Alliances, whose partners
     in the TransAtlantic trade lane are P&O Nedlloyd, Nippon Yusen Kaisha,
     OOCL, and Hapag Lloyd. CP Ships contributes nine of the 31 ships deployed
     in this arrangement.

o    Europe/US East Coast-Australasia trade lane: At the beginning of 2003, CP
     Ships in cooperation with P&O Nedlloyd, CMA-CGM, Hamburg Sud, Hapag Lloyd
     and Marfret, extensively restructured the services within its
     Europe-Australasia and Ocean Star Round-the-World trade lanes. CP Ships,
     with its partners now operates two separate fixed-day weekly
     Round-the-World services; one eastbound and the other westbound. These
     services link Australia, New Zealand and the Pacific Islands with
     Northern and Mediterranean Europe and the U.S. East Coast. The services
     are supported by 22 vessels, 10 of which are new purpose-built larger
     vessels with a high reefer capacity.

o    Gulf-East Coast South America: CP Ships operates a fixed-day weekly
     service between the U.S., Mexico and East Coast South America, under the
     Lykes Lines and TMM Lines brands. It is operated under a co-operation
     agreement with Libra using six ships, four of which are provided by CP
     Ships

o    Asia-Americas trade lane: CP Ships operates three fixed-day weekly
     services under the Lykes Lines, Canada Maritime and TMM Lines brands. One
     service is operated between Asia and U.S. West Coast North America,Mexico
     under a co-operation agreement with APL using six ships, four of which
     are provided by CP Ships.

o    The trade lanes between the Indian Subcontinent and Europe and the Indian
     Subcontinent and the U.S. East Coast are each governed by Joint Service
     Agreements. The service to Europe is operated in conjunction with CMA-CGM
     and P&O Nedlloyd, with slot capacity distributed in agreed proportions.
     The parties to the Agreement collectively sell slot capacity to Hapag
     Lloyd and Hamburg Sud. The service to the U.S. East Coast is operated in
     conjunction with CMA-CGM, Shipping Corporation of India and APL. Under
     this Agreement, slot capacity is distributed in accordance with slot
     provision. Hapag Lloyd and United Arab Shipping Company participate in
     the service via means of Slot Charter Agreements with CP Ships.

          CP Ships generally charters space when it enters a new trade lane,
if the anticipated economic benefits of deploying its own ships do not justify
the size or risk of the investment or where CP Ships' volumes in that
particular trade lane are likely to be initially small. CP Ships regularly
evaluates the potential for deploying its own ships in growing or new markets.

          CP Ships has restructured and rationalized its operations in many
trade lanes, most frequently by combining with other carriers a larger number
of independent services into jointly-operated services. These rationalized
operations enhance service on the trade lanes by increasing frequency,
expanding port calls, improving reliability and reducing costs.



                                                                            17
<PAGE>

Operations

Ships

          The following table lists the 80 ships owned and chartered by CP
Ships as at 31st December 2003:

<TABLE>
<CAPTION>
                                                                       NOMINAL                   MAX SERVICE
          SHIP            YEAR                TRADELANES              CAPACITY(2)      OWNED /      SPEED     SHIP
                         BUILT                                         (teu)      CHARTERED(1)(3)  (knots)   TYPES(4)
<S>                      <C>     <C>                                  <C>         <C>            <C>         <C>
Canmar Honour             1998   US/Canada via Montreal-North Europe    3000           Owned          22        U
Canmar Pride              1998   US/Canada via Montreal-North Europe    3000           Owned          22        U
Cast Prominence           1996   US/Canada via Montreal-North Europe    2400           Owned          20        U
Cast Premier              1995   US/Canada via Montreal-North Europe    2300           Owned          21        U
Cast Prospect             1995   US/Canada via Montreal-North Europe    2400           Owned          21        U
Canmar Spirit             2003   US/Canada via Montreal-North Europe    4100           Owned (8)      23        U
Canmar Venture            2003   US/Canada via Montreal-North Europe    4100           Owned (8)      23        U
Canmar Endurance          1983   US/Canada via                          1900           Owned          20        U
                                 Montreal-Mediterranean
Canmar Valour             1979   US/Canada via                          1000           Owned          19        U
                                 Montreal-Mediterranean
Canmar Glory              1979   US/Canada via                          1000           Owned          19        U
                                 Montreal-Mediterranean
Canmar Triumph            1978   US/Canada via                          1000           Owned          19        U
                                 Montreal-Mediterranean
Canmar Victory            1979   US/Canada via                          1000           Owned          19        U
                                 Montreal-Mediterranean
Canmar Bravery            1978   US/Canada via                          1700           Owned          19        U
                                 Montreal-Mediterranean
Lykes Hero                1986   US East Coast-North Europe             2900           Owned          21        U
TMM Jalisco               1988   Gulf-North Europe                      3300           Owned          21        U
Lykes Discoverer (5)      1987   Gulf-North Europe                      3000           Owned          19        U
Lykes Explorer (5)        1987   Gulf-North Europe                      3000           Owned          19        U
Lykes Liberator (5)       1987   Gulf-North Europe                      3000           Owned          19        U
Lykes Navigator (5)       1987   Gulf-North Europe                      3000           Owned          19        U
Lykes Motivator (5)       1990   Gulf-North Europe                      3000           Owned          22        U
TMM Campeche              1989   Gulf-North Europe                      3000           Owned          21        U
TMM Yucatan               2003   Gulf-North Europe                      3200           Owned          22        G
Lykes Ambassador          1987   Gulf-Mediterranean                     3300           Owned          21        U
TMM Sinaloa               1987   Gulf-Mediterranean                     3300           Owned          21        U
TMM Hermosillo            1986   Gulf-Mediterranean                     3300           Owned          21        U
Lykes Achiever            1987   Gulf-Mediterranean                     3300           Owned          21        U
Lykes Challenger          1986   Gulf-Mediterranean                     3300           Owned          21        U
TMM Sonora                1994   West Coast North                       2400            MTC           20        U
                                 America-Mediterranean
Lykes Commander           1994   West Coast North                       2400            MTC           20        U
                                 America-Mediterranean
Cielo di San Francisco    1998   West Coast North                       2500            MTC           21        G
                                 America-Mediterranean
Cielo del Canada          1998   West Coast North                       2500            MTC           21        G
                                 America-Mediterranean
Cielo d' America          2002   West Coast North                       2500            MTC           21        G
                                 America-Mediterranean
Cielo d' Europa           2002   West Coast North                       2500            MTC           21        G
                                 America-Mediterranean
Contship Rome             1998   Europe and US East                     2200            MTC           21        G
                                 Coast-Australasia
Contship London           1997   Europe and US East                     2200            MTC           21        G
                                 Coast-Australasia
Contship Aurora           2002   Europe and US East                     4100           Owned          25        U
                                 Coast-Australasia
Contship Australis        2002   Europe and US East                     4100           Owned          25        U
                                 Coast-Australasia
Contship Borealis         2002   Europe and US East                     4100           Owned          25        U
                                 Coast-Australasia
Contship Auckland         1998   Europe and US East                     2200            STC           21        G
                                 Coast-Australasia
Direct Kea                1998   US West Coast-Australasia              2200            MTC           21        G
Direct Tui                1998   US West Coast-Australasia              2200            MTC           21        G
Direct Condor             2000   US West Coast-Australasia              1700            STC           20        G
Direct Jabiru             2000   US West Coast-Australasia              1700            STC           20        G
Direct Kestrel            2000   US West Coast-Australasia              1700            STC           21        G
</TABLE>



                                                                            18
<PAGE>

<TABLE>
<CAPTION>

                                                                       NOMINAL                   MAX SERVICE
          SHIP            YEAR                TRADELANES              CAPACITY(2)      OWNED /      SPEED     SHIP
                         BUILT                                         (teu)      CHARTERED(1)(3)  (knots)   TYPES(4)
<S>                      <C>     <C>                                    <C>            <C>           <C>       <C>
Direct Eagle              2000   US West Coast-Australasia              1600           STC           20        G
Rotoiti                   1977   Trans Tasman                            800          Owned          16      Ro Ro
Rotorua                   1993   Trans Tasman                            700           STC           16      Ro Ro
Lykes Envoy               2003   North Europe-East Coast South          2500           MTC           23        G
                                 America
Altonia                   2000   North Europe-East Coast South          1700           STC           20        G
                                 America
Lykes Flyer               2002   Gulf-East Coast South America          3200          Owned          22        G
Lykes Ranger              2002   Gulf-East Coast South America          3200          Owned          22        G
TMM Colima                2002   Gulf-East Coast South America          3200          Owned          22        G
TMM Guanajuato            2002   Gulf-East Coast South America          3200          Owned          22        G
TMM Chiapas               2001   Gulf-Caribbean                         1600           STC           21        G
Colombia                  1996   Gulf-Caribbean                         1600           STC           20        G
Puerto Limon              1996   Gulf-Caribbean                         1500           STC           20        G
TMM Tabasco               2000   Asia-Americas                          2100          Owned          22        G
Lykes Voyager             1995   Asia-Americas                          2100          Owned          21        G
Lykes Deliverer           2002   Asia-Americas                          4100          Owned (9)      25        U
Lykes Provider            2003   Asia-Americas                          4100          Owned (9)      25        U
TMM Monterrey             2003   Asia-Americas                          4100          Owned (9)      25        U
Canmar Dynasty            1994   Asia-Americas                          2100          Owned          21        G
Dorian                    1994   Asia-Americas                          1500           STC           20        G
TMM Aguascalientes        2003   Asia-Americas                          4100          Owned (9)      25        U
TMM Hidalgo               1997   Asia-Americas                          1700           STC           20        G
Canmar Promise            1997   Asia-Americas                          2100           STC           20        G
Lykes Eagle               2000   Asia-Americas                          2100          Owned          22        G
Indamex Malaber           2001   US East Coast-India                    2500           STC           23        U
Indamex Mumbai            1996   US East Coast-India                    2800           STC           22        U
Contship Champion         1994   Europe-India/Pakistan                  3500           STC           23        U
Contship Innovator        1994   Europe-India/Pakistan                  3500           STC           23        U
Lykes Energizer           1992   North America-South Africa              700           MTC           17      Ro Ro
Lykes Raider              1990   North America-South Africa              800           MTC           17      Ro Ro
Lykes Inspirer            1990   North America-South Africa              700           MTC           17      Ro Ro
Lykes Winner              1990   North America-South Africa              700           MTC           17      Ro Ro
Lykes Runner              1992   North America-South Africa              800           MTC           17      Ro Ro
National Pride (6)        1981   Break-bulk                              500           STC           16        BB
Montreal Senator (7)      1983   Sub-Charter                            1900          Owned          20        U
APL Honduras (7)          2002   Sub-Charter                            4100          Owned (9)      25        U
APL Panama (7)            2002   Sub-Charter                            4100          Owned (9)      25        U
                                                                    --------------
CP Ships total standing capacity                                       197,500
</TABLE>

(1)  Owned ships includes four long-term chartered ships owned by certain U.S.
     trusts, the beneficial interests in which were purchased by CP Ships in
     September 2001, two ships under 25 year capital leases and six long-term
     (8 year) time chartered ships which for accounting purposes are treated
     as operating leases.

(2)  Nominal capacity represents the total number of slots theoretically
     available both above and below decks and is therefore different from
     operational capacity which takes account of average cargo weight,
     destination of cargo, likely weather conditions, draft limitations, ship
     stability, and other factors which generally reduce the ship capacity,
     often significantly.

(3)  Bareboat charters are arrangements where the charterer becomes directly
     responsible for providing crew and costs relating to operation and
     maintenance. In contrast, under a time charter the owner remains
     responsible for providing the crew and for certain repairs and
     maintenance costs. A short-term charter ("STC") is a time charter of one
     year or less, medium-term charter ("MTC") is a time charter more than one
     year but less than three years; and long-term charter ("LTC") is a time
     charter three years or more other than those included in footnote one.
     For each ship listed, the duration of the term is determined as from the
     date of entering into the charter.

(4)  Geared ("G") ships have on-board cranes, while ungeared ("U") do not.
     Roll-on Roll-off ("Ro Ro") ships are designed to handle cargo that is
     driven on and off the ship, as well as containers that are lifted by
     cranes on or off the ship. Break-bulk ("BB") ships may also handle
     containers.

(5)  U.S. flag ships.

(6)  One-way voyage charters.



                                                                            19
<PAGE>

(7)  Ships not employed by CP Ships at 31st December 2003.

(8)  Ships subject to 25 year capital lease

(9)  Long term (8 year) time chartered


Ship Replacement Program

          During 2003, CP Ships completed its $800 million ship replacement
program, commenced in 1999, to replace a number of its chartered ships with
owned ships. The replacement program comprised purchasing 13 used ships,
building ten new ships and entering into long-term charter arrangements on a
further six new ships. It followed the integration of various acquisitions
during the 1990s and a comprehensive review of its ship fleet requirements and
took into account three key factors. First, CP Ships believes that it can
reduce its costs over the medium to long-term by owning ships rather than
chartering them. Second, a higher proportion of owned ships will reduce its
exposure to volatility in operating costs from the charter market and
therefore improve the stability of CP Ships expenses. Third, it can be
difficult to charter ships with optimum characteristics for certain trade
lanes at the time they are needed.

          The 23 replacement ships are medium-sized from 2100 to 4100 teu,
which CP Ships believes to be the optimal size range for operations in
regional markets. Each of the new ships has been specifically designed for the
trade in which it is intended to operate. Three, which operate in the
Australasian trades, have the capacity to carry a significant number of
refrigerated containers for temperature sensitive cargo, two are
ice-strengthened to operate into Montreal and the remaining five are geared,
enabling them to operate in Latin American and other ports without shore side
cranes. The replacement program has resulted in the percentage of CP Ships
owned fleet capacity, including long-term charters, increasing from 28% as at
30th June 2000 to 68% at the end of 2003. The average age of the owned fleet
has also decreased from 12.6 years at the beginning of 2000 to just under
eight years at the end of 2003. The estimated useful life of a containership
is 25 years.

          Whilst the replacement program has resulted in CP Ships achieving
its goal of owning or long-term chartering the majority of its ship fleet, the
combined impact of service expansions, the acquisition of Italia Line during
2002 and the prospects for future trade growth means that CP Ships
requirements have evolved from those set out in 1999 and, therefore, to ensure
that it continues to have the appropriate ships to operate its trades and to
minimize its reliance on the volatile, and through the cycle more expensive,
short to medium term charter market, CP Ships reached agreement during August
2003 to charter from Seaspan Container Lines for a period of up to 12 years, a
further nine 4250 teu containerships to be built and delivered between end
2005 and mid 2007. The charter costs for these nine ships, which will be
constructed by Samsung Heavy Industries of Korea, is close to CP Ships
equivalent cost of ownership including financing. Further details on the
charter terms can be found in the Indebtedness section of this document.

