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What Is Harbor Maintenance Fee (HMF)? A 2024 Guide

July 30, 2024

Navigating international trade involves managing various fees, including the Harbor Maintenance Fee (HMF), which is crucial for maintaining U.S. port infrastructure. For businesses exporting goods to the USA, understanding this fee and how it affects your operations is essential for compliance and cost management.

At Artemus, our platform simplifies ISF and AMS filings, ensuring accurate and efficient compliance with U.S. Customs regulations. We help streamline your processes, including managing the Harbor Maintenance Fee, so you can focus on growing your business. In this blog, we’ll break down the Harbor Maintenance Fee and how our solutions can assist you.

Table Of Contents

1 What Is Harbor Maintenance Fee (HMF)?
2 Who Is Responsible For Paying The HMF?
3 How To Calculate Harbor Maintenance Fees?
4 What Is The Difference Between Harbor Maintenance Fee & Merchandise Processing Fee?
5 Harbor Maintenance Fee Rates For 2024
6 Harbor Maintenance Fee Exemptions
7 How Can You Apply For An HMF Refund?
8 Artemus: ISF & Automated Manifest Filing Software Solution
9 Conclusion

What Is Harbor Maintenance Fee (HMF)?

The Harbor Maintenance Fee (HMF) is a federal charge imposed on importers and domestic shippers to fund the maintenance and improvement of U.S. ports and harbors. Established under the Water Resources Development Act of 1986, the fee ensures that ports remain operational and capable of handling the nation’s maritime trade efficiently.

The HMF is calculated at a rate of 0.125% of the value of the commercial cargo shipped through U.S. ports.

The collected funds are deposited into the Harbor Maintenance Trust Fund, which the U.S. Army Corps of Engineers uses for dredging and other necessary maintenance activities. This fee applies to cargo moving through both coastal and inland ports, ensuring the infrastructure is well-maintained to support economic growth and trade activities.

Who Is Responsible For Paying The HMF?

The HMF is typically paid by the importer or consignee of the cargo. The fee is usually collected by the customs broker or freight forwarder on behalf of the importer. Ultimately, the financial responsibility falls on the party receiving the cargo, which is usually outlined in the terms of the shipping contract.

1. Importer Of Record

The primary responsibility for paying the Harbor Maintenance Fee (HMF) falls on the “importer of record” for the shipment. This is the individual or entity who is listed on the import documentation as the party responsible for the goods upon arrival in the U.S.

The importer of record is typically the owner of the goods, the consignee, or the person authorized to receive the shipment. They are accountable for ensuring that the HMF is paid as required by U.S. Customs and Border Protection (CBP).

2. Customs Broker

While the ultimate responsibility for paying the HMF rests with the importer of record, many importers utilize customs brokers to handle the intricacies of importing goods into the U.S. A customs broker is a licensed professional who can assist with filing import documents, calculating fees, and ensuring compliance with all regulations.

In many cases, the customs broker will handle the payment of the HMF on behalf of the importer of record. However, the importer remains legally responsible for ensuring that the fee is paid.

3. Freight Forwarders And Carriers

Freight forwarders and carriers play a crucial role in the logistics chain but do not directly bear the responsibility for paying the HMF. They are responsible for the transportation and handling of the goods, but the financial responsibility for the HMF lies with the importer of record.

Freight forwarders may assist in arranging the payment of the fee through the customs broker, but the importer must ensure that the fee is paid in full and on time.

How To Calculate Harbor Maintenance Fees?

The Harbor Maintenance Fee is a U.S. federal tax imposed on commercial cargo that enters the United States via ports and harbors. The fee is used to fund the maintenance and improvement of the nation’s harbors and navigable waterways, ensuring they remain functional and accessible for commercial shipping.

