GE, Siemens in port security collaborative effort
Two conglomerates create joint venture to manufacture tamper-proof devices to track the 60 million cargo containers being ferried across the oceans every year
General Electric and Siemens, the largest conglomerates in the United States and Europe, will cooperate in offering security solutions for security cargo containers. The security initiative aims to equip most container traffic with devices that register when they have been opened. More than sixty million container shipments take place each year. Research group ABI Research predicts the market for security devices will be worth about $750 million 2010. The market growth will be driven, in part by legislation. The U.S. Congress is considering bills which would establish standards for ocean-going containers, including the mandatory use of tracking devices. Companies agreeing to meet these standards would have their cargo subjected to fewer searches at U.S. ports (not that this is a big deal at present: Fewer than 5 percent of containers arriving at U.S. ports are searched).
The teaming up of these two giants is remarkable in itself given their fierce rivalry in several areas such as medicine technology — and the often unfavorable comparisons analysts make between the German group and its more profitable U.S. competitor. Siemens will take an initial 10 percent stake in the GE-led project, called Commerce Guard, with an option to double its holding, while Mitsubishi Corporation of Japan has 3.8 percent. Siemens will market the product in Europe, and later in India, Australia, New Zealand, and Africa. Mitsubishi is already partnered with GE for sales in Japan and potentially other parts of Asia.
The locking-and-tracking device will cost about $100, and the more profitable part of the business will be the service fees for monitoring them. The tracking device will be fitted on the inside of a container. GE officials admitted that the development of a reliable and low-cost tracking device had been more difficult technically than initially anticipated. As recently as two years ago, the devices registered as much as 5 percent false positives because the jostling of the container would falsely register as the container being opened. As a result, the company abandoned a version based on pressure sensors in favor of a system based on magnets, and the error rate has been reduced to well under 1 percent.
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