          The composition of CP Ships ship fleet by type of commitment is set
out in the table below:

<TABLE>
<CAPTION>

                                                                                  2007 proforma fleet after delivery
                                           Fleet as at 31st December 2003             of the nine Seaspan ships (3)
                                                 Ships        % Capacity (1)           Ships        % Capacity (1)

<S>                                        <C>               <C>                 <C>                <C>
  Owned                                            40                    55%              40                  45%
  Long-Term Committed                               6                    13%              15                  27%
                                          ------------- --------------------- --------------- --------------------
  Total Owned and Long-Term Committed(2)           46                    68%              55                  72%
                                          ------------- --------------------- --------------- --------------------
  LT Charter                                        -                     -               -                     -
  MT Charter                                       16                    15%              16                  13%
  ST Charter                                       18                    17%              18                  15%
                                          ------------- --------------------- --------------- --------------------
  Total Chartered                                  34                    32%              34                  28%
                                          ------------- --------------------- --------------- --------------------
  Total Fleet                                      80(4)                100%              89                 100%
</TABLE>



                                                                            20
<PAGE>

(1)  The proportion of capacity in each category of ship within the overall
     fleet is based on the standing capacity for each class of ships.

(2)  Owned and Long-Term Committed ships includes four long-term chartered
     ships owned by certain U.S. trusts, the beneficial interests in which
     were purchased by CP Ships in September 2001, two ships under 25 year
     capital leases and six long-term (8 year) time chartered ships which for
     accounting purposes are treated as operating leases. The 2007 proforma
     fleet also includes the nine Seaspan charters.

(3)  Assumes 5% increase in total capacity per year to meet trade growth.

(4)  The fleet at 31st December 2003 includes three ships which are sub
     chartered out, two of which are long term chartered ships, each 4100 teu
     standing capacity and one owned ship at 1900 teu.


Containers

          CP Ships operates the following fleet of containers with a total
capacity of approximately 443,000 teu as at 31st December 2003:


  Container Type           Owned(1) (teu)    Leased (teu)    Total (teu)
  Standard                       148,000         252,000         400,000
  Specialized(2)                   4,000          39,000          43,000
                         ----------------- --------------- ---------------
  Total                          152,000         291,000         443,000
                         ----------------- --------------- ---------------
  Percentage                         34%             66%            100%
                         ----------------- --------------- ---------------


(1)  Includes containers subject to capital leases.

(2)  Temperature-controlled (reefer) and other specialized units.


          As at 31st December 2003, 34% of CP Ships' container fleet was owned
or held under capital leases or sale and leaseback arrangements. CP Ships'
believes that owning containers is generally less expensive than hiring them
under short-term leases. However, short-term leases provide CP Ships with the
ability to reduce or otherwise adjust its container fleet in response to
changing trade conditions or container imbalances in specific trade lanes. CP
Ships' objective is to increase over time the proportion of owned and long
term leased containers in its fleet, although there are currently no
commitments to purchase containers.

Montreal Terminals

          CP Ships operates two of the three terminal properties at the Port
of Montreal. In 2003, CP Ships completed the refurbishment of two gantry
cranes at a cost of $6 million. This project has resulted in improved
productivity for these cranes.

          At the terminals, workers employed by the Maritime Employer's
Association were subject to contracts that expired at the end of December
2003. Negotiations regarding new contracts are in progress.

          The main container handling equipment at the Montreal terminals
comprises nine ship-to-shore gantry cranes, 14 rubber-tired gantry cranes, 20
front-end loaders and 64 yard tractors.

Other Property

          CP Ships has offices throughout the world, including its head office
in London, UK and major offices in Gatwick-UK, Tampa-Florida and
Montreal-Quebec. In addition, CP Ships has other assets used in its business,
such as furniture and fixtures, information systems hardware and software,
leasehold improvements and motor vehicles, none of which are individually
material.



                                                                            21
<PAGE>

Group Shared Services

          Over time, CP Ships has achieved significant operating efficiencies
and cost savings by combining the management of various decentralized
services, including container fleet, inland transport, marine operations,
marine terminals, administration, information systems and insurance and risk
management. CP Ships expects that opportunities for further significant
savings are reduced, however, some opportunities exist from transferring
further processing activities from both Europe and the U.S. to India and
further consolidation of facilities in Europe, including the UK.

          Container Fleet - Provision and Management. CP Ships operates with a
single company-wide container fleet acquiring containers either by direct
purchase from manufacturers or through short, medium or long-term leasing
arrangements with leasing companies. Purchasing and leasing activities are
fully centralized in order to achieve cost savings through greater purchasing
power. Empty positioning and other aspects of container management are
performed by regional units, which implement a centrally developed strategy.

          Inland Transport. The main regions where CP Ships provides a high
volume of inland transport services are Europe and North America. Inland
transport activities include the planning, execution and management of mainly
outsourced rail, truck, feeder ship and barge services used to transport
containers between ports and customer warehouses or inland depots or plants.
Inland transport movements are planned and executed through a network of local
operational offices located throughout Europe and North America under regional
direction.

          CP Ships believes that it can achieve further efficiencies by
continuing to combine its volume of inland transport management at a regional
and local level. As a result, regional inland transport activities in Europe
are managed from operating centres in the UK, Germany, Belgium, France and
Italy. In North America, inland transport activities are managed from
operating centres in Montreal, Quebec and Tampa, Florida.

          Marine Operations. Marine operations include ship procurement
(including under time charters) and deployment, marine fuel purchasing, the
contracting and control of ship management services and the negotiation of
marine terminal contracts. CP Ships provides many of these services centrally
to all of its brands in order to achieve economies of scale, with regional and
local resources employed as appropriate. Marine fuel is available from a large
number of suppliers throughout the world.

          CP Ships does not employ any sea-going staff. Instead, it contracts
with independent ship managers who provide crew for its owned and bareboat
chartered ships. A bareboat charter is broadly equivalent to ownership but for
a set period of time and involves the leasing of a ship only, with the
charterer providing the crew and paying all operating costs including repairs
and maintenance. A time charter, which typically is for a shorter duration
than a bareboat charter, includes crew provided by the owner. Under the
control of CP Ships, the ship managers also supervise ship maintenance,
dry-docking and technical management according to an agreed budget and agreed
ship maintenance policies and procedures, and co-ordinate compliance with
relevant legislation and regulation. In 2003, CP Ships recruited 20 cadet
officers, who are employed by a third party, as part of the UK tonnage tax
cadet training program.

          Marine Terminals. CP Ships focuses on marine terminal operations in
several ways. First, it aims to combine volume from its various trade lanes
and services through common ports, where commercial, economic and operational
factors allow. Second, the marine operations group negotiates stevedoring and
marine terminal contracts using total volume to secure competitive pricing.
Third, CP Ships operates two marine terminals in Montreal, Quebec.

          CP Ships may actively pursue or participate in initiatives to
improve its existing terminal arrangements with independent port and terminal
companies where volumes, scale of operations and other economic factors
justify focus. For example, in late 1999, CP Ships concluded a long-term
agreement with Hesse-Nooed Natie, an Antwerp-based stevedore company, whereby
it has committed all its volume to



                                                                            22
<PAGE>

secure priority berthing, ample terminal space and reduced cost at a planned
new terminal, due to open late 2005 at Deurganckdok in the port of Antwerp.

          Administration. In 2003 a Global Processing Center in India was
established to handle certain back office activities, primarily data
processing work. The benefits of this operation will include reduced
transaction costs, standardized processes, and improved service levels through
extended operating hours. As of 31st December 2003, 150 positions had been
transferred from Europe and North America.

          Information Systems. CP Ships is in the process of developing a
single company-wide system as a replacement for the diverse operational
information systems it inherited with its various acquisitions. This includes
standardization of CP Ships on a single financial system platform, SAP, which
began operation for much of the company in January 2004. CP Ships continues to
reduce the number of separate operational and financial information system
functions across its organization in order to achieve better operating
efficiencies. Centrally-managed application development and technical support
will provide effective cost control and support common information technology
("IT") processes across the group. Two major data centres located in the UK
and in the U.S. support IT hardware and software for all corporate systems.

          Implementation efforts continue within several of the lines to
enhance capabilities with GT Nexus, an industry e-commerce portal. The portal
covers rate requests, sailing schedule queries, documentation submissions and
shipment tracking functions. These efforts complement internal e-commerce
projects. In 2003, a new e-commerce system was deployed to five of the
company's brand web sites.

          Insurance and Risk Management. CP Ships provides centrally managed
insurance, risk management and claims support services with centres in Europe,
North America and Australia.


Sales and Marketing

Brands

          CP Ships serves its customers through seven distinct brands: ANZDL,
Canada Maritime, Cast, Contship Containerlines, Italia Line, Lykes Lines and
TMM Lines. CP Ships believes that its brands are recognized in the industry
for their distinct service offering, strong operating performances and
superior customer relations. In 2003 Contship Containerlines won IFW's
Shipping Line of the Year and Lykes Lines was a finalist. ANZDL and Cast both
won Logistics Management's Quest for Quality Awards. Cast also won S.C
Johnson's Carrier of the Year Award and was named as a Star Performer in the
Lloyd's Loading List annual North Atlantic trade analysis. Lykes Lines was
named Best Carrier to Africa by the Canadian International Freight Forwarders
Association ("CIFFA"). Canada Maritime won three CIFFA awards - Best European,
Best Mediterranean and Best Overall Carrier - for the third year in a row. It
also won the Ocean Carrier Award from Canadian Transportation and Logistics
magazine and was re-certified to Q1 Quality Status by the Ford Motor Group.

Sales

          Sales and marketing activities are organized around the individual
brands, reinforcing CP Ships' strategy of maintaining and strengthening its
brands within its regional markets. CP Ships' policy is to have its own sales
and marketing organizations based, in the large majority of locations, in its
principal markets. It has over 200 sales and marketing offices.

          Third party agents are utilised in smaller low volume locations.
Third party agency arrangements may comprise "full service" agreements
(including sales, marketing, customer service and back-office) or may be
functionally specific, for example covering back-office services only

          A Global Account group manages sales, marketing and customer support
relationships with large global customers with activities in many trade lanes.
This allows CP Ships to offer tailored regional



                                                                            23
<PAGE>

coverage on a global scale thereby capitalizing on the capabilities of the
regional management teams and market knowledge.

Trademark and Licences

          CP Ships does not rely on the licensing of intellectual property
belonging to other companies in marketing its brands other than in respect of
certain "CP" related trademarks which are owned by the successor of Canadian
Pacific, Fairmont Hotels & Resorts Inc., and licensed to CP Ships on a royalty
free perpetual basis.


Customers

          CP Ships has three types of customers: exporters, importers and
intermediaries. Exporters include a wide range of enterprises, from global
manufacturers (including the major automotive companies that may ship
thousands of teu annually) to small family owned businesses (which may ship
just a few teu each year). Importers are usually the direct purchasers of
goods from exporters but may also comprise sales or distribution agents or may
be the receiver of the containerized goods at the final point of delivery.
Intermediaries act as agents for exporters and importers, performing a range
of duties such as rate negotiation, bookings, documentation, insurance,
customs clearance, billing and payments, inland transport, warehousing and
container tracking services which would otherwise be part of the carrier's
door-to-door service. Intermediaries usually receive a commission from the
carrier as well as from customers for performing these activities. Commissions
paid to intermediaries by carriers generally range from 1.5% to 2.5% of the
shipping contract value, although they may sometimes be paid on a fixed fee
basis, typically in the range of $25 to $35 per teu.

          Normally one party involved in a shipment, either the exporter, the
importer or the intermediary, controls the selection of the carrier with such
control usually depending on the terms of sale in the contract between an
exporter and an importer. The extent to which exporters, importers or their
intermediaries control carrier selection varies depending on the trade lane
involved.

          CP Ships markets its services to exporters and importers at both
ends of the trade lane. By providing comprehensive sales coverage in this way,
CP Ships builds knowledge about its customers (and other parties involved in
the shipment), enhances its customer relations, builds brand loyalty and
preserves market share. In CP Ships' view, based on industry and company
customer surveys, customers expect to receive from carriers reliable,
consistent and cost-effective ocean and inland transport services, schedule
reliability, container availability and problem solving.

          General practice within the container shipping industry is to
provide standard credit terms to the party that is responsible for paying the
transportation charges. The amount of credit and the credit period depends on
a number of factors including the customer's financial status, its credit
history with the carrier, the frequency and size of its shipments and overall
size and type of business. CP Ships' credit terms are consistent with general
industry practice.

          CP Ships has a diverse customer base. In 2003, CP Ships' top ten
customers accounted for 9.8% of volume or 8.5% of revenue. The single largest
customer accounted for 2.0% of volume and 2.1% of revenue in 2003.


Competition

          The container shipping industry is highly competitive. While the
world's top 20 carriers, by capacity, control 63% of global container
capacity, the industry remains highly fragmented with over 550 carriers
operating world-wide. Within the trade lanes it serves, CP Ships competes
against a wide range of



                                                                            24
<PAGE>

global, regional and niche carriers. However, CP Ships participates in joint
service agreements with other container shipping companies in nearly all of
its trade lanes.

          Global carriers generally deploy significant ship capacity and
operate extensive service networks in most trade lanes in the major East-West
markets, as well as in selected regional markets. These carriers generally
deploy large ships and serve major ports with direct calls and other ports
through transhipment over regional hubs. Global carriers that compete with CP
Ships include APL, CMA-CGM, Hapag Lloyd, Maersk Sealand, Mediterranean
Shipping, OOCL and P&O Nedlloyd.

          Regional carriers generally focus on a number of smaller trade lanes
within the major East-West markets, or within regional markets such as
Australasia, Africa, Latin America and India. These carriers tend to offer
direct services to a wider range of ports within a particular market than
global carriers. Regional carriers that compete with CP Ships include CSAV,
Hamburg Sud, Shipping Company of India and CCNI.

          Niche carriers are similar to regional carriers but tend to be
smaller in terms of the amount of ship capacity they operate and the number
and size of the markets they cover. Niche carriers that compete with CP Ships
include Atlantic Container Line, Dole Ocean Cargo Express and Seaboard Marine.

