For the entirety of her service, Dixie Arrow was a ship flying the American flag and registered at the Port of New York.

[11][17] She was outfitted with a one four-cylinder quadruple expansion steam engine, along with three single boilers and nine corrugated furnaces, giving the ship a maximum speed of 11 knots.

[18][19] The ship's aft portion of the superstructure held a shelter, "designed to carry petroleum in bulk with aft-positioned machinery.

[24][25] The vessel was given a rating of 100A1 by a Lloyd’s Register survey, meaning it was suitable for seagoing service and fit to carry dry and perishable goods.

The first year of Dixie Arrow's service had among her longest trips, going from New York City, through the Panama Canal, and to the Far East.

Normally, the ship would leave New York City, docking in Colón, then San Francisco, and finally sailing across the Pacific Ocean to Hong Kong.

After unloading cargo in the British port, the ship would load coconut oil in Manila before heading back to New York.

[11] Normally, ships would simply sail empty with ballast, but Socony-Vacuum Oil wanted to make as much money as they could, due to the long length of the voyages.

[34][35]After serving two years in the Far East, and being handed over to Socony itself, Dixie Arrow was rerouted to the domestic oil trade.

[39][40] On her return trips back from the northeast, in stark contrast to her service in the Far East, Dixie Arrow sailed in ballast with no cargo.

Tanker ships like Dixie Arrow carried oil from the Gulf Coast to the northeast, where it would be refined and distributed for use in the war effort as needed.

[11] Captain Anders Johanson ordered the ship to follow a forty fathom curve, in hopes of staying safe while sailing past Hatteras.

[48] As she sailed up the East Coast of the United States, Dixie Arrow constantly received SOS and SSSS[note 1] messages from ships that had been torpedoed by German U-boats.

[47][50] Captain Anders Johanson decided to take an unusual course away from the barrier islands that made up the North Carolinan Outer Banks, concerned about the shallow depth of the water in the region.

[51][53] All shipping in the area was either coming from the north or the south, making the region a prime hunting ground for German U-boats.

In addition, the continental shelf is narrowest along the coastline, making it convenient for U-boats to hide themselves in deep water while waiting for ships.

Around 9:00 AM EWT (Eastern War Time), a United States Coast Guard (USCG) airplane reported it was circling Dixie Arrow near the Diamond Shoals outer buoy, at 34° 59' N, 75° 33' W.[11][20] Twelve miles (19 km) southwest of Cape Hatteras, at 08:58 AM, while on its fifth patrol, the type VII-C submarine U-71 spotted the masts of Dixie Arrow through its periscope.

[48][61] Korvettenkapitän Walter Flachsenberg gave the order to fire three torpedoes,[62] all of which hit Dixie Arrow amidships on the starboard side.

The first blew up the forward deckhouse and lit its ruins on fire, killing the radio operator and a number of other crewmen.

[72] Richard Rushton, a sailor aboard the ship, described the scene in a 2001 interview in his San Francisco home:[47]When the torpedo struck, there was sort of a rolling motion.

As it pulled away from Dixie Arrow, two crewmen—Fred Spiese and Alex Waszczseyn—jumped from the deck of the ship, and despite the former not knowing how to swim, only the latter would be killed by the flames.

He went right into the fire.The United States Navy (USN) destroyer USS Tarbell spotted the flames of Dixie Arrow, and the ship's crew came to investigate.

Being guided by a USN seaplane sent from Naval Operating Base Norfolk,[70][84] the destroyer arrived around 9:30, roughly half an hour after Dixie Arrow had first been torpedoed.

[11][85] Tarbell dropped lifeboats for Dixie Arrow's survivors, and proceeded to circle the flaming ship in search of U-71.

[22] The masts and wreck site of Dixie Arrow were used as target practice by planes from the Cherry Point North Carolina Marine Air Station, but the former collapsed into the sea in 1943.

[67] Dixie Arrow lays under 90 feet (27 m) of water, 15 miles south of Hatteras Inlet, at 34°54'0.58"N, 75°45'1.73"W.[95][96] She sits upright, intact, half-buried in the seabed.

The triple-expansion steam engine lies in the middle of the wreck, amidst the remains of all sorts of pipes, valves, and fittings.