The Harbor Maintenance Fee is calculated based on the value of the cargo being imported. Here’s a step-by-step guide on how to calculate it:

Determine The Value Of The Cargo:
- The fee is based on the “value of the cargo” which is generally the cost, insurance, and freight (CIF) value of the goods. This value is reported on the Importer’s Entry Summary (Customs Form 7501) when the goods arrive in the U.S.
- CIF Value Calculation: If you have an invoice that lists the cost of goods and shipping, you need to convert this into the CIF value. If the invoice lists the cost of goods and separate shipping charges, sum these to get the CIF value.
Identify The HMF Rate:
- As of the latest update, the Harbor Maintenance Fee rate is 0.125% (or 1/8th of a percent) of the CIF value of the imported cargo. This rate is set by the U.S. government and is subject to change.
Calculate The Fee:
- Use the formula: HMF=CIF Value×HMF Rate\text{HMF} = \text{CIF Value} \times \text{HMF Rate}HMF=CIF Value×HMF Rate
- For example, if the CIF value of the cargo is $50,000, the calculation would be: HMF=$50,000×0.00125=$62.50\text{HMF} = \$50,000 \times 0.00125 = \$62.50HMF=$50,000×0.00125=$62.50
- Therefore, the Harbor Maintenance Fee for this shipment would be $62.50.
File And Pay The Fee:
- The HMF is typically paid at the same time as the import duties and taxes. It is reported and collected by U.S. Customs and Border Protection (CBP) as part of the import entry process.
- Ensure that the fee is included in your customs entry summary and that you keep a record of the payment for your records and for compliance purposes.

Additional Considerations

Exemptions And Special Cases:
- Certain types of cargo or shipments may be exempt from the Harbor Maintenance Fee. It is important to check the latest regulations or consult with a customs broker to determine if any exemptions apply to your shipments.
Periodic Updates:
- The Harbor Maintenance Fee rate and rules can be updated periodically. Stay informed about the latest changes by consulting official resources or industry updates.
Record Keeping:
- Maintain detailed records of all calculations, payments, and relevant documentation. This ensures compliance and aids in audits or disputes.

What Is The Difference Between Harbor Maintenance Fee & Merchandise Processing Fee?

Understanding the distinctions between the Harbor Maintenance Fee (HMF) and the Merchandise Processing Fee (MPF) is crucial for businesses involved in importing goods into the United States. Here’s a breakdown of the key points of differentiation between these two fees:

1. Purpose

Harbor Maintenance Fee (HMF):
- The HMF is primarily designed to fund the maintenance and improvement of U.S. ports and harbors. It ensures that the infrastructure required for safe and efficient maritime operations is well-maintained.
Merchandise Processing Fee (MPF):
- The MPF is levied to cover the costs of processing and inspecting imports. It is intended to support customs operations, including administrative costs associated with the entry of merchandise into the U.S.

2. Applicability

Harbor Maintenance Fee (HMF):
- Applicable to imports, domestic shipments, and exports transported by vessel through ports subject to the fee. It is charged based on the value of the cargo being shipped through U.S. ports.
Merchandise Processing Fee (MPF):
- Applicable only to imported merchandise entering the U.S. It is assessed on the value of the imported goods, with specific rates and caps set for formal and informal entries.

3. Rate Calculation

Harbor Maintenance Fee (HMF):
- The HMF rate is 0.125% (0.00125) of the value of the commercial cargo shipped through U.S. ports.
Merchandise Processing Fee (MPF):
- The MPF rate for formal entries is 0.3464% of the entered value of the merchandise, with a minimum and maximum fee ($29.66 minimum and $575 maximum, as of 2024). For informal entries, a set fee applies, typically $2, $6, or $9, depending on the type of entry.

4. Exemptions

Harbor Maintenance Fee (HMF):
- Exemptions include cargo that is transported between domestic ports, cargo moving through ports in certain territories (e.g., Puerto Rico), and cargo related to government operations.
Merchandise Processing Fee (MPF):
- Exemptions include merchandise that is duty-free under certain free trade agreements, goods entering under specific temporary importation bonds, and certain products that are part of humanitarian aid.

