Investment losses in the first half of 2008 helped to reduce Bermuda Container Line's profit, the shipping company reported yesterday.

And the weakening Bermuda economy, along with high fuel prices, means the company is not expecting to see an improvement in operating income in the second half of this year.

BCL earned $1.53 million in the six months ending June 30, a $462,000 or 23 percent decline on the same period in 2007.

Much of the reduction was attributed to a $132,500 loss in the company's investment portfolio, compared to "a healthy return in 2007".

"The turnaround was substantial. We were earning a ten percent return in the first half of 2007."

Mr. Frith said the company was using the investment portfolio, which is around $23 million and is now deposited in AAA-rated money market funds and short term deposits., to fund the purchase of a new ship or to buy a vessel should the opportunity present itself.

Company president Geoffrey Frith said the investment losses, meant company revenue for the first six months of the year was virtually flat, rising about $160,000 to $17.58 million.

Expenses increased by more than $620,000 to $16.05 million, with all of the increase atrributable to increases in the price of fuel, which rose $729,000 or 74 percent year over year.

He said preliminary estimates would see fuel costs rise by 100 percent in the third quarter.

Mr. Frith said this was partly offset by fuel surcharges, but the implementation of those charges tends to lag 30 days behind any increases in fuel price increases.

"Operating earnings from the BCL service improved in 2008 over 2007 but the 2007 operating earnings were negatively impacted by the additio nal and expepected costs of the Oleander dry-docking," Mr. Frith said, but added that operating earnings for 2008 were below the figure for 2006, and cargo levels were flat compared to 2007.

"The SISL service from Florida experienced a healthy growth in cargo volume but the increased revenue generated by this additional volume was off-set by higher costs, particularly fuel costs, so that the earnings from this service in the first half of 2008 were comparable to 2007," he added.

Mr. Frith said cargo volumes for both the BCL service and the SISL service in the third quarter are down, undoubtedly in response to the uncertain economic conditions.

Given the current global financial crisis, Mr. Frith said he did not expect trading conditions to improve in the rest of 2008.