Employees

          The number of employees of CP Ships at 31st December 2003 was
approximately 4,720 with 44% of the staff located in North America, 38% in
Europe and the balance mainly in Australasia and South America. CP Ships'
employees are divided by function almost evenly between (i) sales and
marketing, (ii) customer service, (iii) shared services and (iv)
administration and accounting, with the head office of CP Ships being less
than 1% of the total. Employees engaged in shared services include those
responsible for container fleet management, co-ordination of inland transport
services, certain IT functions, insurance and risk management and marine
operations such as ship procurement, marine fuel purchasing, ship management
services and the negotiation of marine terminal contracts.

          Less than 3% of CP Ships' employees are employed under collective
bargaining agreements. CP Ships believes that its relations with employees are
good. CP Ships further believes that the material terms of its collective
bargaining agreements and other terms of employment are customary for the
industry, as are the classification of its employees and the geographic
locations covered by such agreements.

Insurance

          CP Ships maintains insurance policies to cover risks related to
physical damage to its ships and ship equipment, other equipment (such as
containers, chassis, terminal equipment, trucks) and properties, as well as
third party liabilities arising from the carriage of goods and the operation
of ships and shore-side equipment, and general liabilities which may arise
through the course of its normal business operations.

          CP Ships' owned ships are insured with a group of major insurance
companies for physical damage (hull and machinery insurance), including war
and terrorist risks, and total loss up to their full individually declared
values on an annual basis. The declared value of the ship is its assessed
market value. A further 25% of the value is covered under an "increased value"
policy, in order to meet additional expenses that might arise from the total
loss of a ship. In addition, owned ships calling in areas identified by the
marine insurance market as specified war risk zones are temporarily covered
for war risks by declaration and payment of an additional premium. Under its
charter agreements, CP Ships is required to pay additional premiums when its
chartered ships call in a war risk zone.

          Protection and Indemnity insurance (P&I) provides cover for: third
party claims arising from the carriage of goods including loss or damage to
cargo; claims arising from the operation of owned and chartered ships
including injury or death to crew, passengers, or other third parties; claims
arising from collisions with other ships; damage to other third-party
property; pollution arising from oil and other



                                                                            25
<PAGE>

substances; and salvage and other related costs. CP Ships' P&I cover is
divided between two P&I Clubs, both of which are members of the International
Group of P&I Clubs. Members of this association, who insure approximately 90%
of the world's ocean-going merchant fleet, arrange a pooling insurance and a
substantial re-insurance program. Members of P&I Clubs are subject to calls
payable to the association based on the member's claim record as well as the
claim records of all other members of the association. The sum insured by P&I
cover is up to approximately $4.25 billion per incident. CP Ships' terminals
in Montreal and its equipment fleet (containers and chassis) are insured in
the London Companies market for physical damage, including war risks, and
liabilities arising thereunder. As a result of the significant insurance
losses incurred in the September 11, 2001 attacks and related concern
regarding terrorist attacks, the world's insurance markets increased premiums
and reduced or restricted cover for terrorist losses generally. Accordingly,
premiums payable by CP Ships have increased substantially and the level of
terrorist cover has been significantly reduced. The impact on Marine insurance
cover and cost of developing U.S. legislation, including the U.S. Terrorism
Risk Insurance Act of 2002, which aims to restore terrorism coverage in
insurance policies, and security requirements generally, is regularly
assessed.

          CP Ships also maintains additional insurance policies to cover a
number of other risks including: strikes and delays; liability arising from
documentary or procedural errors and omissions; workers compensation; motor
fleet; office buildings; directors' and officers' liability; and general
liabilities. A US re-insurance program has been set up to provide additional
cover in respect of liabilities including trucking, terminal and charterers
liabilities. CP Ships believes that the types and amounts of insurance
coverage it currently maintains are in line with customary practice in the
international container shipping industry and are adequate for the conduct of
its business.

Security

          As a matter of course, CP Ships gives high priority to security and
has traditionally supported industry and government efforts to ensure the safe
carriage of cargo. CP Ships' Security Committee reports directly to the Chief
Executive Officer. Membership is drawn from experts across the group including
marine and land based operations, sales and customer service, cargo
documentation, information systems, communications and regional management. CP
Ships' Vice-President of Supply Chain Security maintains focus on ensuring
company-wide compliance with international security initiatives. Top
priorities in 2003 were to ensure compliance with Customs-Trade Partnership
Against Terrorism (C-TPAT) in the U.S., Partners in Protection in Canada and
the U.S. Customs 24-Hour Advance Notification Rule. As these programs and
others develop, CP Ships will make compliance a top priority.

Regulatory Matters

          CP Ships' operations 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 ships operate,
as well as in the country or countries of their registration. Because such
conventions, laws and regulations are subject to revision, it is difficult to
predict the continuing cost of compliance with such conventions, laws and
regulations, the impact thereof on the resale price or useful life of ships or
on business operations. Various governmental and quasi-governmental agencies
require holding certain permits, licenses and certificates with respect to
marine operations. Subject to the discussion below and to the fact that the
kinds of permits, licenses and certificates required for the operations of its
owned ships will depend upon a number of factors, CP Ships believes that it
has been and will be able to retain or obtain all permits, licenses and
certificates material to the conduct of its operations.


Maritime Regulations

          United States. In the U.S., carrier operations of CP Ships serving
U.S. ports are subject to the provisions of the Shipping Act of 1984 (the
"Shipping Act"), as amended by the Ocean Shipping Reform Act of 1998 ("OSRA").
Among other things, the Shipping Act confers immunity from anti-trust laws for
certain co-operative agreements between ocean common carriers operating in the
U.S. The most common types of



                                                                            26
<PAGE>

agreements are slot exchange agreements, whereby carriers share space on each
others' ships, and rate discussion agreements, in which carriers may
co-ordinate, discuss and voluntarily agree on ocean freight rates and charges
and other terms and conditions of service (collectively, "Carrier
Agreements"). Adherence to decisions reached in such discussion agreements is
purely voluntary. To receive an antitrust exemption, Carrier Agreements must
be filed with the U.S. Federal Maritime Commission ("FMC"). Under the Shipping
Act, as amended, carriers serving U.S. ports may offer transport services to
customers either through semi-confidential service contracts or through
publicly available tariffs. The Shipping Act requires carriers to publish
their tariff rates and certain service contract terms electronically to allow
public internet access. Carrier operations of CP Ships via U.S. ports are
subject to Shipping Act and FMC regulatory requirements relating to Carrier
Agreements, tariffs, and service contracts. Civil penalties of up to $30,000
per violation can be imposed on carriers that fail to adhere to these
statutory and regulatory requirements.

          Under the U.S. Maritime Security Act of 1996, U.S. documented ships
that are operated in a common carrier service are eligible to apply for an
annual subsidy payment ("MSP Program"). As at 31st December 2003, CP Ships had
five U.S. flag ships enrolled in the MSP Program, and these ships receive an
annual subsidy payment of approximately $2 million per ship. Although the
current MSP Program continues until 30th September 2005, funding for the MSP
Program must be approved by U.S. Congress on an annual basis. As a
pre-condition to receipt of the annual subsidy payment under the MSP Program,
the operator or charterer of the ship must enter into an emergency
preparedness agreement with the U.S. Secretary of Transportation. Accordingly,
Lykes Lines has entered into such an agreement with the U.S. Secretary of
Transportation pursuant to which Lykes Lines agrees to make its ships,
capacity in ships, intermodal systems and equipment, terminal facilities,
management service and related service available to the U.S. Government in the
event of war, national emergency or when the U.S. Secretary of Defence
determines it to be necessary for national security. A new MSP program will
become effective 1st October 2005. CP Ships is presently considering whether
and to what extent it will seek participation in the new program.

          Following the terrorist attacks on September 11, 2001 the U.S.
Government adopted certain measures to improve security at various U.S. ports
and with respect to cargo movements to and from the U.S.. Congress and federal
agencies have adopted or are considering the adoption of additional security
related measures. Such measures include increased security for facilities and
vessels, mandatory filing requirements for certain data, improved container
seals, electronic vessel and equipment tracking, enhanced personnel security
checks and identification procedures, reviews of vendors and subcontractors,
changes to cargo documentation requirements, automated filing procedures for
customs and vessel entries, and other actions. It is possible that some of
these measures could adversely affect the efficiency of operations of CP Ships
or result in additional costs. It is as yet too early to determine with any
precision the nature and extent of the full scope of measures that may be
adopted in the U.S..

          Canada. In Canada, the Shipping Conferences Exemption Act, 1987
("SCEA") exempts certain shipping conference practices, such as agreeing to
terms and prices by way of published tariffs or service contracts, pooling
volumes, and exchanging market data with the objective of achieving trade
stability, from the provisions of the Competition Act. This allows for partial
anti-trust immunity provided that, among other things, on request a shipping
conference is required to meet, notify and discuss issues with the Canadian
Shippers Council.

          Recent amendments to SCEA include provisions (a) permitting
conference carriers to offer individual confidential service contracts, (b)
permitting carriers to file rates and tariffs electronically, (c) providing
for penalties of C$10,000 per offence, and (d) reducing the notice period for
independent action from fifteen to five days. In general, these amendments
brought the Canadian regulatory environment closer to U.S. and European
regulation.

          European Union. The European Union ("EU") recognizes traditional
conferences but not discussion agreements. In the EU, CP Ships is affected by
the regulations under the Treaty of Amsterdam (formerly the Treaty of Rome)
("Treaty"). Under the Treaty, CP Ships is subject to European Community ("EC")
Regulation 4056/86 ("Reg. 4056/86") and EC Regulation 823/00 ("Reg. 823/00").



                                                                            27
<PAGE>

          Under Reg. 4056/86, carriers are entitled to give effect to rate
fixing agreements in relation to the ocean carriage of cargo to and from the
EU (and the European Economic Area) member states. This is in derogation of
the fundamental prohibition of cartels imposed by Article 81 of the Treaty.
Such derogation is subject to certain qualifications. These permitted rate
fixing agreements relate to specific trade lanes. They are known as "liner
conferences". Many of CP Ships' liner services are members of the relevant
liner conferences, primarily in the trade lanes between North Europe and
Canada, and between Europe and Australia, New Zealand, South America and
India/Pakistan. Changes to Reg. 4056/86 have now been brought into effect
pursuant to the "modernisation" of EC competition rules brought into effect by
Council Regulation No 1/2003 dated 16 December 2002. These changes will have
effect on 1st May 2004. The changes transfer the burden of testing compliance
with Reg. 4056/86 and Article 81 of the Treaty, and the application of
exemptions to Article 81, from the Commission (of the EC) to a self-assessment
regime open to verification by interested parties (at the national court level
or with or by the commission) or by the EC itself.

          Reg. 823/00, known as the "consortia" regulation, permits carriers
trading to and from the EU to co-ordinate, subject to certain conditions, the
operation of their ships in particular trade lanes, in order to promote
greater efficiency in the optimising and scheduling of shipping capacity. Such
permitted co-ordination is subject to certain qualifications and is distinct
from, and must not include, freight rate fixing agreements (as permitted by
Reg. 4056/86). CP Ships participates, world-wide, in a number of such
arrangements, several of which are subject to Reg. 823/00 by reason of trade
to and from EU member states. There are currently under discussion proposals
to change the verification procedure under this Regulation from that conducted
by the Commission (of the EC) to a self-assessment regime, broadly in line
with the changes to Reg. 4056/86.

          Australia. In Australia, Part X of the Trade Practices Act 1974
("TPA") provides registered liner cargo shipping conference agreements with
exemptions from provisions of the TPA which would otherwise prohibit contracts
or arrangements to lessen competition and corporations engaging in the
practice of exclusive dealing. These exemptions allow conferences to agree
upon freight rates, pool earnings and costs, rationalize capacity and restrict
new entrants to the conference agreement.

          Recent amendments to Part X include the extension of exemptions
relating to rate setting to "port to port" type shipping negotiations, the
extension of Part X to cover inward conferences, the increase in the powers of
the Minister of Transport and the Australian Competition and Consumer
Commission to resolve anti-competitive conduct, a requirement that closed
conferences accept new members in certain circumstances and allowing shipping
conferences to negotiate collectively with stevedores for the provision of
stevedoring services to member lines of those conferences.

          Recent developments in anti-trust immunities. The anti-trust
immunities described above have historically been justified on the grounds
that they are necessary to assure shippers of stable freight rates and
reliable scheduled liner shipping services. These immunities have been in
place in various forms for many years in the U.S., Canada, EU and Australia.
However, they have been gradually eroded and narrowed through legislative and
regulatory amendments and court decisions. For example, in 1998 the OSRA
introduced measures designed to increase the level of competition in the U.S.
between carriers. In 2001, amendments to the SCEA in Canada contained changes
similar to those found in the OSRA and which were also designed to increase
competition in Canada between carriers.

          Three decisions issued by the European Court of First Instance on
28th February 2002 held that the immunities contained in EC Reg. 4056/86 apply
only to port to port services, and do not permit fixing of tariffs for the
inland leg of intermodal services. Further, the lengthy decision of the
European Court of First Instance of 30th September 2003 confirmed in all
material respects (save to annul the fines) the substantive Decision of the
Commission in the TAA case dated 18th September 1998. It thereby confirmed
general guidelines as to certain impermissible conduct on the part of
conferences subject to this Regulation.

          In May 1999, the Secretariat of the Organisation for Economic
Co-operation and Development (the "OECD") published a report entitled
"Discussion document on regulatory reform in international maritime



                                                                            28
<PAGE>

transport". The report recommended, among other things, that agreements among
carriers to set common rates should no longer receive automatic antitrust
immunity or exemption.

          In April 2002, the OECD Secretariat published its final report
entitled "Competition Policy in Liner Shipping" (the "OECD Report") which,
among other things, concluded that there is no evidence that the liner
shipping industry needs to be protected from competition by anti-trust
immunity for price-fixing and rate discussions, and that there is no evidence
that the conference system leads to more stable freight rates or more reliable
shipping services than would be the case in a fully competitive market. The
OECD Report concluded that countries should (i) seriously consider removing
anti-trust exemptions for common pricing and rate discussion and (ii) have the
discretion to retain exemptions for other operational arrangements relating to
liner shipping so long as these did not result in excessive market power. The
container shipping industry has disputed many of the factual findings
contained in the OECD Report and is vigorously opposing the implementation of
its recommendations.

          In February 2002, the European Commission, noting the Draft OECD
Report (published in November 2001 prior to the OECD Report), announced that
it would study, and re-assess the justifications for, the existing exemptions
for liner conferences provided in EC Reg. 4056/86. This is the first time that
EC Reg. 4056/86 will have been formally reviewed by the European Commission
since enactment of the Regulation in 1986. This review process has now
proceeded to detailed comments from interested parties on a Commission
questionnaire, and a recent public hearing.