5. Collection Method

Harbor Maintenance Fee (HMF):
- The fee is collected by the U.S. Customs and Border Protection (CBP) at the time of cargo entry or departure. It is typically included in the shipping invoice.
Merchandise Processing Fee (MPF):
- The MPF is collected by the CBP at the time of entry summary filing. It is usually paid by the importer as part of the customs clearance process.

6. Usage Of Collected Funds

Harbor Maintenance Fee (HMF):
- Funds collected from the HMF are deposited into the Harbor Maintenance Trust Fund, which is used for the dredging, maintenance, and improvement of U.S. harbors and ports.
Merchandise Processing Fee (MPF):
- Funds from the MPF support the operations of the CBP, including the costs associated with processing import documentation, inspecting shipments, and enforcing customs regulations.

By understanding these key differences, importers and businesses can better navigate the complexities of U.S. customs fees and ensure compliance with the relevant regulations.

Harbor Maintenance Fee Rates For 2024

The Harbor Maintenance Fee (HMF) for 2024 remains consistent with the rates applied in previous years. The HMF is levied on the value of commercial cargo shipped through U.S. ports to fund the maintenance and improvement of these ports and harbors. For 2024, the fee is set at 0.125% of the value of the cargo.

This fee is crucial for ensuring that U.S. ports are well-maintained and can efficiently handle the nation’s import and export activities. The collected funds are used to cover dredging and other necessary maintenance activities to keep the ports operational and capable of accommodating international trade.

Harbor Maintenance Fee Exemptions

The Harbor Maintenance Fee (HMF) is a U.S. federal tax imposed on the value of commercial cargo shipped through ports and harbors. Its primary purpose is to fund the maintenance of harbor channels and port infrastructure, ensuring they remain navigable and safe for commercial use.

However, there are specific exemptions to this fee that businesses and stakeholders should be aware of. Here’s a detailed look at the exemptions to the Harbor Maintenance Fee:

1. Export Cargo

One of the most significant exemptions is for cargo that is exported from the United States. The HMF does not apply to goods that are shipped out of the U.S. for export purposes. This exemption is designed to avoid taxing U.S. exports, thereby ensuring that American goods remain competitively priced in international markets.

2. Cargo Shipped Through Non-Harbor Maintenance Fee Ports

If cargo is shipped through ports that are not subject to the Harbor Maintenance Fee, it is exempt from the fee. This typically applies to certain inland ports or facilities that do not handle a large volume of commercial cargo and thus are not covered by the fee.

3. Cargo Shipped Through Small Ports

The HMF is generally applied to large commercial ports and harbors. Smaller ports or harbors, which might not have the same level of infrastructure or maintenance needs, may not be subject to the fee. This helps to ensure that the fee is proportionate to the size and use of the port facilities.

4. Government And Military Cargo

Cargo that is transported by or for the U.S. government or military is exempt from the Harbor Maintenance Fee. This includes supplies and equipment that are part of military operations or other government-related activities. The rationale behind this exemption is to avoid additional costs for government agencies engaged in national defense and public service.

5. Certain Agricultural Products

In some cases, agricultural products may be exempt from the HMF, especially if they are shipped under specific government programs or subsidies. These exemptions are intended to support the agricultural sector and ensure that the cost of transporting essential goods does not become prohibitive.

6. Cargo Used In Coast Guard Operations

Cargo that is used in support of U.S. Coast Guard operations, such as equipment or supplies necessary for maritime safety and security, may be exempt from the HMF. This exemption recognizes the role of the Coast Guard in maintaining safe and secure maritime environments.

7. Cargo Shipped In U.S.-Flagged Vessels

While the HMF typically applies to cargo transported through U.S. ports, certain exemptions might be in place for cargo shipped on U.S.-flagged vessels, depending on specific regulations or agreements. This can be part of broader maritime policies to support U.S. shipping industries.

8. Special Programs Or Legislative Exemptions

Occasionally, specific legislative acts or special programs may create temporary or permanent exemptions from the Harbor Maintenance Fee. These exemptions are usually enacted to address particular needs or to support specific industries or regions.

