$1.8 million suffered by Bermuda Container Lines for 1991.

Apart from the labour problems at Stevedoring Services, rising wages and falling income led to BCL suffering possibly its worst 12 months in its 11-year history. In 1990, BCL made a profit of $1.1 million.

Although the company increased its market share of in-bound containers to a record-high of 71.4 percent, freight rates continued to fall while cargo handling costs escalated.

Average revenue per container dropped by $50, or 2.5 percent, between 1990 and 1991. There has now been a cumulative decrease of $196, or 10 percent, since the last time freight rates went up, in late 1985.

The company's newly-released annual report states that last year's ban on overtime by Stevedoring Services and then its employees' self-imposed work-to-rule had a crippling effect on BCL.

"Both of these actions affected BCL's ability to service its customers for four months,'' said a management statement. "Many voyages were badly delayed and, finally, three or four scheduled voyages in June had to be cancelled.'' Even when the dispute was settled in July, it took several months for BCL's productivity to return to "acceptable levels''.

"The cost, not only to the shipping lines, but to the truckers, freight consolidators and the general importing community has been staggering,'' said management.

"The most discouraging aspect is that Bermuda may look forward to these kinds of disruptions once every two years.'' Management said there had been a "dramatic increase'' in the wage rates of stevedores in Bermuda, putting a strain on BCL's operating costs.

Although BCL's revenue went up by 5.8 percent to $14.38 million, expenses rose by 24 percent, or $3.3 million, to $17.1 million.

Management added: "Between 1986 and 1991, the basic stevedoring costs in both the United States and Bermuda have gone up by 16 percent while certain stevedoring charges have increased by substantially more; overtime differential in Bermuda, for instance, has increased by 58 percent.'' Lower freight volumes brought on by the recession had compounded the problem of lower freight charges.

After a stagnation in the New York/New Jersey to Bermuda freight market between 1988 and 1990, there was a 9.4 percent fall in container volumes in 1991.

Volumes in the Florida to Bermuda freight market have been declining steadily for the last three years, with volume down by 19.2 percent between 1988 and 1991.

BCL's problems were further compounded by first-time losses of $197,000 from its 50 percent stake in Somers Isles Shipping.

BCL's assets fell by 10 percent to $19.6 million while its liabilities also fell, by 5.6 percent, to $6.2 million.

Although 1991 was pretty bad, management predicted that this year would not be much better. "Another substantial loss is foreseen for 1992,'' said the report.

"To the end of May, 1992, the total market volume was just above the depressed 1991 levels and BCL's share of the market had increased only marginally.

"There are no signs that the freight rate levels will improve at any time in the near future, which affects all carriers serving Bermuda.

"This mirrors the existing situation in the shipping trade between the US and Europe where it is reported that none of the operators are making a profit.

"On the North Atlantic run there have been tentative moves to rationalise services thus far with limited success.

"In the present competitive environment in Bermuda, we hold out little hope for a meaningful rationalisation which could lead to profitability at the least possible cost to the importing community.'' The report concludes by attempting to put to rest any fears about the company's future. Management said: "Fortunately, the company continues to show a strong balance sheet, generates cash from operations which substantially covers its expenses, and maintains good relationships with its customers and bankers. There should be no concern for the continuity of BCL's operations at any time in the foreseeable future.'' BCL's chairman is Mr. Gilbert Darrell MP and its president is Mr. William Brewer, who runs Container Line Management, which manages BCL.

BERMUDA CONTAINER LINE 1991 RESULTS LOSS .$1.8m REVENUE .$15.4m EXPENSES .$17m LOSS FROM STAKE IN SOMERS ISLES SHIPPING .$200,000) TOTAL ASSETS .$19.6m TOTAL LIABILITIES .$6.2m.