Hong Kong e-cigarette transit ban to be lifted in April, 2023

Currently, Hong Kong is implementing a series of measures to promote the recovery of traffic at Hong Kong International Airport. On March 22, the Hong Kong Special Administrative Region government announced that on Friday (March 24), the “2023 Import and Export (Amendment) Ordinance Draft” will be gazetted, allowing alternative smoking products (e-cigarettes including vapes) to be transported by sea, air, and land to overseas markets via Hong Kong. The draft ordinance will be submitted to the Legislative Council for review next Wednesday (March 29).

With the lifting of the e-cigarette and e-cigarette transit ban, Hong Kong’s air exports are expected to increase significantly. According to data, freight agents claim that the banned goods amount to approximately 330,000 tons annually, accounting for about 10% of Hong Kong’s annual air export volume. The value of re-exported goods affected by the ban is estimated to exceed RMB 120 billion (USD 17.33 billion).

E-cigarettes have always been transported through Hong Kong using intermodal transportation, usually involving two or more modes of transportation from the shipping location to the destination. Before the legal regulations were amended, land-air transportation was commonly used. However, since April last year, land-air transportation has been banned, causing significant losses to Hong Kong’s air cargo transit business. Although some air transportation is still allowed, most of the products are produced in Dongguan, and exporters are eager to transport e-cigarettes to Hong Kong International Airport by land. Once the proposal is approved, goods will be able to enter Hong Kong through ferry security channels and be delivered to the airport.

The chairman of the Hong Kong Shippers’ Council, Lin Xuanwu, said that the plan is only to facilitate direct transit through Hong Kong, and the goods will not be supplied for local consumption. It is hoped that this will help recover some of the flights lost to competitors due to the ban on e-cigarettes and related substances being transported through Hong Kong.

The Hong Kong Association of Freight Forwarding and Logistics (HAFFA) said that last year’s ban was “a huge blow” and “strangled” the cargo business. Chairman Liu Jiawen added: “[The ban] has led to a serious decline in Hong Kong’s overall air export volume, causing losses of hundreds of thousands of tons of transshipment per year for the industry, airlines, cargo terminals, and Hong Kong International Airport.”

It is understood that after Hong Kong officially banned e-cigarette transit, the demand for large-scale exports was dispersed to airports in cities such as Shenzhen, Guangzhou, Shanghai, Wuhan, and Beijing. In particular, Shenzhen Airport seized this opportunity, formulated e-cigarette whitelist enterprise identification standards, and implemented differentiated security inspection systems, promoting the air transportation market for e-cigarettes. However, according to Hong Kong’s estimates, there are currently more than 600 domestic e-cigarette companies with production licenses, while Shenzhen Airport’s whitelist enterprises only number in the thirties, meaning the remaining 500+ manufacturers may still prefer to export via Hong Kong.

With the upcoming May Day holiday, the consumer market will also enter its peak season. It is predicted that international logistics capacity may become scarce and price increases may happen during the holiday. Cross-border export enterprises and sellers need to reasonably calculate the stocking cycle, dynamically track daily product sales, and prepare for stocking to ensure adequate supply. In addition, shipping times should be arranged reasonably to avoid unnecessary economic losses due to inventory shortages caused by logistics abnormalities.