High fuel costs and lower cargo volumes contributed to a 27 percent decline in Bermuda Container Line?s net earnings for the first six months of 2005.

And the company warned that it did not expect the profit picture to improve in the second half of the year.

BCL?s profit for the period ending June 30 fell by $615,000 to $1.64 million compared to the same period in 2004.

Expenses increased by $339,000 or 2.9 percent to $13.86 million, including a net increase of 63 percent or $164,000 in fuel costs.

BCL, which issued a profit warning to shareholders in May when fuel costs first surged, said in its statement yesterday that it will be faced with further cost increases in the second half of the year.

BCL also said the third quarter will be also be affected by the costs associated with the engine breakdowns experienced recently by both the in which it is a joint venture partner, and the .

BCL also said that both the service from New Jersey and the one from Florida recorded decreased cargo volumes in the first half of 2005 compared to 2004.

?The New Jersey service experienced a fairly large decline in the container volume but this was partly offset by an increase in the volume of roll on/roll off cargo, giving an overall decline in cargo volume measured in slots of 1.6 percent,? BCL said.

?The Florida service experienced declines in both containerised and break-bulk cargo volumes.?

However, BCL said the drop in volume was partly offset by a general increase in freight rates on April 1 ? the company?s first rate hike in eight years.

The decline in cargo volume negatively impacted on revenue but this was partly offset by a general freight increase effective April 1.

Overall, revenue declined by $225,500 or 1.43 percent to $15.5 million in the period.