In view of the rising terrorism threat around the world, in September 2016 the International Civil Aviation Organization (ICAO) announced a new policy to enhance international standards on air cargo security.

Under this policy, by 30 June 2021 all consignors will have to either:

  • be approved by the appropriate authority as a validated "Known Consignor", or
  • become an "unknown consignor" with all cargo subject to 100% security screening prior to being loaded onto a commercial aircraft.

At present, security screening of air cargo in Hong Kong primarily takes place at the cargo terminals at the airport. In anticipation of an upsurge in screening demand, and in order to avoid an adverse impact on the air cargo industry in Hong Kong, at the end of October 2018 the Government launched a new scheme to enable and regulate cargo screening in off-airport locations. Under the scheme, industry operators such as freight forwarders and shared warehouse operators will be able to conduct cargo screening operations in their premises by registering with Hong Kong’s Civil Aviation Department to become Regulated Air Cargo Screening Facilities. Such facilities would have to satisfy a number of requirements, including having suitable x-ray machines, as well as a secure means of transporting the cargo from the warehouse to the airport’s cargo terminals in order to protect the screened cargo from unlawful interference.

A validation scheme for Known Consignors in Hong Kong is also being formulated, with a targeted roll out during the first Quarter of 2019. Consignors who have not been approved by the Civil Aviation Department will become "unknown consignors" from 1 July 2021, with all of their air cargo being security screened prior to being loaded onboard aircraft.

In another related development, plans are underway to develop a premium logistics centre to the south of Hong Kong Airport, with an estimated floor area of 380,000 square metres (making it the third largest warehouse in Hong Kong). A joint venture, led by Cainiao Network (the logistics arm of Alibaba Group), will design, construct, finance and manage the logistics centre, which is scheduled to commence operation in 2023. The centre aims to capture trans-shipment and cross-boundary opportunities arising from the fast-going global e-commerce business, as well as growth in the transport of temperature-controlled products such as pharmaceuticals.

In a separate initiative, Hong Kong Airport and Brussels Airport (Europe’s principal air cargo hub for handling pharmaceutical shipments) have launched an airport-to-airport corridor for temperature-sensitive medicines. Pharma shipments transported between Hong Kong and Brussels will be handled in strict compliance with the CEIV Pharma standards and carried by CEIV Pharma-certified airlines. Although Hong Kong Airport’s objective is to make it a preferred pharmaceutical transshipment hub, the broader initiative by Pharma.Aero (a cross-cargo industry collaboration) is to pioneer a global network of specialist pharma corridors.

As part of the new service, Hong Kong Airport is adding 19 temperature-controlled cool dollies to its ground fleet for the ramp transfer of pharma goods by airlines, with the aim of giving all airlines access to cool dollies for their temperature-sensitive shipments. In addition, the Airport is also building apron shelters to protect pharma shipments from direct exposure to the weather.

In our experience, temperature deviations for temperature-sensitive pharmaceutical products (for example as a result of cargo being left on the apron in the sun for prolonged periods) can lead to significant claims. It will therefore be interesting to see whether this new initiative helps to reduce the number of claims faced by airlines and their insurers.