National Cargo Screeners, Inc. (NCSI), a third party Certified Cargo Screening Facility (CCSF), recently installed new X-Ray and Explosive Trace Detection screening equipment to help airlines, freight forwarders and manufacturers meet an Aug. 2010 deadline for the screening of all air cargo for explosives but business is light for now, a company official says.
The cargo screening business is relatively “dead” now because airlines aren’t charging fees to do the screening themselves and because various exemptions in the current federal mandate allow for a lot less cargo to actually have to be screened, which in turn is why the airlines for the most part are able to handle the demand, Tom Hullinger, general manager of NCSI and director of operations for Forward Logistics Group (FLG), the parent company of NCSI, tells TR2. NCSI is located in Orlando, Fla., about two miles from Orlando International Airport.
Hullinger says that FLG created NCSI as a neutral third party CCSF under the Transportation Security Administration’s (TSA) Certified Cargo Screening Program, which was established last year to achieve the congressionally-mandated goal of having all cargo bound for passenger planes be screened for explosives beginning Aug. 2010. That screening can be done either using technology, bomb sniffing dogs, or by physical means and it can be accomplished at several different nodes along the supply chain, beginning with the manufacturer and ending with the air carrier.
Earlier this year TSA met an interim mandate that 100 percent of all cargo destined for narrow-body planes had to be screened of explosives. That deadline essentially took care of 50 percent of the cargo shipped by passenger planes departing from a U.S. airport. However, Hullinger says that since then companies have discovered loopholes in the requirements that allowing for exemptions to the interim screening mandate, which means far less cargo is being screened.
That’s the reason why the screening business, particularly for third party screeners like NCSI, is light, he says. That and the fact that at some point this year airlines, who are ultimately responsible for ensuring that cargo is screened and had already been screening a small percentage of high-risk cargo themselves, eliminated their screening fees, he adds.
Hullinger says he was at a conference in Miami in May of this year where TSA “pleaded” with companies to get involved in the CCSP program and the airlines in attendance there also said they needed help. He says that “motivated” his company that the air cargo screening business would be a good one. Back in February NCSI ordered its screening equipment, which includes L-3 Communications‘ [LLL] MVT-HR High Resolution Multi-View Technology explosives detection system and two Smiths Detection IONSCAN 400B desktop explosives trace detectors. The L-3 machine cost about $500,000, he says. The MVT-HR is widely deployed in Europe and other parts of the world for hold baggage screening and is capable of automated explosives detection.
Up until the beginning of October, when NCSI’s screening equipment was installed, operational and permitted, the company was physically inspecting cargo.
Now that the airlines aren’t charging for screening and exemptions have reduced screening demand, Hullinger says that some companies that set themselves up as third party screeners have dropped from the program due to a lack of business. NCSI’s business now is through FLG, which is a U.S.-based international freight forwarder, Hullinger says. He expects that beginning early next year as crunch time approaches for screening that more manufacturers and freight forwarders will begin the application process to participate in the CCSP program.
Lag Time for Getting Technology
The problem with waiting until crunch time is that if companies have to buy screening equipment, they may confront a lengthy delay in obtaining the equipment and getting their staff trained to operate it.
It took NCSI about five months from the time it ordered its X-Ray system from L-3 until the machine was installed and training was complete, Hullinger says. And that’s in a period of relatively “light demand” for this equipment, he adds. At the conference in Miami, Hullinger says that he spoke to representatives of L-3, Smiths Detection and OSI Systems‘ [OSIS] who all told him if demand for their equipment spikes at once they won’t be able to keep up with production. That means if companies wait until next spring to place their equipment orders, there is a good chance it won’t be delivered in time to help meet the Aug. 2010 mandate, he believes.
And there is also the issue of permitting by the local government inspector. Hullinger says it took nearly two months for the county building inspector to come in and okay the wiring and other things that had to be done to allow the X-Ray system to operate. Again, that’s in a period where construction activity is down, he adds. If the economy picks up and more construction begins, going through any particular county’s permitting process could take longer, he says.
How the air cargo screening market will play out is yet-to-be determined, Hullinger says. The exemptions in place for cargo on narrow-bodies will go away next August, he says. Still, a lot will depend on whether airlines invest more money into screening equipment and decide to shoulder more of the burden themselves, he adds. For companies like NCSI, the goal is to make money, he says.
It will be hard for some airlines to afford the more expensive X-Ray systems not to mention finding the real estate in existing warehouses to install and operate them, Hullinger believes.
Still, Hullinger says, manufacturers who have their product screened by themselves, third parties or freight forwarders will ensure that their cargo gets to the front of the line for loading on a plane.