Overall, 2003 was another record year for air cargo with Hong Kong's throughput at 2.64mn tonnes, 6.6% higher than the previous record set in 2002 of 2.48mn tonnes. In December 2003, cargo throughput at the Hong Kong International Airport's handling facilities showed a remarkable increase of 15.8% compared with December 2002, at a total of 249,000 tonnes. The growth was attributed mainly to the export boost to the markets of Mainland China, Europe and the US.

In the period April 2003-March 2004, cargo throughput had risen by 7.5% over the same period the previous year, to 2.74mn tonnes. Meanwhile, high demands for summer consumption in the European US markets brought June 2004 cargo throughput to 250,000 tonnes, 24% higher than June 2003. This was the fifth consecutive month of double-digit growth for cargo handling in the airport. The robust cargo traffic also brought with it a 16% increase in aircraft movements, a welcome development for shippers as they can be assured of space allocation for their airfreight.

Strong air freight volumes going through HKIA.

Hong Kong airport continues to be the hub in the region, with continuous infrastructure improvements and investments in logistics facilities. Even the opening of the Guangzhou Baiyun airport on August 5th failed to blunt the HKIA's considerable edge in the region's cargo handling. Cargo throughput in August was 17.3% higher than the same month in 2003, at 257,000 tonnes, with exports growing by 22.3% to 164,000 tonnes. The demand continued to grow heavily in Hong Kong markets of Europe, North America and the Mainland. A new record was set for cargo throughput in September with 280,000 tonnes of cargo handled at HKIA and increase of 19.2% over September 2003.

The government's electronic manifest submission went into effect July 17, 2004. The airlines announced they were introducing an E-MAN Enquiry Service Charge of HK$25 for any e-filing that is returned by Government for amendment or correction. Members of the Hongkong Association of Freight Forwarding and Logistics Ltd (HAFFA) said they would charge a total of HK$40 per House Air Waybill as its E-MAN Data Amendment Fee which would include the HK$25 E-MAN Enquiry Service Charge that would be paid to the airline.

The Council negotiated with the parties involved for a test and education period of six weeks to delay the collection of the Data Amendment Fee so that shippers could get used to the new electronic submission and with the help of the guidebook, eliminate the incidences of incorrect or incomplete submissions. It was agreed that that the collection of the fee would start on shipments sent on or after September 1. We asked that the guidelines be published on websites on how to fill in air waybills and highlighting common mistakes.

The airlines are levying an Advance Cargo Information (ACI ) fee of HK$5.00 per house air waybill for US-bound cargo. The fee is used to defray costs incurred in the implementation of the AAMS or Air Advance Manifest System to US Customs, including physical checking of each HAWB information and systems development/support costs. The ACI is approved till August 31, 2005.

The current fuel surcharge mechanism has been agreed upon by the Council and related trade and government organisations. The Board of Airline Representatives' most recent application extended the fuel surcharge mechanism from July 2004 to July 18, 2005. It is based on the Fuel Price Index (FPI) on the Lufthansa Cargo website, as per international practices.

With rising fuel prices this year, however, the BAR had applied twice already to the CAD to add additional trigger point levels to the fuel price index. The first was in May 2004, when two new additional trigger levels were added, as follows:

It is the Council's position that shippers should not bear sole responsibility for fuel rate rises and the airlines should share in the increases resulting from higher fuel prices. The agreement between BAR, CAD and the Council on the fuel price mechanism was understood to put a cap or ceiling on charges. However, we have stipulated that when the conditions go the opposite way, then there should also be provisions for negative adjustments in addition to the decreasing trigger points.

Nine airlines have received approval to impose a security surcharge, based on justification of security measures adopted. However, the other airlines that did not receive approval, have gone ahead and imposed a "Security Charge" that is understood will be paid by the consignees or cargo owners and will be charged as part of freight on the airway bill.

The Council also reached an understanding with the Hong Kong Association of Freight Forwarding and Logistics Limited (HAFFA) that for Freight Collection shipments, SC would be borne by consignees, while Freight Prepaid shipments, SC would be borne by shippers.

We have sent notices to shippers that the Security Charge will not be applicable to minimum charge shipments. Also, shippers should beware that the cost could vary.

Regulated Agent Regime (RAR) conforms to ICAO security standards.

To conform to the security standard of the International Civil Aviation Organisation (ICAO), the Hong Kong Aviation Security Programme which is enforceable under the Aviation Security Ordinance, introduced a requirement to strengthen the security of air cargo. Under this requirement airlines can carry only consignments of cargo, courier and express parcels or mail on passenger flights from a Regulated Agent, a Known Consignor or consignments which have been subjected to other security controls. The Regulated Agent Regime is a system under which a cargo handling agent, freight forwarder or consignor of air cargo can be qualified as a Regulated Agent.

The Hong Kong scheme took effect on March 6, 2000. There are now over 1,000 Registered Agents with CAD (complete list is at http://www.info.gov.hk/cad/english/register.htm). Under the regime, a Regulated Agent or an airline operator is required to apply security control measures on consignments of air cargo received from shipper who is not a Known Consignor unless the goods are exempted cargo.

Under the RAR there are three main entities: the Known Consignor, Regulated Agent and Airline Operator. A Known Consignor is a person who offers a consignment of cargo for carriage by air in Hong Kong to either a cargo agent or an airline operator.

Meanwhile, 0.5% all unknown cargo carried on passenger flights are subject to random security checks as per the Quality Assurance Programme. The ratio may be amended upward eventually.

Asia Airfreight Terminal is investing HK$1.75 bn in new terminal.

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