At 03.05 hours on 17 March 1943, U-338 fired a spread of two torpedoes at convoy SC-122 southeast of Cape Farewell and Kinzel thought that he had hit one ship, but in fact the Kingsbury in station #51 and the King Gruffydd in station #52 were hit and sunk. At 03.06 hours, a second spread of two torpedoes was fired, one of them struck the Alderamin in station #61, which sank later in 51°30N/34°55W. At 03.07 hours, the stern torpedo was fired, which missed the intended target, the Alderamin, but damaged the Fort Cedar Lake in station #124.

Alderamin (Master Cornelis Leendert van Os) was hit by a torpedo on starboard side amidships and immediately developed a heavy list to starboard. The crew began to abandon ship in four lifeboats, but only two of them could be launched successfully so the remaining men had to leave on rafts before the Alderamin broke in two and sank about 30 minutes after being hit. At dawn HMS Saxifrage (K 04) (Lt. N.L. Knight, RNR) picked up 37 survivors from a lifeboat and rafts and landed them at Liverpool on 23 March. The forward starboard lifeboat had been launched with 17 occupants, but filled with water due to high waves and was abandoned when an empty raft from another torpedoed ship was spotted nearby. During the night three men died of exposure before the raft was found at dawn by the British rescue ship Zamalek (Master Owen Charles Morris, DSO) and the survivors taken aboard, however two more men died and were buried at sea before the vessel arrived at Gourock on 23 March.