Environmental Regulations

          United States. In the U.S., ship operators are subject to a number
of federal and state laws and regulations with respect to protection of the
environment in the course of ship operations in U.S. trade lanes. The primary
laws are the Oil Pollution Act of 1990 ("OPA 90") with respect to oil spill
liability, the Comprehensive Environmental Response, Compensation, and
Liability Act ("CERCLA") with respect to spills or releases of hazardous
substances, the Federal Water Pollution Control Act ("FWPCA"), also called the
Clean Water Act, and the National Invasive Species Act of 1996 ("NISA") with
respect to ballast water management.

          Under OPA 90, ship owners, operators, and bareboat charterers are
deemed "Responsible Parties" and are jointly, severally and strictly liable
for all removal costs and other damages caused by oil spills from their ships.
Although OPA 90 is primarily directed at oil tankers (which CP Ships does not
operate), it also applies to non-tanker ships with respect to the fuel carried
on board the ships. OPA 90 limits the liability of non-tanker owners to the
greater of $600 per gross ton or $500,000 per discharge, which may be adjusted
periodically for inflation. The liability limits do not apply if the incident
was caused by the Responsible Party's gross negligence, wilful misconduct, or
a violation of an applicable federal safety, construction, or operating
regulation. In addition, the liability is not limited if the Responsible Party
fails to report the oil spill or fails to cooperate or comply with a removal
order.

          OPA 90 requires all Responsible Parties to establish and maintain
evidence of financial responsibility sufficient to meet the maximum liability
to which it could be subject under OPA 90. Financial responsibility may be
established by any combination of the following: evidence of insurance, surety
bond, guarantee, letter of credit, qualification as self-insurer or other
evidence of financial responsibility. CP Ships believes that it has sufficient
insurance with its P&I Clubs to cover damages that might arise under OPA 90.
However, OPA 90 specifically preserves state law liability and remedies,
whether by statute or common law, which liability is not subject to the OPA 90
limitations of liability. Some states have enacted legislation providing for
unlimited liability for oil spills both in terms of removal costs and damages.
As such, overall liability under state law for a spill maybe virtually
unlimited, and could theoretically exceed CP Ships' available insurance
coverage in the case of a catastrophic spill.

          CERCLA governs spills or releases of hazardous substances other than
petroleum, natural gas, and related products. CERCLA imposes strict and joint
and several liability on the owner or operator of a ship,



                                                                            29
<PAGE>

vehicle or facility from which there has been a release, as well as other
responsible parties. Spills or releases could occur during shipping, land
transport, terminal or transport-related operations. Damages may include
removal costs, natural resource damages, and economic losses without regard to
physical damage to a proprietary interest.

          The Clean Water Act prohibits the discharge of oil or hazardous
substances and imposes strict liability in the form of penalties for damages
and remedial costs. The Clean Water Act now serves largely to provide backup
coverage with respect to remedial costs to the more recent OPA 90 and CERCLA.

          NISA was enacted in 1996 in response to growing reports of harmful
organisms being released into U.S. ports through ballast water taken on by
ships in foreign ports. NISA established a ballast water management program
for ships entering U.S. waters calling for voluntary mid-ocean ballast water
exchange, retention of ballast water onboard the ship, or the use of
environmentally sound alternative ballast water management methods approved by
the U.S. Coast Guard. If the mid-ocean ballast exchange is made mandatory
throughout the U.S., or if water treatment requirements or options are
instituted, the costs of compliance could increase for ocean carriers,
including CP Ships.

          Canada. In Canada, shipowners are faced with a number of Canadian
federal and, concurrently, provincial environmental laws which do or may apply
to shipping operations and related activities in Canadian waters. The federal
laws include the Marine Liability Act, Canada Shipping Act, Canadian
Environmental Protection Act and Fisheries Act. The Marine Liability Act
("MLA") gives effect to the International Convention on Civil Liability for
Oil Pollution Damages, 1992 and the International Convention on the
Establishment of the International Fund for Compensation for Oil Pollution
Damage as amended by protocols in 1976 and 1992. The MLA imposes liability on
the shipowner for oil pollution damage and for costs and expenses to prevent,
repair, remedy or minimize that pollution. Unless the pollution results from a
personal act or omission of the shipowner committed with intent to cause the
pollution, or recklessly and with knowledge that pollution damage would
probably result, the maximum liability of the shipowner is limited to
4,510,000 International Monetary Fund Special Drawing Rights for the first
5,000 tons and 631 Special Drawing Rights per subsequent ton, to a maximum of
89,770,000 Special Drawing Rights. The law requires that certificates of
insurance or other security be issued in respect of each ship. All of CP
Ships' owned ships carry such certificates.

          The Marine Liability Act, Canada Shipping Act, Canadian
Environmental Protection Act and Fisheries Act and comparable provincial laws,
prohibit dumping of deleterious substances in water which would adversely
affect the fishery and other aspects of the environment. These statutes can be
publicly or privately prosecuted and in some cases create a civil cause of
action. Common law causes of action may also be available for those affected
by acts of pollution. Those laws, as well as the common law, create a civil
cause of action against the offender.

          The CP Ships terminals in Montreal are subject to various federal
and province of Quebec environmental laws. The Quebec Environmental Quality
Act imposes liability jointly and severally on all persons who have ownership,
custody or control over contaminants and persons responsible for emission,
deposit or discharge of any contaminant.

          Australia. Australian law governing marine pollution from ships
takes the form of domestic enactment of international conventions. The
Commonwealth, the States and the Northern Territory of Australia have all
legislated to give effect to some of the conventions listed below, but there
is no uniformity between the various jurisdictions. Different jurisdictions
have given effect to different conventions in different ways. The core of
MARPOL 73/78 (referred to below) has been adopted in Australia by the
Protection of the Sea (Prevention of Pollution from Ships) Act, 1983 ("PSA").
All of the States of Australia and the Northern Territory have their own
legislation implementing Annex I and II of MARPOL.

          Effective as at October 2001, the PSA was amended to include
provisions: (a) requiring ships of 400 tons or more, or certified to carry 15
or more persons, to have a shipboard waste management plan and to carry and
maintain a garbage record book; (b) expanding incident reporting requirements
so that ships of



                                                                            30
<PAGE>

15 metres or more must report any incident that affects the safety of the ship
having the potential to result in pollution (previously reporting was required
in respect of an incident only when there was a probability of pollution) and
(c) empowering surveyors to require a ship to discharge waste in port, where
it becomes clear that the ship would have to discharge some waste at sea
before reaching its next port of call.

          The Commonwealth and State Acts implementing Annex I and II of
MARPOL (a) prohibit the discharge of oil or an oily mixture into the sea
subject to certain exceptions; (b) impose a duty to report certain incidents
involving oil or an oily mixture; and (c) require all Australian tankers or
ships over 400 GRT (Gross Registered Tonnage) to maintain an oil record book
according to the regulations outlined in those Acts. A maximum penalty of
A$1.1 million can be imposed against the owner of a ship and A$220,000 against
the master of a ship for breaches of the Acts. In New South Wales, oil
pollution legislation effective as of 1st November 2002 increased the maximum
penalties for pollution from A$220,000 to A$500,000 for individuals and from
A$1.1 million to A$10 million for corporations. These new penalties are the
highest fines in Australia for marine oil and chemical spills.

          The International Convention on Civil Liability for Oil Pollution
Damage, 1969 (known as CLC), as amended by Protocols dated 1976, 1984 and
1992, was implemented by the Commonwealth by enactment of the Protection of
the Sea (Powers of Intervention) Act, 1981. The Dumping Convention was
implemented by the Commonwealth by enactment of the Environment Protection
(Sea Dumping) Act, 1981. That Act was amended in 1994 to give effect to
Australia's obligations under the Protocol for the Prevention of Pollution of
the South Pacific Region by Dumping ("SPREP") Protocol. Legislation was passed
in 1993 to give effect to the Fund Convention in Australia. The Protection of
the Sea (Oil Pollution Compensation Fund) Act, 1993 provides for who is to
contribute to an international oil pollution compensation fund, how much they
must contribute and how such contributions are to be completed.

          The Protection of the Sea (Civil Liability) Amendment Act, 2000
provides that: (a) ships over 400 GRT will be required to have appropriate
insurance in place to meet liabilities arising from pollution damage caused by
the discharge of oil; and (b) a breach of this Act will result in a strict
liability offence which carries penalties of up to A$55,000.

          International. Globally, the International Maritime Organization
("IMO") has adopted MARPOL 73/78, which relates to environmental standards
including oil leakage or spilling, garbage management, as well as the handling
and disposal of noxious liquids, harmful substances in packaged forms, sewage
and air emissions. Compliance with MARPOL is not yet mandatory. However, CP
Ships endeavours to comply with all materially relevant provisions of the
convention.

          The IMO adopted the International Convention for the Safety of Life
at Sea or SOLAS Convention, which imposes a variety of standards to regulate
design and operational features of ships. SOLAS standards are revised
periodically. CP Ships believes that all ships, either owned or chartered by
it, comply with SOLAS standards. SOLAS also incorporates the International
Safety Management Code ("ISM"). The ISM requires, among other things, ship
operators to implement environmental and safety management systems. CP Ships
has obtained ISM accreditation for all its owned ships and for the management
companies operating those ships.

          The majority of CP Ships' marine operations activities has been
certified to the ISO 14001 Environmental Management standard. The purpose of
ISO 14001 certification is to ensure that all company marine operations
activities which relate to the environment conform to a specific standard
which makes it mandatory to comply with relevant international conventions,
national and local laws and regulations and create the framework required to
continuously improve directly or indirectly related internal processes,
procedures and activities. Certification of CP Ships' remaining marine and
terminal operations is expected during the course of 2004.

          All of CP Ships' owned and chartered ships operate under the
International Ship Management Code's standard of safe operations. CP Ships'
owned ships are registered with internationally recognized Classification
Societies including Lloyds, Bureau Veritas, ABS, and DNV. The principal
purpose of



                                                                            31
<PAGE>

Classification Societies is to provide objective and independent confirmation
to the insurance underwriters that ships are being maintained to the standards
that are considered appropriate to minimize claims on underwriters. A
beneficial by-product of the activities of Classification Societies is to
provide reassurances to owners and others with a financial or other interest
in those ships that they are being regularly surveyed and properly maintained.



                                                                            32
<PAGE>

                  SELECTED CONSOLIDATED FINANCIAL INFORMATION

          Prior to 1st October 2001, CP Ships Holdings Inc. ("CPSHI") was the
wholly owned holding company of Canadian Pacific Limited's ("CPL") container
shipping interests. On 1st October 2001, as part of a Plan of Arrangement, CPL
distributed its interests in CPSHI to CP Ships, a newly created subsidiary
company of CPL. CPL then distributed its investment in CP Ships to its common
shareholders on the basis of one new common share in CP Ships for four old CPL
common shares. Where appropriate, share numbers in the financial statements
reflect the effect of the Plan of Arrangement applied retroactively. As both
CPSHI and CP Ships were under the control of CPL at the time, the transactions
have been accounted for in a manner similar to a pooling-of-interests and the
historical financial information of CPSHI has become the historical financial
information of the now publicly held CP Ships.

          Subject to the foregoing, the following table sets forth certain
financial information for CP Ships or its predecessor and its subsidiaries on
a consolidated basis under Canadian Generally Accepted Accounting Principles
for the last three fiscal years.

Consolidated Statements of Income Data
($ millions, except amounts per share, presented in $)


<TABLE>
<CAPTION>
                                                           Year ended 31st December
                                                   ------------- ------------- --------------
                                                         2003          2002        2001 (1)
<S>                                                <C>           <C>           <C>
Revenue                                                 3,136         2,687         2,646
Expenses                                               (3,005)       (2,604)       (2,507)
                                                   ------------- ------------- --------------
Operating income before exceptional items (2)             131            83           139
Exceptional items                                         (10)            2           (43)
                                                   ------------- ------------- --------------
Operating income                                          121            85            96
Interest (expense), net                                   (36)          (23)            -
Income tax expense                                         (3)          (10)          (12)
Minority interest                                           -             -             1
Goodwill charges (3)                                        -             -           (16)
                                                   ------------- ------------- --------------
Net income (3)                                           $ 82          $ 52          $ 69

                                                   ============= ============= ==============

Earnings per common share basic before                   $1.02         $0.59         $1.37
exceptional items (3) (4) (5)

Earnings per common share basic (3) (4)                  $0.91         $0.61         $0.83

Earnings per common share diluted (3) (4)                $0.89         $0.60         $0.83

Cash dividend declared per common share                  $0.16         $0.16             -

Cash dividend declared per preference share                 -             -         $17.69
</TABLE>



                                      33
<PAGE>

Consolidated Balance Sheet Data
($ millions)

<TABLE>
<CAPTION>
                                                              At 31st December
                                                   ----------------------------------------
                                                         2003          2002         2001 (1)
<S>                                                    <C>          <C>           <C>
Cash and cash equivalents                                  75           110           116
Property, plant and equipment                           1,235         1,134           774
Total assets                                            2,506         2,487         1,923
Total long-term liabilities                               639           589           223
Total debt                                                651           597           230
Common share capital                                      686           685           597
Shareholders' equity                                    1,314         1,225         1,096
</TABLE>


(1)  The 2001 financial statements have been revised. See note 2 to CP Ships'
     2002 Financial Statements.

(2)  Exceptional items include an exceptional charge in 2001 of $43 million,
     an exceptional credit in 2002 of $2 million and an exceptional charge of
     $10 million in 2003.

(3)  Goodwill was not amortized in 2003 and 2002 due to changes in Canadian
     GAAP. The impact of not amortizing goodwill for the year ended 31st
     December 2001 would have been to increase net income by $16 million, and
     increase basic and diluted earnings per share by $0.20.

(4)  Earnings per common share is calculated after deduction of preference
     dividends in the years ended 31st December 2003, 2002 and 2001 of $0, $0
     and $3 million, respectively. Basic and diluted earnings per common share
     have been calculated using net income after deducting the preference
     shares dividend divided, by 89.8 million and 92.6 million shares,
     respectively, for the year ended 31st December 2003 and 84.8 million and
     86.1 million shares, respectively, for the year ended 31st December 2002
     and 79.3 million and 79.9 million shares, respectively, for the year
     ended 31st December 2001.

(5)  Exceptional items include a charge of $10 million in 2003, a credit of $2
     million in 2002 and a charge of $43 million in 2001.


Dividend Policy

          On 5th February 2004, CP Ships' Board of Directors declared a
dividend for the fourth quarter of 2003 of $0.04 per common share ($3.6
million in aggregate), which was paid on 2nd March 2004.

