Duty-free cargo does not necessarily imply freedom from associated costs and fees. Cargo transportation generally requires a commercial invoice, packing lists, customs declaration and bills of lading.
Ocean freight requires thorough information about the cargo contents, purchase prices, origin and destination. When maritime cargo passes through US ports at least once during their journey, they are liable to attract a harbor maintenance fee and merchandise processing fee on domestic shipments and imports alike.
What Is Harbor Maintenance Fee?
The US Customs and Border Protection levies the harbor maintenance fee for all maritime imports. Also known as ‘user fees’, they are tax charges officially levied on all imports irrespective of the means of transportation unless they arrive from Canadian ports.
The Water Resource Act of 1986 states that this tax could partly fund all harbor, inland water transport and flood control projects. All imports, domestic shipments, foreign trade zone shipments and passengers on cruise ships attract the HMF.
Thus, the US federal government charges HMF to bring foreign goods into the country and its calculation is provided in the next section.
How Is Harbor Maintenance Fee Calculated?
All shipments arriving in the US are liable to pay a Harbor Maintenance Fee according to the Water Resources Development Act. The fee is applicable for all imports irrespective of customs and other duties already paid.
The harbor maintenance fee rate is calculated as a percentage (0.125%) of the gross cargo value.
HMF = 0.125% of Cargo value So, for a cargo value of $200,000, CBP charges HMF = .125% of $200,000 = $250. Unlike the Merchandise Processing Fee, HMFs do not have a minimum or maximum charge.
Also Read: What is MPF (Merchandise Processing Fees)? A Complete Guide
Type of Products for Which Harbor Maintenance Fee Is Charged?
The Water Resources Development Act states that all imports entering the US soil are liable for paying Harbor Maintenance Fee. This includes all cargo types with or without applicable duty fee unless WRDA specifies their exclusion.
Exemptions to Harbor Maintenance Fees
Payment of Harbor Maintenance Fees is mandatory for all imports unless stated otherwise. However, intra-port movements, for example, are exempt from HMF payments. Some other harbor maintenance fee exemptions are as follows:
- All vessel equipments, ship or sea stores, and bunker fuel are exempt from HMF.
- Unprocessed and freshly caught fishes or aquatic animals do not attract HMF payments.
- CBP excludes intra-port or contiguous movement of passenger (and their vehicles, if any) transport from HMF payments.
- Selective loading and unloading of cargo from Alaska, Hawaii, and other US territories are exempt from HMF.
- Commercial vessels subject to Inland Waterway Fuel Tax payment are exempt from HMF.
- Vessels belonging to the US army or other instrumentality are free from HMF payment.
- CBP certified vessels voyaging for humanitarian or development assistance are exempt from HMF payments.
Who Pays The Harbor Maintenance Fees and How Is It Paid?
The US Customs and Border Protection state that cargo importers are liable to pay the harbor maintenance fee. Importers sign a CBP Form 7501 to initiate the payment. Importers pay normal and customs clearance duties to release their cargo. Harbor maintenance fees are additional charges that importers pay for cargo. If importing into Foreign Trade Zones, they must pay HMF every quarter by signing CBP Form 349. The last days of March, June, September, and December mark the beginning of quarterly periods, and payments must be made within 31 days post quarter. The Harbor Maintenance Fund accepts HMF, which sponsors harbor maintenance projects and development in the US. Harbor maintenance fee payees must pay in cash or personal checks.
How Can HMF Taxes Be Avoided?
Unless the cargo arrives at a US port from Canada or US territories, all dutiable and duty-free imports attract HMF charges.
Also Read: US Customs Clearance Process - Fees, Processing Time & Payment
What Is The Difference Between Harbor Maintenance Fee And Merchandise Processing Fee?
The 1998 declaration of the US Supreme Court rules that levying harbor maintenance fees for domestic ships is unconstitutional. Nevertheless, foreign maritime movements involving a US port are liable for Harbor Maintenance Fee payment.
Frequently Asked Questions
1. What are the charges and surcharges levied when international cargo reaches its destination?
When cargo reaches a US port, importers pay customs clearance fees, customs duty, merchandise processing fees, harbor maintenance fees, demurrage and detention fees, etc.
2. Can importing a car from Japan into the US attract harbor maintenance fees when shipped by sea?
Firstly the vehicle must follow EPA and DOT standards. Secondly, importers must pay 2.5% of the transaction value, MPF, and HMF fees to US Customs when the ship enters harbor.
3. What are the different types of customs tax payable by the importers?
Apart from the harbor maintenance fees, and merchandise processing fees, importers must pay PierPass charges applicable for the ports of Long Beach and LA.
