After months of delay, OSI Systems [OSIS] says its Rapiscan Systems division has begun operating a new service for the Puerto Rico Ports Authority (PRPA) providing turn-key cargo scanning services, opening a new revenue stream for the company.
The company hasn’t provided estimates of how much revenue it expects to generate from its cargo scanning services business although analysts have put the value between $100 million and $300 million over 10-years.
Morgan Keegan defense and security analyst Brian Ruttenbur in a recent note to clients pegs the annual value to OSI System at about $20 million. He and other analysts believe the cargo scanning services model also offers the company higher than average margins.
OSI Systems has also been touting the potential to provide its cargo scanning services business to other countries and ports authorities.
“Commercial and government agencies continue to evaluate our screening-as-a-service model as an efficient alternative that reduces upfront capital investment and offers an innovative approach to handling ongoing maintenance and staffing requirements, while completing screening in a rapid manner,” Deepak Chopra, president and CEO of OSI Systems, says in a statement regarding the start of operations in Puerto Rico.
The PRPA’s goal is to position itself as a transshipment location for maritime cargos destined for the U.S., Peter Kant, head of Global Government Affairs at Rapiscan, tells TR2. The screening service arrangement with Rapiscan is a step in that direction in terms of meeting the congressionally-mandated 100 percent container screening requirement for U.S.-bound cargo, he says.
For the new operation Rapiscan has installed its various Eagle cargo and container X-Ray inspection systems and is also supplying analysts.
The start of operations is at one site with the PRPA for now.
Ruttenbur says that with operations underway Rapiscan will now be able to demonstrate the business case to other potential customers.