          The Board of Directors determines the amount of the quarterly
dividends based on its view of anticipated net income and in accordance with
CP Ships' capital expenditure and working capital needs as well as its
strategic spending plans. Should the Board's view change, the amount of the
dividend could be increased, decreased or eliminated entirely.

          The Board of Directors is under no obligation to declare dividends
and the declaration of dividends is wholly within its discretion. Restrictions
under CP Ships' existing or future financing agreements and the provisions of
applicable law preclude, or may preclude, the payment of dividends in certain
circumstances.



                                      34
<PAGE>

       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                            RESULTS OF OPERATIONS

          Reference is made to the section entitled "Management's Discussion
and Analysis" set out at pages 25 to 38 of CP Ships' 2003 Annual Report, which
is incorporated by reference in this Annual Information Form.


                             MARKET FOR SECURITIES

Stock Exchange Listings

          The common shares are traded on The Toronto Stock Exchange and the
New York Stock Exchange and trade under the symbol "TEU".



                           DIRECTORS AND MANAGEMENT

Directors

          Set out below are the names, municipality of residence, business
addresses, offices within CP Ships and principal occupations within the past
five years of the directors of CP Ships together with the common shares
beneficially owned or controlled by such individuals as at 29th February 2004.
As at the date of this document, no single director beneficially owns or
controls 1% or more of the common shares.

<TABLE>
<CAPTION>
                                                                                            Number of
                                                                                            Common
                                                                                            Shares
Name, Municipality of Residence and                          Principal Occupation           Beneficially
Business Address if different from                           (where different from          Owned or
CP Ships                                 Office              office)                        Controlled

<S>                                      <C>                 <C>                            <C>
John P. Bowmer.......................    Director since      Chairman, Adecco SA               6,503
Atherton, California                     October 2001        (international staffing
                                                             group)

Business Address:
100 Redwood Shores Parkway
Redwood City
California, U.S.A 94065

Robert J. Clanin.....................    Director since      Corporate Director                6,486
Alpharetta, Georgia                      October 2001

Business Address:
14780 East Bluff Road
Alpharetta
Georgia, U.S.A 30004

Peter J. Dey.........................    Director since      Partner, Osler Hoskin &           8,735
Toronto, Ontario                         October 2001        Harcourt LLP (law firm)

Business Address:
1 First Canadian Place
Toronto, Ontario
Canada M5X 1B8

Frank J. Halliwell...................    Director since                                      201,790 (1)
Tampa, Florida                           October 2001 and
                                         Chief Operating
                                         Officer



                                                                            35
<PAGE>

Business Address:
401 East Jackson St., Suite 3300
Tampa
Florida, U.S.A 33602

John D. McNeil.......................    Director since      Corporate Director               23,735
Toronto, Ontario                         October 2001

Business Address:
150 King Street West
Toronto, Ontario
Canada M5H 1J9

Raymond R. Miles.....................    Director since                                      276,116(2)
London, England                          October 2001 and
                                         Chief Executive
                                         Officer
Business Address:
62-65 Trafalgar Square
London
WC2N 5DY England

Nigel M.S. Rich......................    Director since      Corporate Director                3,387
London, England                          October 2001

Business Address:
7 Lower Sloane Street
London
SW1W 8AY England

Ian J. Webber........................    Director since                                      135,318(3)
Kent, England                            October 2001 and
                                         Chief Financial
                                         Officer
Business Address:
62-65 Trafalgar Square
London
WC2N 5DY England

Viscount Weir........................    Chairman and        Corporate Director                3,895
Glasgow, Scotland                        Director since
                                         October 2001

Business Address:
130 Wilton Road
London
SW1Y 1LQ
</TABLE>


(1)  201,790 common shares of which 131,778 are Restricted Shares, 41,778 of
     which vest on 18th October 2004 and 41,778 vest on 1st December 2005, and
     48,222 subject to company performance criteria also vest on 1st December
     2005, all under compensation plans.

(2)  276,116 common shares of which 184,445 are Restricted Shares, 73,778 of
     which vest on 18th October 2004 and 73,778 vest on 1st December 2005, and
     36,889 subject to company performance criteria also vest on 1st December
     2005, all under compensation plans.

(3)  135,318 common shares of which 103,556 are Restricted Shares, 33,556 of
     which vest on 18th October 2004 and 33,556 vest on 1st December 2005, and
     36,444 subject to company performance criteria also vest on 1st December
     2005, all under compensation plans.


          Viscount Weir, Chairman since 1991. If elected at the annual meeting
on 4th May 2004 he will step down as chairman and be appointed Lead Director.
Viscount Weir was also Chairman of Balfour Beatty, one of the UK 's largest
construction companies until May 2003. He was Chairman of the Weir Group, a
UK-based mechanical engineering group, from 1983 to 1999. He is also a
Director of St James's Place Capital and Canadian Pacific Railway. Formerly,
he was a Director of the Bank of England, British Steel and Canadian Pacific
Limited. He is Chairman of the Compensation Committee and a member of the
Audit and Corporate Governance Committees.



                                                                            36
<PAGE>

          John Bowmer is Chairman of Adecco of Switzerland, the world's
largest international staffing and recruitment company where he was Chief
Executive Officer from 1996 to 2002 and Chief Executive Officer of its
predecessor, Adia, since 1993. He has served in a variety of executive
positions in the UK, Asia, Australia and the US since he joined Adia in 1987.
He is a member of the Audit, Corporate Governance and Compensation Committees.


          Robert Clanin is Chairman of Overseas Partners, a Bermuda
reinsurance company, a Director of Caraustar Industries, which produces
recycled packaging, of John H Harland, a financial services company and of
Serologicals. a global provider of biological products. He was Chief Financial
Officer of United Parcel Service, the US-based international parcel delivery
and logistics company, from 1994 to 2001, having joined the company in 1971.
He oversaw what was at the time the largest ever initial public offering of
stock in the US. He is a member of the Audit, Corporate Governance and
Compensation Committees.

          Peter Dey was Chairman of Morgan Stanley Canada from 1998 until 2001
and President from 1994. From 1985 to 1994 he was a partner in the Canadian
law firm Osler, Hoskin & Harcourt which he first joined in 1969 and to which
he returned as a partner in 2001. He was Chairman of the Ontario Securities
Commission from 1983 to 1985 and was responsible for the Dey Report on
corporate governance in Canada. He is a director of Stelco, Camco, Workbrain
Corporation and Atlas Cold Storage Income Trust. He is Chairman of the
Corporate Governance Committee and a member of the Audit and Compensation
Committees.

          Frank Halliwell will be appointed Chief Executive Officer of CP
Ships after the annual meeting on 4th May 2004. He has served as Chief
Operating Officer in 2001, having been Executive Vice President since 1995. He
has filled a number of senior roles in the CP Ships group since joining Canada
Maritime as Commercial Director in 1991. He entered the container shipping
industry in 1971.

          John McNeil was Chairman and Chief Executive Officer of Sun Life
Assurance Company of Canada from 1988 to 1998 and Chairman until retirement in
1999, having originally joined the company in 1956. He is a Director of Sun
Life Financial. He serves as Chairman of Fairmont Hotels and Resorts having
been Director of its former parent company, Canadian Pacific Limited from 1992
to 2001. He is also a Director of Shell Canada and DWL (USA). He is Chairman
of the Audit Committee and a member of the Compensation and Corporate
Governance Committees.

          Ray Miles joined CP Ships in 1988 as Chief Executive Officer. He
will be replaced by Frank Halliwell as CEO after the annual meeting on 4th May
2004. If elected at the meeting he will become Chairman. He has worked in the
shipping industry since 1972. He is a non-executive Director of Provident
Financial and West of England P&I Club, Chairman of Box Club the container
shipping industry's CEO forum, Chairman of the World Shipping Council, the
industry's US representative organization and a trustee of the National
Maritime Museums at both Greenwich, London and Falmouth, Cornwall.

          Nigel Rich is Chairman of Exel, the global logistics business. He is
also Chairman of the Hamptons Group, a real estate services company, and a
Director of Pacific Assets Trust. He spent 20 years with the Jardine Matheson
group in Asia and was its Chief Executive from 1989 to 1994. He is a member of
the Audit, Compensation and Corporate Governance Committees.

          Ian Webber, a Chartered Accountant, was appointed Chief Financial
Officer in 1996 after 17 years with PricewaterhouseCoopers LLP, the last five
as an audit partner.

          The Articles of Amalgamation of CP Ships provide for a minimum of
three and a maximum of 15 directors. The directors are empowered to exercise
all the powers of CP Ships, including the power to borrow money. A director
may not vote in respect of any contract, arrangement, transaction or proposal
in which he, or any person connected with him, has any material interest other
than by virtue of his interests in securities of, or otherwise in or through,
CP Ships. A director shall not vote or be counted in any quorum concerning his
own appointment or terms of his appointment. Directors are not required to
hold any shares



                                                                            37
<PAGE>

of CP Ships by way of qualifications but the board has decided that each
should own 10,000 shares within five years of election. There is a mandatory
retirement for a director at the AGM after reaching 70 years of age. Subject
to shareholder approval in May 2004, the board of directors amended the
company's by-laws to allow the board to waive the mandatory disqualification
for directors having reached 70 years of age for successive one year periods
when it is in the best interests of the company.



Management

          The names, municipality of residence and principal occupations
within the past five years of CP Ships' senior officers who are not directors
are shown below. Unless otherwise noted below during the past five years each
of the following senior officers has been engaged in the principal occupation
shown opposite his name or in another position with the same or an affiliated
company.

          Salvador Bruno, Tampa, USA, Senior Vice-President, joined in July
1997 with the acquisition of Lykes Lines, where he had worked since 1985
having served in a number of senior positions until his appointment as VP
Commercial.

          Terry Burrows, Sussex, England, Senior Vice-President, appointed in
August 2000. He joined CP Ships in 1964 and has served in various senior
commercial and marketing roles for the Montreal Gateway.

          Dave Dawson, Sussex, England, Senior Vice-President, was appointed
in January 2003. He joined CP Ships in 1966 and has held a number of senior
administrative and commercial positions.

          Jeff Drake, London, England, Vice-President Corporate Planning,
joined CP Ships in October 2000. From 1998, he was Director Marketing and
Planning for Contship Italia in Italy and before that a partner with Mercer
Management Consulting in Boston, Massachusetts.

          Juan Manuel Gonzalez, Tampa, USA, Senior Vice-President, joined CP
Ships on the merger with TMM in 1999.

          John Irving, Surrey, England, Vice-President General Counsel and
Secretary, joined CP Ships in June 2001 after five years as Senior
Vice-President and General Counsel for Dairyworld Foods in Vancouver, British
Columbia. He was Vice-President, General Counsel and Secretary of Emco Limited
from 1993 to 1996.

          JP LaCasse, Tampa, USA, Senior Vice-President, joined in January
1998. Before that he was with APL for nine years, most recently as North
American Controller. He started in the shipping business in 1978 as
international tax counsel for Sea-Land Service Inc.

          Jeremy Lee, Montreal, Canada, Vice-President Investor Relations
since June 2001. He joined CP Ships in 1989 and has served in various senior
commercial, marketing and corporate planning positions.

          Paul Stone, Essex, England, Vice-President Human Resources, was
appointed in November 1999 after serving as General Manager, Human Resources
for Contship Containerlines since 1996. Previously he was UK HR Manager for
Deloitte & Touche and previously in similar roles in other companies.

          Iain Torrens, London, England, Vice-President Treasurer, was
appointed in January 2002. He joined from Cookson Group where he was Deputy
Group Treasurer.


          There is no family relationship between any of the directors and
officers.



                                                                            38
<PAGE>

Committees of the Board of Directors

          The Board of Directors of CP Ships has constituted three standing
committees - an Audit Committee, a Compensation Committee and a Corporate
Governance Committee. Each standing committee is comprised of non-employee
directors. Matters regarding employee health and safety and the protection of
the environment are dealt with by the full Board of Directors.


Audit Committee

          The mandate of the Audit Committee includes:

o    Reviewing with management and CP Ship's internal and external auditors,
     the financial reporting in connection with the annual audit and the
     preparation of the financial statements including the judgement of the
     external auditors as to the quality and appropriateness of CP Ship's
     accounting principles.

o    Reviewing CP Ship's Quarterly Financial Statements and recommending the
     release of those statements to the public.

o    Discussing with management the policies and procedures for managing the
     principal financial risks of the business to satisfy themselves that the
     principal financial risks have been identified and that systems have been
     implemented to effectively manage these risks.

o    Reviewing the effectiveness of CP Ship's disclosure controls and
     procedures and internal financial controls.

o    Subject to shareholder approval, selecting, retaining and where
     appropriate replacing the external auditors, including a review and
     discussion with the external auditors of all significant relationships
     that the external auditors and their affiliates have with CP Ships.

o    Approving the audit and non-audit services and fees of the external
     auditors.

o    Establishing procedures for anonymous complaints regarding questionable
     accounting or auditing matters.

          The Chairman of the Audit Committee is John McNeil and the members
are John Bowmer, Robert Clanin, Peter Dey, Nigel Rich and Viscount Weir.


Corporate Governance Committee

          The mandate of the Corporate Governance Committee includes:

o    Monitoring and assessing the functioning of the Board and the committees
     of the Board and developing and implementing good corporate governance
     practices.

o    In consultation with the Chairman and the CEO, reviewing the size,
     composition and profile of the Board and identifying candidates to be
     appointed to fill any vacancies.

o    Reviewing from time to time the compensation for the Board and for
     committee service.

o    Reviewing and making recommendations to the Board from time to time with
     respect to the performance of the Board and various committees of the
     Board.



                                                                            39
<PAGE>

          The Chairman of the Corporate Governance Committee is Peter Dey and
the members are John Bowmer, Robert Clanin, John McNeil, Nigel Rich and
Viscount Weir.


Compensation Committee

          The mandate of the Compensation Committee includes:

o    Defining the reporting relationships of senior management and its major
     business units

o    Reviewing on a regular basis, succession plans for senior management
     positions

o    Assessing the performance of senior management, their compensation and
     reviewing the compensation policy of CP Ships.

          The Chairman of the Compensation Committee is Viscount Weir and the
members are John Bowmer, Robert Clanin, Peter Dey, John McNeil and Nigel Rich.



                                                                            40
<PAGE>

        DESCRIPTION OF INDEBTEDNESS AND OTHER OBLIGATIONS AND TAXATION
                         OF CP SHIPS AND SUBSIDIARIES

          The following is a summary of the terms and conditions of CP Ships'
revolving credit facility, 10 3/8% Senior Notes due 2012, 4% Convertible
Senior Subordinated Notes due 2024, Pacific Class Vessel loan, and certain
capital leases and other operating leases. This summary is necessarily of a
general nature and does not purport to describe all of the terms and
conditions of such financing transactions.


