At 01:00 on 16 June 1943, I-174 arrived off Smoky Cape on the coast of New South Wales southeast of Coffs Harbour. At 16:37 she sighted Convoy GP55, which consisted of ten cargo ships and three tank landing ships escorted by the Royal Australian Navy corvettes , , , , and . After penetrating the escort screen, I-174 fired two torpedoes at two overlapping transports, which her commanding officer estimated as of 8,000 and 10,000 gross register tons. One torpedo struck the 5,000-displacement ton U.S. Navy tank landing ship in her starboard side aft, killing 26 men and wrecking the vessel's steering gear. Moments later, lookouts aboard the 5,551-gross register ton U.S. Army Transport , which was loaded with fuel and ammunition, sighted the second torpedo approaching. Portmar began a hard turn to port, but the torpedo hit her in her starboard side in her No. 1 hold before she could answer her helm. Her cargo of gasoline exploded, setting her on fire from stem to stern almost immediately, and her cargo of ammunition exploded shortly afterward. Seven minutes after the torpedo hit, Portmar′s crew abandoned ship and she sank at , the last ship sunk by a Japanese submarine off Australia′s east coast. I-174′s commanding officer believed that she had sunk both ships. In fact, LST-469 remained afloat and was towed to Sydney for repairs, although her damage made her unavailable for Operation Chronicle, the Allied landings on Woodlark Island and Kiriwina on 30 June 1943, and forced a reduction in the number of troops and amount of cargo committed to the landings. Kalgoorlie and Warrnambool pursued I-174 and attacked her with depth charges, but she escaped.
