Lines' building of the "mega-ship'' Oleander saying it is too big for Bermuda.

And he said it was "Brewernomics'' that is causing Bermuda's two shipping services from the US northeast coast to lose money, and not the recession.

Mr. Hayward, whose agency manages Bermuda International Shipping Lines, was responding to a call by Mr. William Brewer, president of rival Container Ship management which operates the Oleander , for a merger between the two lines this week.

And he warned if BISL does not get the support it needs and is consequently taken over by BCL, the public will suffer.

He charged BCL's building of the new Oleander "created over-tonnage'' and put freight services in Bermuda in "an unsatisfactory position''.

"The importing community did not ask for such a ship as the Oleander and should not be expected to pay for it,'' Mr. Hayward said.

He said the importers will pay because BCL will have to put its rates up to cover its losses.

Mr. Brewer said in a speech that BCL and BISL will have to merge in order to survive the recession. BCL's Oleander and BISL's Bermuda Islander both serve the US northeast coast.

"There is simply not enough business available in the foreseeable future to support two container ships and the back-up management plus equipment to run them,'' Mr. Brewer said.

"It is not economically sound to operate two competing Bermuda shipping lines when one consolidated company could provide a first class service for the community.'' But Mr. Hayward said, "The facts are that the hardware has to be adjusted to the reality of the trade, not the trade adjusted to the hardware.'' He said that despite the recession the total cargo imported into Bermuda in the first seven months of 1992 was up 5.5 percent on 1991.

"There have been two vessels on the New York run since 1977 and two suitable vessels running in competition with one another don't need anywhere near the type of freight increase which is visualised for the Oleander with 100 percent of the New York cargo,'' he said.

"This is obvious when we consider that last year the Oleander carried 71 percent of the New York cargo, was 41 percent utilised and lost $1.6 million.

"How much of an increase would this operation require to make a 10 percent return on the investment.

"The bottom line is that it is competition that is affecting the importing business and it is competition that has provided tremendous benefits to the Bermuda importer since 1977 and human nature being what it is, it is only competition which keeps service up and freight rates down to a reasonable level.''