Indebtness Corporate Structure


                              {GRAPHIC OMITTED]


(1)  CP Ships owns a 100% interest in Racine Terminal (Montreal) Company and
     Cast Terminal Company indirectly through Montreal Gateway Terminals
     Company, which is incorporated in Nova Scotia.

(2)  CP Ships (Bermuda) Limited holds a 100% interest in (i) CP Ships (UK)
     Limited indirectly through three intermediate holding companies, one of
     which is incorporated in Bermuda and the other two in England and Wales,
     (ii) CP Ships (Americas) Limited through an intermediate holding company
     incorporated in Bermuda .

(3)  Owns and leases CP Ships' containers.

(4)  Services are marketed under the following brands: Canada Maritime, Cast,
     Contship Containerlines and ANZDL.

(5)  Services are marketed under the Italia brand.

(6)  Services are marketed under the Lykes Lines brand.

(7)  Services are marketed under the TMM Lines brand.

(8)  Ship-owning company.



                                                                            41
<PAGE>

Revolving Credit Facility


$525 Million

          On 25th March 2004, CP Ships and certain of its subsidiaries entered
into a $525 million secured revolving credit facility (the "$525 Million
Facility") with a syndicate of financial institutions represented by ING Bank
NV, as agent and security trustee. The $525 Million Facility replaces CP
Ships' previous $175 million and $350 million revolving credit facilities,
which have been cancelled. The $525 Million Facility has a five-year term
expiring in March 2009. Borrowings under the $525 Million Facility are by
subsidiaries of CP Ships (CPS Number 1 Limited and CPS Number 2 Limited), are
presently secured by 25 owned ships, and are guaranteed by CP Ships, Lykes
LLC, TMM LLC and CP Ships (UK).

          Under the $525 Million Facility, CP Ships must pay interest on
amounts borrowed at a rate equal to LIBOR (or, in relation to any advance in
Euro, Euribor), plus the applicable margin and mandatory costs (if any), in
addition to a quarterly commitment fee on the unused portion of the $525
Million Facility equal to 40% of the applicable margin. The applicable margin
is based on the average of the Moody's and S&P corporate ratings of CP Ships.
For so long as CP Ships' corporate ratings continue to be Ba2 (as rated by
Moody's) and BBB-- (as rated by S&P) and the amount outstanding under the $525
Million Facility is less than 50% of the total commitments thereunder at such
time, the applicable margin is 1.10%. The applicable margin is subject to
adjustment in the event of a change in such ratings. If the amount outstanding
under the $525 Million Facility is more than 50% of the total commitments
thereunder at such time, the applicable margin is increased by a further
0.15%.

          Under the $525 Million Facility, CP Ships may borrow an amount up to
the aggregate of 75% of the appraised value of the ships on which the facility
is secured. The value of all secured ships is subject to an annual reappraisal
and, to the extent that borrowings under the facility exceed the 75%
threshold, CP Ships may be required to reduce the borrowings within 15
business days of notification. CP Ships may also be required to make a
prepayment if and to the extent that the sale or total loss of a ship, or the
release of a mortgage on a ship results in borrowings under the facility
exceeding the 75% threshold. Based on the appraised value of the 25 secured
ships, CP Ships was able to borrow $525 million under the $525 Million
Facility as at 25th March 2004.

          Voluntary prepayments, including partial prepayments, are permitted
under the $525 Million Facility and amounts prepaid may be re-borrowed.

          As guarantor, CP Ships is subject to certain financial and other
covenants including: (i) an ongoing obligation to maintain free liquid assets
(defined as credit balances on current or deposit accounts, short-term (less
than one-year maturity) certificates of deposit, investments in money market
funds rated AAA by S&P or Aaa by Moody's, and amounts up to $35 million of any
unutilized, committed credit facilities with a remaining term of greater than
one year) of at least $75 million; (ii) an ongoing obligation to maintain
consolidated tangible net worth (defined as shareholders' equity less any
goodwill and other intangibles) equal to or in excess of $500 million; (iii)
an ongoing obligation to ensure that the ratio of total debt (excluding up to
$225 million of subordinated debt) and capitalized lease obligations
(excluding (a) the impact of ship charters which commence on a future date and
(b) leases of office equipment, office premises, motor vehicles, trucks and
chassis) to shareholders' equity does not exceed 1.2 to 1.0; (iv) an ongoing
obligation to ensure that the ratio of total debt (excluding up to $225
million of subordinated debt) to earnings before interest, depreciation, taxes
and amortization does not exceed 4.0 to 1.0.

          In addition to events of default customary for this type of
facility, any event of default or default with respect to CP Ships, Lykes LLC,
TMM LLC and CP Ships (UK) or the borrowing subsidiaries' indebtedness for
money borrowed having an aggregate principal amount of $15 million or more
would constitute an event of default under the $525 Million Facility. If CP
Ships ceases to be listed on The TSX, the London Stock Exchange or the NYSE
(or other approved stock exchanges) or any person or group acquires



                                                                            42
<PAGE>

more than 25% of CP Ships' outstanding common shares, this will constitute a
change of control under the $525 Million Facility and an event of default. The
occurrence of an event of default, unless waived by the lenders, will result
in all amounts owing under the facility becoming immediately due and payable.

10 3/8% Senior Notes due 2012

          On 3rd July 2002, CP Ships completed a private placement of senior
notes in the aggregate principal amount of $200 million at a price of 97.722%
of their principal amount. Following an exchange offer made by CP Ships on
31st October 2002, all of the senior notes were exchanged for senior notes
registered under the Securities Act (the "10 3/8% Senior Notes"). The 10 3/8%
Senior Notes are issued pursuant to a Trust Indenture dated 3rd July 2002
between CP Ships as issuer, CP Ships (UK), Lykes LLC and TMM LLC (together,
the "Note Guarantors") as subsidiary guarantors and The Bank of New York as
trustee and reference is made to the Trust Indenture for a full description of
the terms and conditions attaching to the 10 3/8% Senior Notes. The 10 3/8%
Senior Notes are listed on the Luxembourg Stock Exchange (CUSIP number
22409VAC6).

          The 10 3/8% Senior Notes bear interest at 10.375% payable
semi-annually and mature in July 2012 unless redeemed earlier. The obligations
of CP Ships under the 10 3/8% Senior Notes are guaranteed by the Note
Guarantors. Under the terms of the 10 3/8% Senior Notes, CP Ships has the
option, in each case subject to payment of any accrued and unpaid interest:

          (i) at any time prior to 15th July 2005, to redeem up to 35% of the
aggregate principal amount of the 10 3/8% Senior Notes with the proceeds of
one or more public equity offerings, at a redemption price equal to 110.375%
of the principal amount of the redeemed 10 3/8% Senior Notes;

          (ii) at any time prior to 15th July 2007, to redeem any of the 10
3/8% Senior Notes at a redemption price equal to the principal amount thereof
plus a redemption premium equal to the greater of (a) 1% of such principal
amount and (b) the excess of (x) the present value at the redemption date of
the redemption price of such 10 3/8% Senior Notes at 15th July 2007 plus all
required interest payments that would otherwise be due to be paid on such 10
3/8% Senior Notes between the redemption date and 15th July 2007 excluding
accrued but unpaid interest, computed using a discount rate equal to the U.S.
Treasury Rate at such redemption date plus 0.50%; over (y) the principal
amount of such 10 3/8% Senior Notes; and

          (iii) at any time after 15th July 2007 and prior to their maturity,
to redeem any of the 10 3/8% Senior Notes at an applicable fixed redemption
price which gradually decreases from 105.188% of the aggregated principal
amount of such 10 3/8% Senior Notes if such option is exercised in 2007 to
100% of such amount if such option is exercised in 2010 and thereafter.

          Under the terms of the 10 3/8% Senior Notes, if any person or group
directly or indirectly acquires 50% or more of CP Ships' outstanding common
shares, or if CP Ships consummates certain specific merger or consolidation
transactions or sells substantially all of its or its subsidiaries' assets, or
the majority of the Board of CP Ships is replaced during any consecutive two
year period and, within 90 days of any such event, the credit rating of the 10
3/8% Senior Notes is downgraded or withdrawn by both S&P and Moody's, CP Ships
will be required to make an offer to purchase all of the outstanding 10 3/8%
Senior Notes at a price equal to 101% of the principal amount thereof plus
accrued and unpaid interest to the date of purchase.

          CP Ships is also required to make an offer to purchase outstanding
10 3/8% Senior Notes in the principal amount equal to any proceeds (when such
proceeds exceed $25 million) from a sale of assets by CP Ships or its
subsidiaries that have not been used to repay third-party debt of any
subsidiary of CP Ships or to acquire assets, at a price equal to 100% of such
principal amount plus accrued interest up to the date of purchase.

          The indenture governing the 10 3/8% Senior Notes contains various
restrictive covenants that, among other things, limit the ability of CP Ships
and each of its subsidiaries to: (i) incur certain additional indebtedness;
(ii) pay dividends on capital stock or redeem capital stock or prepay any
subordinated debt; (iii)



                                      43
<PAGE>

make certain investments; (iv) sell assets other than at a fair market value
and for cash or other equivalent consideration; (v) enter into transactions
with direct or indirect holders of more than 10% of the common shares of CP
Ships or of its subsidiaries and with affiliates that are not subsidiaries of
CP Ships, other than in good faith and on arm's-length terms; (vi) create
security interests over any of their respective assets other than certain
permitted security interests; (vii) sell shares in its subsidiaries or permit
its subsidiaries to issue shares; (viii) sell and leaseback assets; (ix)
guarantee debt; (x) consolidate, merge or transfer all or substantially all of
CP Ships' assets or (xi) in the case of the Note Guarantors, dispose of their
respective assets. All of these restrictions are subject to a number of
important limitations and qualifications.

          Events of default under the 10 3/8% Senior Notes are customary for
this type of debt and, among other things, include the occurrence of an event
of default or default with respect to CP Ships' or its subsidiaries'
indebtedness for borrowed money having an aggregate principal amount of $20
million or more that results in acceleration of the payment of such
indebtedness.

4% Convertible Senior Subordinated Notes due 2024

          On 24th February 2004, CP Ships completed a private placement of
convertible senior subordinated notes due 2024 (the "Convertible Notes") in
the aggregate principal amount of $200 million at a price of 100% of their
principal amount. The Convertible Notes are issued pursuant to an Indenture
dated 24th February 2004 between CP Ships and The Bank of New York as trustee
(the "Convertible Notes Indenture") and reference is made to the Convertible
Notes Indenture for a full description of the terms and conditions attaching
to the Convertible Notes. The Convertible Notes are traded in The PORTAL
Market (CUSIP number 22409VAD4).

          The Convertible Notes bear interest at 4% payable semi-annually and
mature 30th June 2024 unless redeemed earlier. The Convertible Notes are
unsecured obligations of the Company subordinated in right of payment to all
existing and future senior indebtedness.

          Under the terms of the Convertible Notes, the Convertible Notes are
convertible into common shares of CP Ships at an initial conversion rate of
39.6542 shares per $1,000 principal amount of Convertible Notes (which results
in an initial conversion price of approximately $25.22 per share), subject to
adjustment, prior to the close of business on 30th June 2024 under the
following circumstances:

     (i)  during any fiscal quarter commencing after 30th June 2004 and only
          during such fiscal quarter, if the closing sale price of one of CP
          Ships' common shares exceeds 120% of the conversion price for at
          least 20 trading days in the 30 trading day period ending on the
          last trading day of the preceding fiscal quarter;

     (ii) during the five business day period after any five consecutive
          trading day period in which the trading price per Convertible Note
          for each day of that period was less than 98% of the product of the
          closing sale of CP Ships' common shares and the conversion rate for
          such date;

    (iii) if the Convertible Notes have been called for redemption; or

     (iv) upon the occurrence of certain specified corporate transactions.

          On or after 3rd July 2009, by giving investors at least 30 days'
notice, CP Ships may redeem any of the Convertible Notes at a redemption price
of 100% of the principal amount of the Notes being redeemed, plus accrued and
unpaid interest. Holders may require CP Ships to purchase the Notes on 30th
June 2009, 30th June 2014 and 30th June 2019, or upon the occurrence of
certain designated events, at a purchase price equal to 100% of the principal
amount of the Convertible Notes, plus accrued and unpaid interest.

          CP Ships may, in lieu of delivering its common shares upon
conversion of all or a portion of the Convertible Notes, elect to pay cash or
a combination of cash and common shares.



                                                                            44
<PAGE>

          CP Ships has entered into a registration rights agreement pursuant
to which CP Ships has agreed to:

          o    File a shelf registration statement with the SEC within 120
               days after the closing date of the offering covering resales of
               the Convertible Notes and the common shares issuable upon
               conversion of the Convertible Notes;

          o    Use reasonable best efforts to have the shelf registration
               statement declared effective within 180 days of the closing
               date of this offering; and

          o    Use reasonable best efforts to keep the shelf registration
               statement effective until the date that there cease to be
               limitations on resale of the Convertible Notes or common shares
               thereunder or there are otherwise no longer any outstanding
               registrable securities.

          If CP Ships is party to a consolidation, amalgamation, statutory
arrangement, merger, binding share exchange or other combination or a transfer
of all or substantially all of CP Ships' consolidated property asset, as
determined under applicable law, pursuant to which CP Ships' common shares are
converted into, or become the right to receive, cash, securities or other
property, a holder may convert Notes at any time from and after the date which
is 15 days prior to the anticipated effective date of the transaction, as
determined by CP Ships, until 15 days after the effective date of the
transaction.

          Whilst the Convertible Notes Indenture does not restrict CP Ships
ability to incur additional senior indebtedness, CP Ships has agreed not to
incur any indebtedness that is contractually subordinate in right of payment
to any senior indebtedness unless it ranks pari passu or is contractually
subordinated in right of payment to the convertible bonds ; provided, however,
that unsecured debt will not be deemed to be subordinate in right of payment
to secured debt merely by virtue of its nature as unsecured debt.

          Events of default under the Convertible Notes are customary for this
type of debt and, among other things, include the occurrence of an event of
default or default with respect to CP Ships' or its subsidiaries' indebtedness
for borrowed money having an aggregate principal amount of $25 million or more
that results in acceleration of the payments of such indebtedness.


