The loss was 86 cents a share, compared to a loss of US$79.5 million, or US$2.89 a share, a year earlier, including a US$170.6 million, or US$5.42 a share, charge related to ship delivery delays, the New York-based company said.
The average estimate of four analysts surveyed by Bloomberg was a loss of US$1.13 a share. Sales fell 38 per cent to US$242.6 million.
Overseas Shipholding kept 70 per cent of its 103-vessel fleet under spot, or one-voyage, contracts during the fourth quarter, exposing itself to a 50 per cent slump in spot rates.
Charges for fixed-rate time charters also dropped.
The company is putting more ships on the spot market this year, betting a rebound in rates will bring it more profit than its competitors.
'The company has a pretty solid amount of their vessels on spot exposure, so they had exposure to low rates and this impacted their revenue,' said Natasha Boyden, an analyst at Cantor Fitzgerald who raised the stock to 'buy' from 'sell' on Jan 25. 'If the market does improve, this is the company that's going to outperform mainly because of their exposure to the spot market.'
Shipping rates tumbled as the recession cut oil demand and reduced seaborne shipments.
The Baltic Dirty Tanker Index, a measure of spot rates for crude-oil shipments, averaged 646 during the fourth quarter, down from 1,246 a year ago.
The index has rebounded, averaging 1,035 so far this year, after reaching 1,216 on Jan 15, the highest level in more than a year.
'While market conditions were tough last year, the commercial, financial and operational platforms of OSG performed well and enabled OSG to enter 2010 in solid shape,' said chief executive officer Morten Arntzen in a statement.
Mr Arntzen said in an interview earlier last month that he is planning to put 14 more ships on the spot market when their current time charters expire during the year.
Competitors such as Teekay Corp and General Maritime Corp maintain a larger proportion of their fleet in time charters to ensure stable revenue, even though they may miss a rebound in spot prices.
Very large crude carriers (VLCCs) earned an average of US$33,511 a day on the spot market, down 64 per cent from a year ago.
While in time charters they earned an average of US$41,959 a day, down 43 per cent from a year ago.
VLCCs can carry more than 1.46 million barrels of oil.