How Can You Apply For An HMF Refund?

To apply for a Harbor Maintenance Fee (HMF) refund, complete the required refund request forms and submit them to U.S. Customs and Border Protection (CBP) with supporting documentation. Ensure all information is accurate to avoid processing delays. For detailed instructions, consult the CBP’s website or customer service.

Eligibility For A Refund

You may be eligible for an HMF refund if:

You have paid the fee on cargo that was not actually discharged at a U.S. port.
The fee was paid in error or excess.
You have documentation proving that the fee was paid but not utilized for the maintenance of the port.

Steps To Apply For An HMF Refund

Verify Eligibility: Ensure that you meet the criteria for a refund. Refunds are generally available if the cargo was not discharged at a U.S. port or if you have overpaid the fee.
Gather Necessary Documentation: Prepare the required documents, including:
- Proof of payment of the HMF (e.g., payment receipts, invoices).
- Proof that the cargo was not discharged at a U.S. port (e.g., shipping documents, manifests).
- Any other relevant documentation, such as correction notices or statements from the shipping line.
Complete The Refund Application Form: Fill out the appropriate refund application form. The U.S. Customs and Border Protection (CBP) provides the form for HMF refund requests. This form typically requires details about the shipment, payment information, and the reason for the refund request.
Form To Use:
- Form 3502: Application for Refund of Harbor Maintenance Fee. This form can be downloaded from the CBP website.
Submit The Application: Send the completed form and supporting documentation to the address specified on the form. This is usually the CBP office or the specific port where the fee was initially paid.
Track Your Application: After submission, keep track of your application status. It may take several weeks or months to process. You can contact the CBP office or check the online status if available.
Receive Your Refund: Once your application is approved, the CBP will process the refund and send it to the address provided on your application form. Be sure to verify the refund amount and ensure it is accurate.

Artemus: ISF & Automated Manifest Filing Software Solution

Artemus Transportation Solutions offers state-of-the-art ISF (Importer Security Filing) and Automated Manifest Filing software solutions, designed to streamline compliance and enhance efficiency in the import process.

The software ensures that all necessary ISF data elements are accurately reported to U.S. Customs and Border Protection (CBP) well within the required timelines, minimizing the risk of penalties and shipment delays. By automating the filing process, our solution reduces manual data entry errors and provides real-time tracking and updates, ensuring a seamless flow of information.

In addition to ISF filing, our Automated Manifest Filing software integrates smoothly with existing logistics and supply chain systems, facilitating quick and accurate transmission of manifest data for both ocean and air shipments.

FAQs

1. How To Calculate Harbor Maintenance Fee?

To calculate the Harbor Maintenance Fee (HMF), multiply the value of the cargo being imported by the applicable rate, which is currently 0.125%. The fee is assessed on the value of cargo entering U.S. ports.

2. What Are The Harbor Charges?

Harbor charges are fees assessed by port authorities for services and facilities used by vessels at the port, such as docking, mooring, and cargo handling.

3. What Is The Harbor Maintenance Fee In Canada?

The harbor maintenance fee is a charge levied on cargo imports and exports to fund the maintenance and improvement of Canadian port facilities, ensuring they remain efficient and effective.

4. What Is The Meaning Of HMF And MPF?

HMF stands for Harbor Maintenance Fee, a fee collected to maintain and improve U.S. ports and harbors. MPF, or Merchandise Processing Fee, is a fee assessed on imports to cover the cost of customs processing.

Conclusion

Harbor Maintenance Fee (HMF) plays a critical role in maintaining and improving the infrastructure of U.S. ports and harbors, ensuring they remain efficient and capable of handling the demands of modern shipping. While it is a necessary cost for importers and exporters, understanding its purpose and how it is calculated can help businesses manage their logistics budgets more effectively.

By contributing to the upkeep of vital port facilities, the HMF supports the smooth flow of goods and enhances the overall competitiveness of U.S. ports in the global trade landscape.