Pacific Class Vessel Loan

          CP Ships acquired on 14th September 2001 the beneficial interest in
four trusts (the "PCV Trusts"), each of which owns a U.S. flag Pacific Class
ship which was and continues to be chartered to Lykes LLC under long-term
charter arrangements. Prior to such acquisition, the PCV Trusts had entered
into agreements dated 22nd July 1998 with a financial institution pursuant to
which they borrowed a total of $70.5 million (the "Pacific Class Vessel
Loan"). As a result of such acquisition, CP Ships effectively acquired the
four ships and assumed the Pacific Class Vessel Loan. As at 31st December 2003
the principal amount outstanding under the Pacific Class Vessel Loan was $37
million.

          The obligations of the PCV Trusts under the Pacific Class Vessel
Loan are secured on the four ships and are guaranteed by CP Ships and CP Ships
(Bermuda). The loan is repayable in monthly installments with the final
installment being due in June 2008, at an interest rate of 6.71% per annum.

          Under the Pacific Class Vessel Loan, CP Ships is subject to certain
covenants including: (i) a restriction on the sale of assets outside the
ordinary course of business and (ii) an ongoing obligation to ensure that a
subsidiary, CP Ships (Bermuda), has a net worth of at least $100 million.

          CP Ships may prepay in whole the Pacific Class Vessel Loan at any
time by paying to the lender an amount equal to the principal amount
outstanding under the Pacific Class Vessel Loan plus a premium.



                                                                            45
<PAGE>

Capital Leases

Venture and Spirit Leases

          CP Ships (UK) has entered into two leases with Seaspirit Leasing
Limited (the "Lessor") to lease from the Lessor two container vessels. The
first lease, entered into on 29th May 2003 (the "Venture Lease"), is in
relation to a 4080 TEU ice-strengthened container vessel called the "Canmar
Venture" (the "Venture") and the second lease, entered into on 23rd July 2003
(the "Spirit Lease"), is in relation to a similar vessel called the "Canmar
Spirit" (the "Spirit"). All obligations of CP Ships (UK) under the leases
(and/or any of its affiliates which manages either vessel under any related
agreements) are guaranteed by CP Ships, Lykes LLC and TMM LLC.

          The primary lease period for each lease is 25 years commencing on
the delivery date of the vessel (3rd June 2003 in respect of the Venture and
25th July 2003 in respect of Spirit and each a "Delivery Date") with one-year
secondary lease periods renewable at CP Ships (UK)'s option thereafter. CP
Ships (UK) is required to make quarterly rental payments to the Lessor which
are determined in accordance with the financial schedule forming part of the
relevant lease. The rental installments during the primary lease period for
each lease are calculated by reference to factors such as the cost of the
vessel, interest and assumptions as to, in particular, changes in UK tax rates
and the level of capital allowances available to the Lessor and is therefore
variable throughout the lease.

          During the lease period, CP Ships (UK) is liable for all costs and
expenses in relation to the operation of the vessels, including but not
limited to, the maintenance, repair, insurance and use of the vessels. CP
Ships (UK) bears the full risk of any damage to or loss of the vessels.

          The Lessor is entitled to review (according to its own criteria) the
"creditworthiness" of CP Ships in the eleventh year following the Delivery
Date in the case of the Venture and the eighth year in the case of the Spirit,
in order to monitor the adequacy of the guarantees provided by CP Ships. If
the Lessor determines, in its sole discretion, that the creditworthiness of CP
Ships is inadequate, it can require CP Ships (UK) to provide additional
security in respect of each lease by way of letter of credit or other
security, or to prepay rental to a specified level. Failure to provide such
security and/or make the prepayment will be a termination event. The Spirit
Lease is further secured by a 364-day letter of credit (the "LC") with a bank
currently rated AA (the "LC Bank") in the maximum aggregate amount of
(pound)7,000,000 which decreases throughout the lease period as rental
instalments are paid. The Lessor may only make a demand under the LC following
a termination of the Spirit Lease and the termination sum (as calculated in
the financial schedule) becoming due and payable if not already paid at that
time. If the rating of the LC Bank is lower than A- at any time or if the LC
is not renewed, and CP Ships has not replaced the LC or otherwise provided
additional security acceptable to the Lessor, a termination event would arise
under the Spirit Lease.

          Other than in connection with the LC, the termination provisions are
consistent in both leases and cover standard defaults such as non-payment,
breach of representations, warranties and undertakings and insolvency events
in respect of the Lessor, CP Ships and any security provider. In particular,
there will be a termination event if CP Ships breaches any of its financial
indebtedness (including pursuant to any lease agreement or hire purchase
agreement) with any other party in excess of $15,000,000 unless the Lessor
notifies CP Ships (UK) that such default does not have a material adverse
effect on the ability of CP Ships and/or CP Ships (UK) to discharge its
obligations under the leases. There will also be a termination event if CP
Ships ceases to be a public limited liability company listed on the stock
exchanges of Toronto, London or New York. A termination event under one lease
will cross-default the other lease.

          Upon the occurrence of a termination event under either lease, the
Lessor may require CP Ships (UK) to pay (i) all outstanding amounts under the
lease and the associated finance documents; (ii) any loss which the Lessor has
incurred in relation to the termination, and (iii) a fixed termination amount
as calculated in the relevant financial schedule. On the termination of a
lease (either following a termination or mandatory



                                                                            46
<PAGE>

prepayment event or upon expiry), the Lessor irrevocably appoints CP Ships
(UK) as its exclusive sales agent for the purpose of negotiating the sale of
the vessel with a purchaser. The Lessor may terminate such appointment if no
sale has been made within six (6) months of the termination date of the
relevant lease. Any sale proceeds which are realized can be used to repay the
outstanding amounts under the relevant vessel's lease and any excess can be
used to prepay unpaid amounts under the other lease. Upon satisfaction of
amounts due under the lease, 99.9% of any excess sale proceeds would be
payable to CP Ships.

          Under the Venture and Spirit Leases, CP Ships is subject to certain
financial and other covenants including: (i) an ongoing obligation to maintain
free liquid assets (defined as credit balances on current or deposit accounts,
short-term certificates of deposit and amounts up to $50 million of any
unutilized, committed credit facilities with a remaining term of greater than
one year) of at least $75 million; (ii) an ongoing obligation to maintain
consolidated tangible net worth (defined as shareholders' equity less any
goodwill and other intangibles) in excess of $400 million; (iii) an ongoing
obligation to ensure that the ratio of total debt and capitalized lease
obligations to shareholders' equity does not exceed 1.1 to 1.0 prior to 31st
December 2004, and 1.0 to 1.0 thereafter; (iv) an ongoing obligation to ensure
that the ratio of total debt to earnings before interest, depreciation, taxes
and amortization does not exceed 4.0 to 1.0; and (v) a restriction on the
payment of any dividends during an event of default.


Other Capital Lease Obligations

          CP Ships has entered into a number of other capital leases, which
are repayable in monthly installments ending between 2004 and 2007 and are
secured on the leased equipment, mainly containers. Obligations under capital
leases bear primarily fixed interest rates, which range from 3% to 18%.
Interest expense on such leases amounted to $5 million in 2003 ($2 million in
2002).


Operating Leases

Container Sale and Leaseback

          On 7th November 2000, a subsidiary of CP Ships (the "Container
Lessee") agreed to sell containers with a total capacity of approximately
44,350 teu (the "Leased Containers") to a leasing counterparty (the "Lessor")
for $63.9 million, and agreed to lease such containers from the Lessor for a
minimum of five years (and up to nine years at the option of CP Ships) under a
container lease contract (the "Container Lease"). The obligations of the
subsidiary in connection with this transaction are fully guaranteed by CP
Ships (the "Container Guarantee"). Under the Container Lease, the Container
Lessee is required to make fixed quarterly rental payments to the Lessor based
on the amortization of the purchase price plus a specified return to the
Lessor. The rate of return to the Lessor is 8.05% if and for so long as CP
Ships' long term corporate credit rating by S&P is not lower than BBB-- or CP
Ships' long term senior implied rating by Moody's is not lower than Baa3
(whichever is the lower). This rate of return will increase to 8.4% if and for
so long as the lower of such ratings is BB+ (in the case of S&P) or Ba1 (in
the case of Moody's), and 8.9% if and for so long as the lower of such ratings
is BB or lower (in the case of S&P) or Ba2 or lower (in the case of Moody's).
For so long as CP Ships' long term senior implied rating by Moody's is Ba2,
the rate of return to the Lessor is 8.9%.

          Under the Container Sale and Leaseback, CP Ships is subject to
certain financial and other covenants including: (i) an ongoing obligation to
maintain free liquid assets (defined as credit balances on current or deposit
accounts, short-term certificates of deposit and amounts up to $50 million of
any unutilized, committed credit facilities with a remaining term of greater
than one year) of at least $75 million; (ii) an ongoing obligation to maintain
consolidated tangible net worth (defined as shareholders' equity less any
goodwill and other intangibles) in excess of $400 million; (iii) an ongoing
obligation to ensure that the ratio of total debt and capitalized lease
obligations to shareholders' equity does not exceed 1.1 to 1.0 prior to 31st
December 2004, and 1.0 to 1.0 thereafter; (iv) an ongoing obligation to ensure
that the ratio of total debt to earnings before interest, depreciation, taxes
and amortization does not exceed 4.0 to 1.0; and (v) a restriction on the
payment of any dividends during an event of default and on the payment of
dividends in



                                                                            47
<PAGE>

excess of 50% of cumulative consolidated net income since 30th September 2001
at all other times. In addition, the Lessor may require the Container
Guarantee and the Container Lease to be amended to include any other financial
covenants given by CP Ships (or the Container Lessee) under any future ship
mortgage loan, bareboat charter agreement, container financing arrangement or
secured long-term credit facility. Under the Container Sale and Leaseback, the
Lessor can declare a "material adverse change" if CP Ships' long term
corporate credit rating by S&P is not lower than BB+ (as at 31st December 2003
it was BBB--) or its long term senior implied rating from Moody's is not lower
than Ba1 (as at 31st December 2003 it was Ba2), whichever rating is higher
from time to time. Such a "material adverse change" could lead to an event of
default under the Container Sale and Leaseback.

          If any event of default or default occurs with respect to CP Ships'
obligations under any contract with the Lessor or under any material contract
with a third party having an aggregate principal amount or value in excess of
$5 million, the Lessor may declare an event of default under the Container
Sale and Leaseback.

          Upon the occurrence of an event of default under the Container Sale
and Leaseback, the Lessor may, at its option (i) require CP Ships to
repurchase the Leased Containers at a purchase price based on a fixed
termination price plus certain breakage costs incurred by the Lessor or (ii)
retain ownership of the Leased Containers and demand payment of an amount
equal to certain breakage costs incurred by the Lessor. If the Lessor declares
an event of default under the Container Sale and Leaseback, this will also
constitute an event of default under CP Ships' other financing transactions
which, unless waived, will result in all amounts owing thereunder becoming
immediately due and payable.

          The Container Lessee may at its option, in order to avoid the
occurrence of an event of default under the Container Sale and Leaseback,
repurchase the Containers at a specified purchase price based on a fixed
termination price (as at 31st December 2003, approximately $54 million).

          Under the Container Lease, the Container Lessee has the option
exercisable at the end of the fifth, sixth and seventh years of the Container
Lease to repurchase the Leased Containers at a fixed purchase price based on
the projected fair market value of the Leased Containers at the relevant time
plus the Lessor's breakage costs.

Long-term Charter Arrangements

          In June 2000, Lykes LLC entered into individual long term time
charter parties (the "Long-Term Charters") for six 4100 teu vessels then under
construction. Lykes took delivery of four of the vessels during the first
quarter of 2003 and the remaining two vessels during the third quarter of
2003. The Long-Term Charters have been guaranteed by CP Ships.

          Each of the Long-Term Charters prescribes an initial hire period
(the "Initial Period") of eight years from the date of delivery of the
relevant vessel with an option, exercisable at the end of the seventh year, to
extend hire for a further two years, or until 2010 (the "Second Period").
Should the charter be so extended, Lykes LLC then has a second option,
exercisable at the end of the ninth year of the charter, to further extend
hire for another two years (the "Third Period"). The daily rate is fixed, but
increases by an agreed amount on each renewal.

          In August 2003, CP Ships' subsidiary Lykes LLC entered into
individual long term charter parties (the "Seaspan Charters") with affiliates
of Seaspan Container Lines Limited ("Seaspan") for nine new 4,250 teu vessels
(the "Seaspan Vessels") of identical specifications. The Seaspan Vessels are
presently under construction and are scheduled for delivery between 2005 and
2007. Lykes LLC's obligations under each of the Seaspan Charters are
guaranteed by CP Ships.

          The daily charter hire under each of the Seaspan Charters is for a
fixed amount for the primary charter period (the "Primary Term"). While the
charter hire includes the costs of the Seaspan Vessels' master and chief
engineer, other ship management and operating costs are to be paid pursuant to
a separate ship



                                                                            48
<PAGE>

management contract (the "Management Contract") entered into with Seaspan.
Payments due under the Management Contract are in addition to the daily
charter hire for the Seaspan Vessels and are set at a fixed amount per day for
so long as the relevant Seaspan Vessel is on charter. Lykes LLC's payment
obligations under each Seaspan Charter and the related Management Contract
will commence only on delivery of the relevant Seaspan Vessel.

          The Primary Term under each Seaspan Charter is up to ten years, with
options for CP Ships to extend the charter for up to two further years at a
slightly higher daily charter rate; payments under the Management Contract
remain fixed at the previous level. The Primary Term is structured such that
Lykes LLC has entered into an initial charter period of three years from
delivery of each vessel, with seven annual extension options (the "Extension
Options"). Each Extension Option must be declared two years in advance,
thereby creating a rolling minimum three year obligation. If Lykes LLC does
not exercise an Extension Option and the charter terminates at the end of the
relevant three year period, Lykes LLC becomes liable to pay Seaspan an
additional pre-determined exit fee (the "Exit Fee") at the date of
termination.

          The Exit Fee payable declines with each renewal such that no Exit
Fee is payable if the Primary Term extends to 10 years.

          Amounts due under long-term charters are included in the table under
the heading "Commitments" below.


Commitments

          CP Ships has commitments under operating leases, including
obligations under time charters which include certain ship operating expenses.
The commitments in each of the next five years and thereafter are:

                              Current               Future
   Year                   operating leases       commitments(1)     Total
----------------          ----------------       --------------     -----
                                         (in $ millions)
  2004.......                  204                     --              204
  2005.......                  127                      1              128
  2006.......                  105                     25              130
  2007.......                   94                     53              147
  2008.......                   63                     59              122
  2009 and thereafter          137                    454              591
                               ---                    ---              ---
                               730                    592            1,322
                               ===                    ===          =======



          (1) Future commitments comprise operating leases and associated
management services agreements for 10 years for the Seaspan vessels from their
expected delivery dates between late 2005 and early 2007. The lease terms
allow for termination at CP Ships' option on an annual basis from the end of
the third year of each lease by giving two years notice and paying a
termination fee. The associated management services agreements would terminate
at the same time. Under the early termination option, the minimum future lease
commitments at 31st December 2003 would be $249 million.

