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New US cruise terminal rules may boost screening equipment sales, impact global industry

New US cruise terminal rules may boost screening equipment sales, impact global industry
In a new research report, information analysis firm IHS Inc. asserted cruise terminal security screening remains 'relatively soft' compared to airport screening, something it expects to change when the United States implements new regulations in 2015. IHS further predicts this would have far-reaching impact on cruise terminal screening around the globe.

As earlier reported, the US Coast Guard is planning to standardize passenger security screening procedures at cruise terminals throughout the US. The proposed Terminal Screening Program aims to give greater clarity and efficiency by removing redundancy in regulations, ensuring greater accountability and providing for a more systematic approach to monitor facility procedures.

Comments on the proposed rulemaking are due March 10.

USCG identified 137 terminals that are subject to the Maritime Transportation Security Act of 2002, passed by Congress following the terrorist attacks of Sept. 11, 2001.

Noting that the USCG's newly proposed regulations are not mandatory, IHS projects slow uptake over the short term of new explosives, weapons and contraband detection (EWC) equipment in the cruise ship industry.

A new IHS report on the EWC equipment sector forecasts the seaports market will grow at a combined annual rate of 6.7% to $241.6m in 2018. Many cruise terminals currently use a combination of X-ray, people screening, explosives detection systems, canine teams and manual inspections.

Larger cruise terminals are expected to prefer the efficiency and greater throughput that newer X-ray and explosives detection equipment offers, while smaller cruise terminals will be slower to adopt new EWC equipment, instead using a combination of canine teams, manual inspections and EWC detection equipment, according Jared Bickenbach, IHS market analyst for security and building technology.

Bickenbach noted the Terminal Screening Program does not require cruise terminal operators to purchase EWC detection equipment. However, those who do will be required to buy equipment with similar detection capabilities to those installed at airports. EWC detection equipment at airports typically carries a higher price due to its increased capability, resulting from strict detection standards.

IHS expects the long-term impact of the new regulations to be positive for EWC providers, as cruise terminals in the US replace older equipment with newer, more advanced equipment. However, IHS does not think the Terminal Screening Program will create a spike in growth over the short-term. Instead, normal replacement cycles are expected for most of the cruise industry over the next 12 to 24 months.

Further, IHS believes the adoption of the Terminal Security Plan stateside will have long-term implications for the global cruise market. Noting how the US became a leader in airport screening regulations after the Sept. 11 terrorist attacks, IHS expects the US adoption of cruise screening regulations to result in the development of similar screening regulations in other regions.

Bickenbach noted terrorist threats to the cruise industry are very small in comparison to aviation but said cruise ships are considered a unique target due to the large number of passengers carried on each ship. He added that cruise ships are more resilient to attack than aircraft, which will result in the development of specific screening requirements for cruise terminals.

IHS found only five terrorist attacks against cruise ships in the last 55 years, but did not specify what those were.

Seatrade Insider notes the Achille Lauro hijacking in 1985 heightened awareness of security on passenger ships and prepared the industry for the execution of contingency plans. As a result, the cruise industry implemented 100% screening of baggage and stores the day after 9/11—years ahead of the airlines.

The proposed USCG rules do not address stores, bunkers or cargo, which are covered in other regulations, or what items may be brought into a cruise ship by the cruise operator, including items that passengers may check for secure storage with the cruise operator outside of their baggage or carry-ons.

Both the International Ship and Port Facility Security Code and the US Maritime Transportation Security Act in good part built out cruise security plans to the rest of the maritime sector.

Bickenbach said that despite the proposed new rules, the low probability of a terrorist attack on cruise ships is expected to result in less stringent screening requirements at cruise  terminals.

He added that, similar to aviation, the cruise market is event-driven, and an attack on a ship would undoubtedly lead to increased screening regulation at cruise terminals. While the Terminal Security Program only applies to US cruise terminals, airport equipment manufacturers are expected to see greater opportunities to sell premium EWC detection equipment to the cruise industry, IHS said.