Sommersemester 2011 

Executive Summary 

Background and Market Need 

Over the past years the air cargo industry has faced several threats that had significant impact on the image and the performance of the entire industry. The air cargo market suffered most from terrorist attacks in the US and an increase in the movement of prohibited goods. Current cargo scanning technologies do not have the capabilities, speed and image quality to detect an increasing number of dangerous materials and hence are not able to deal with the existing problems adequately. Therefore, new technologies are required to address those risks and enable a higher security level in the ever increasing market. 

Product Description

The European Organization for Nuclear Research, CERN, has available Micro Pattern Gaseous Detector technology (MPGD), which can be integrated in the next generation of air cargo scanning devices. The MPGD technology allows building large area scanning systems of several square meters that can measure neutrons and X-rays simultaneously, thus enabling the creation of 2-dimensional images, which will significantly reduce the scanning time for entire air cargo containers to 5-10 seconds. Additionally, due to the use of MPGD detectors, the scanningtime is independent of the size of the container. Due to the better material discriminationcapabilities, threats can be detected with a higher reliability than with traditional X-Ray solutions in large objects like ULDs or pallets. The described technology bundle creates high-resolution images which – in addition to object shapes – also provide information on the material of scanned objects to the operators facilitating the image analysis. 

Air Cargo Supply Chain and Related Legislative Framework 

Both in the US and in Europe, air cargo supply chains are becoming more complex.
Screening responsibilities are shifted to the earlier stages of the supply chain to handling agents and freight forwarders in order to cope with the demand
for more security. This demand is based on threat perception, which is substantially higher in the US compared to Europe. As a consequence the responsible authorities in the US enacted a legislative framework which requires screening of 100% of cargo transported on passenger airplanes. Moreover, the Transportation Security Agency (TSA) invests substantial financial resources in the development of new technological solutions. 

Market Analysis & Market Potential 

Taking into account the legislative framework in the US as well as the willingness of government authorities to support R&D efforts in the field of threat detection devices financially, the American market is the most attractive one. However, also in the US, future demand for neutron scanners will depend on the introduction of even more stringent regulations, prescribing either directly the use of such technologies or making screening of all cargo mandatory. Such regulatory changes can only be reached by offering regulators a working prototype.

In order to penetrate the American market, ways must be found to circumvent protectionist directives of the Department for Homeland Security (DHS), such as establishing research collaborations with American
institutes. This should be facilitated by already existing joint declarations in the field of aviation security between DHS and the European Commission.

A first estimation, based on the current status concerning cargo quantities and mandatory screen regulations, shows that at the 58 biggest cargo hub airports worldwide about 83 neutron scanners could be deployed, 64 of which concern the US. The attractiveness of the European market, being very reactive, might increase in the future.

Considering the price of such a neutron scanner, making up € 5m to € 10m, the onetime worldwide market potential for only the biggest cargo hub airports will range between € 415m – € 830m. 

Competitor Analysis 

The only parties which may be perceived as CERN’s competitors are Rapiscan Laboratories and the Australian Commonwealth Scientific and Industrial Research Organisation (CSIRO), as they have been working on a new generation of cargo screening systems which use combined fast neutron and gamma- ray/X-ray radiography. Rapiscan Laboratories had a working scanner prototype (based on Pulsed Fast Neutron Analysis) in 2005, but the project has been suspended for financial reasons. CSIRO established a joint venture with the Chinese manufacturer Nuctech, and developed and commercialized a new scanner (combining X-ray and neutron technology). Until today, however, only two devices were sold to the Beijing Airport.

Cost Estimation for Prototype Development As outlined in the market analysis, the next step on the way to the commercialization of an MPGD-based neutron scanner will be the development of a demonstrator prototype. The main cost factors for such a project are personnel and material costs. Over the time period of approximately 6 years, up to 18 engineers will work on different project stages, with total personnel expenses of about € 4.3m; total material costs (for the same time period) will amount € 4.8m. This amounts to estimated total project costs of roughly € 9.1m. CERN, however, having only limited resources available, CERN will need a collaboration partner to get the project to the commercialization phase. 

Collaboration Design 

There will be at least two parties involved in the project. CERN, acting as a detector specialist will be providing the MPGD technology package (including the patent-family), while the partner will take the role of the collaboration leader, responsible for the project management, supply of human resources, and access to the public funding schemes. The project shall be conducted at the partner’s site, including prototype development and testing. 

Business Model Options 

The most likely option will be the development of a prototype together with (an) American R&D institute(s) in order to circumvent protectionist entry barriers concerning the US market (primary market for CERN). A US commercialization partner (e.g. manufacturer) will then be in charge of producing the final scanner product and penetrating the market. Another viable option includes collaboration with an air cargo system integrator, who takes the lead both in R&D and commercialization. 

Results 

The spin-off will be incorporated in the beginning of 2012 and will concentrate in its first year solely on data evaluation and start with the design of whole studies in 2013. These two services provide a constant revenue stream and this together with the simple and flexible cost structure will result in a projected positive cash-flow from the first year on. The future aim is to develop further essential services for research institutes and the pharmaceutical companies.

Cooperation Partner 

• European Organization for Nuclear Research
  (CERN)
  Genève 23
  CERN CH-1211
  Switzerland

• Contact Person
  Hartmut Hillemanns, PhD (CERN)
  Tel: +41 22 767 2664
  E-Mail: hartmut.hillemanns@cern.ch 

Student Team 

• Kristina Gondova
  Ivana Sijan
  Faruk Kapetanovic
  Sebastian Knabl
  Stefan Richter