Capital Commitments

          CP Ships had capital commitments at 31st December 2003 of $2 million
that fall due in 2004.



                                                                            49
<PAGE>

Taxation of CP Ships and Subsidiaries

          CP Ships is subject to taxation in the countries in which it and its
constituent companies operate. CP Ships' corporate structure is such that much
of the income it generates from container shipping is subject to tax at
relatively low tax rates.

Bermuda

          Lykes LLC and TMM Lines are Delaware limited liability companies and
are subject to the taxation regimes of their sole member, which is a Bermuda
company. Lykes LLC and TMM LLC are, therefore, effectively exempt from income
taxation as their sole member has received exemption from income taxation in
Bermuda until 28th March 2016. They are however taxed on their activities in
certain countries other than Bermuda, including in the U.S., with respect to
their operations in those countries.

United States

          CP Ships carries on activities in the United States through various
subsidiaries of CP Ships Holdings (Bermuda) Limited ("CP Ships Holdings
(Bermuda)"), most of which are treated as disregarded entities for U.S.
federal income tax purposes. For such purposes, CP Ships Holdings (Bermuda) is
considered to earn directly all of the income earned by such subsidiaries. A
small amount of activity in the United States, not involving the international
operation of ships, is carried on by non-U.S. subsidiaries of CP Ships
Holdings (Bermuda) in the Cast and Canada Maritime divisions that are not
disregarded entities for U.S. federal income tax purposes.

          Under current law, the income derived by CP Ships Holdings (Bermuda)
from the international operation of ships is excluded from gross income and
exempt from U.S. federal income tax under Section 883 of the Internal Revenue
Code of 1986, as amended. For this purpose, income from the international
operation of ships means the gross amount of any income that is derived from
the operation of ships in carriage of passengers or cargo for hire, from the
hiring or leasing of ships for use on a time, voyage or bareboat charter basis
for carriage of passengers or cargo for hire, or from activities incidental to
such operation, with respect to voyages that either begin or end (but do not
both begin and end) in the United States. As a prerequisite to obtaining the
benefits of the Section 883 exemption, a corporation claiming these benefits
must establish that it satisfies a share ownership test. CP Ships believes
that it and CP Ships Holdings (Bermuda) satisfy this test. As a result, the
income derived by CP Ships Holdings (Bermuda) from activities in the United
States is substantially exempt from U.S. federal income taxation under the
Section 883 exemption. However, the income from certain activities, such as
acting as ships' agent and freight forwarding, is not considered to be income
from the international operation of ships and is not exempt. In addition,
recently finalized regulations under section 883 have created some uncertainty
as to the precise scope of the activities that are incidental to the
international operation of ships, the income from which qualifies for
exemption.

          To the extent that income earned by CP Ships Holdings (Bermuda) or
its non-U.S. subsidiaries does not qualify for exemption, it may be subject to
U.S. federal income tax. Non-exempt shipping income from U.S. sources, if any,
is subject to tax at the rate of 4% of the amount of that income, not reduced
by any deductions, unless such taxation is foreclosed by an applicable tax
treaty. To the extent that non-exempt income is effectively connected with the
conduct of a U.S. trade or business (or is attributable to a permanent
establishment in the United States of any subsidiary that qualifies for
benefits under an applicable tax treaty), such income is subject to U.S.
federal income tax on a net basis, in lieu of the 4% tax on gross shipping
income. Any such income, net of applicable deductions, is subject to U.S.
federal income tax at graduated rates, up to a current maximum rate of 35% of
net income. CP Ships Holdings (Bermuda) may also be subject to an additional
branch profits tax at the rate of 30% on the earnings and profits attributable
to its effectively connected income, subject to certain adjustments, and on
interest paid or deemed paid which is allocable to effectively connected
income. Any non-U.S. subsidiary of CP Ships Holdings (Bermuda) that qualifies
for benefits under an applicable tax treaty may also be subject to the branch
profits tax at such rate as prescribed by the treaty.



                                                                            50
<PAGE>

United Kingdom

          The United Kingdom introduced a tonnage tax regime ("Tonnage Tax")
from 1st January 2000 for qualifying shipping companies to stimulate
investment in UK shipping. Under Tonnage Tax, the tax liability is calculated
with reference to a pre-set scale of alternate income based on the tonnage of
the ships in the relevant fleet, rather than actual income earned. Therefore,
under Tonnage Tax, tax expense varies with the tonnage of the fleet rather
than with the profitability of the business.

          In particular, it is generally not permitted for a company within
Tonnage Tax to reduce its liability to Tonnage Tax by offsetting losses or
depreciation. Entry to Tonnage Tax requires an election by the relevant
shipping company. Such an election generally must be made for a ten-year
period and, once made, is irrevocable.

          CP Ships (UK) entered the Tonnage Tax regime with effect from 1st
January 2001, and has recently renewed the election such that it now applies
until 31st December 2013. CP Ships (UK) comprises the Contship Containerlines
business and, from 27th September 2001, the Canada Maritime, Cast and ANZDL
businesses.

Canada

          CP Ships and its Canadian subsidiaries that operate the Racine and
Cast marine terminals in Montreal, Quebec are subject to normal Canadian
federal and provincial taxes.

          CP Ships believes that it is, and intends to take all necessary
steps to remain, resident solely in Canada for income tax purposes. CP Ships'
tax residency is, however, affected by a number of factors, some of which are
outside its control, including the application and interpretation of relevant
tax laws and treaties. If CP Ships were to cease to be tax resident in Canada,
it would be liable to pay additional Canadian taxes, including, but not
limited to, capital gains tax based on the difference between the fair market
value and tax cost of its assets at the relevant time. If such taxes were to
become payable, this would have a material adverse effect on CP Ships'
business, financial condition and results of operations. In addition, CP Ships
may be obliged to make indemnification payments under the Plan of Arrangement
if its ceasing to be Canadian tax resident caused the Spin-off to be taxed in
a manner inconsistent with the tax rulings obtained from the Canadian and
United States revenue authorities in connection with the Spin-off. If such
indemnification payments were to become due, this may have an adverse effect
on CP Ships. Further, the tax consequences to holders of Notes would generally
be different from those applicable if CP Ships were not resident in Canada.

          As noted above, a significant portion of CP Ships group income is
earned by controlled foreign affiliates resident in Bermuda, the United States
and the United Kingdom. Canadian tax legislation has a detailed regime for the
taxation of activities carried on by foreign affiliates. In very general
terms, income that is from an active business, a term that is defined for
Canadian tax purposes, earned by controlled foreign affiliates is not taxed in
Canada. Active business income earned by controlled foreign affiliates located
in jurisdictions with which Canada has concluded an income tax convention
(which would include the United States and the United Kingdom) is not subject
to any additional tax in Canada upon repatriation. Active business income
earned by a controlled foreign affiliate in a jurisdiction with which Canada
has not concluded an income tax convention, such as Bermuda, is subject to
additional taxation in Canada upon repatriation of such income via dividends.
Such income is subject to taxation at approximately 39%. CP Ships is of the
view that the operations of its significant operating subsidiaries constitute
the carrying on of an active business for the purpose of the Canadian foreign
affiliate rules. Changes to the Canadian foreign affiliate rules could result
in an increase of the tax burden to the group.



                                                                            51
<PAGE>

                            ADDITIONAL INFORMATION

          When the securities of CP Ships are in the course of distribution
under a preliminary short form prospectus or a short form prospectus, copies
of the following documents may be obtained upon request from the Secretary, CP
Ships Limited, 62-65 Trafalgar Square, London, WC2N 5DY, United Kingdom:

          (i)  one copy of the Annual Information Form, together with one copy
               of any document, or the pertinent pages of any document,
               incorporated by reference in the Annual Information Form;

          (ii) one copy of the comparative financial statements of CP Ships
               for its most recently completed financial year for which
               financial statements have been filed together with the
               accompanying report of the auditor and one copy of the most
               recent interim financial statements of CP Ships that have been
               filed, if any, for any period after the end of its most
               recently completed financial year;

         (iii) one copy of the information circular of CP Ships in respect of
               its most recent annual meeting of shareholders that involved
               the election of directors or one copy of any annual filing
               prepared instead of that information circular, as appropriate;
               and

          (iv) one copy of any other documents that are incorporated by
               reference into the preliminary short form prospectus or the
               short form prospectus and are not required to be provided under
               clauses (i), (ii) or (iii).

          At any other time, one copy of any documents referred to in clauses
(i), (ii) and (iii) will be provided upon request, provided that CP Ships may
require the payment of a reasonable charge if the request is made by a person
or company who is not a security holder of CP Ships.

          Additional information including directors' and officers'
remuneration and indebtedness, principal holders of CP Ships' securities,
options to purchase securities and interests of insiders in material
transactions, if applicable, is contained in the CP Ships information circular
for its most recent annual meeting of shareholders that involved the election
of directors. Additional financial information is provided in CP Ships'
comparative financial statements for the year ended 31st December 2003. These
documents are also available through the internet on the Canadian securities
regulatory authorities' System for Electronic Document Analysis and Retrieval
(SEDAR) which can be found at www.sedar.com



                                                                            52


<PAGE>


Part B.


                                  UNDERTAKING
                                  -----------

     The Registrant undertakes to make available, in person or by telephone,
representatives to respond to inquiries made by the Commission staff, and to
furnish promptly, when requested to do so by the Commission staff, information
relating to: the securities in relation to which the obligation to file an
annual report on Form 40-F arises; or transactions in the said securities.

                            ADDITIONAL INFORMATION
                            ----------------------

     The Registrant has in place a Code of Business Conduct applicable to all
officers of the Registrant and no amendments have been made nor exemptions
granted under it during the year ended 31st December 2003. The Code of
Business Conduct is available on the Registrant's website at www.cpships.com.
The Registrant intends to disclose on its website any amendments to or waivers
from its Code of Business Conduct with respect to the Chief Executive Officer,
Chief Financial Officer and Group Controller within five days of any such
event.

     Disclosure controls and procedures are defined by the Securities and
Exchange Commission as those controls and procedures that are designed to
ensure that information required to be disclosed in our filings under the
Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission rules and forms. Management has evaluated the Registrant's
disclosure controls and procedures, previously designed and thereafter
maintained under management's supervision, and has concluded that they were
effective as at 31st December 2003. There has been no change in internal
controls during the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the Registrant's
internal control over financial reporting

     CP Ships' Board of Directors has determined that John McNeil is the
financial expert serving on its Audit Committee. The Board has determined that
Mr. McNeil is an independent director as defined in the NYSE Listed Company
Manual. Mr. McNeil serves as Chairman of the Audit Committee.

     All services to be rendered by the Registrant's external auditors are
subject to approval by the Audit Committee of the Board. The engagement for
the annual audit of the Registrant's consolidated financial statements is
approved by the Audit Committee on an annual basis.

     In addition, certain specified services that fall into the following
categories have been pre-approved by the Audit Committee in accordance with
the Committee's established policy: statutory or other financial audit work,
employee benefit plan audits, financial due diligence in connection with
acquisitions and divestitures, internal control reviews, tax services and
tax-related valuations, and certain fact-finding services and non-financial
systems design and implementation. Specified pre-approved services would
nevertheless require separate Audit Committee approval where the fees for a
particular engagement or series of related engagements are not within
established fee limits, or where the total cost for non-audit services for the
year would exceed the estimated fees for audit services.


<PAGE>


     The Audit Committee has delegated the authority for any required approval
to the Chairman of the Committee or, if the Chairman is unavailable, to
another independent member of the Committee. The Audit Committee receives
reports of each engagement of the auditors at its regularly scheduled
meetings.


<PAGE>


<TABLE>
<CAPTION>
     Type of Fees ($ in millions)                        2003                                   2002

---------------------------------------- -------------------------------------- --------------------------------------
<S>                                                      <C>                                    <C>
              Audit Fees                                  2.1                                    3.3

          Audit Related Fees                              0.6                                    0.4

               Tax Fees                                   2.0                                    1.2

            All Other Fees                                0.2                                    0.2
                                                          ---                                    ---

                 Total                                   $4.9                                   $5.1
                                                         ====                                   ====
</TABLE>


     In the above table, in accordance with the SEC's definitions and rules,
"audit fees" are fees paid PricewaterhouseCoopers for audit and other services
in connection with statutory and regulatory filings; "audit related fees" are
for assurance and related services that are reasonably related to the
performance of the audit or review of financial statements; "tax fees" are for
tax compliance, tax advice and tax planning; and "all other fees" are for
acquisition due diligence and fees for other services not included in the
first three categories.





                                  SIGNATURES
                                  ----------

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant certifies that it meets all of the requirements for filing on Form
40-F, and has duly caused this annual report to be signed on its behalf by the
undersigned, thereto duly authorized.

                                            CP SHIPS LIMITED



                                   By:      /s/ Ian J. Webber
                                            --------------------------------
                                   Name:    Ian J. Webber
                                   Title:   Chief Financial Officer


<PAGE>


                               LIST OF EXHIBITS
                               ----------------

The following documents are filed as exhibits to this Form 40-F:

<TABLE>
<CAPTION>
Exhibit No.                        Description
-----------                        -----------
<S>                                <C>
1                                  Management's Discussion and Analysis for the year ended 31st
                                   December 2003 (incorporated by reference to Exhibit 10.1 of
                                   the Registrant's Report filed on Form 6-K filed on 7th April
                                   2004).

2                                  Audited Consolidated Financial Statements for the years ended
                                   31st December 2003, 2002 and 2001 (incorporated by reference
                                   to Exhibit 10.1 of the Registrant's Report to be filed on Form
                                   6-K filed on 7th April 2004).

3*                                 Consent of Auditors.

4(a)*                              Certification of Ray Miles, CEO of Registrant, pursuant to
                                   Section 302 of the Sarbanes-Oxley Act of 2002.

4(b)*                              Certification of Ian Webber, CFO of Registrant, pursuant to
                                   Section 302 of the Sarbanes-Oxley Act of 2002.

5*                                 Certification of Ray Miles, CEO of Registrant, and Ian Webber,
                                   CFO of Registrant, pursuant to 18 U.S.C. Section 1350, as
                                   adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                                   2002.



* filed herewith
</TABLE>