Harbor Maintenance Fee (HMF)
Harbor Maintenance Fee (HMF) A U.S. federal tax imposed on commercial cargo imported through or transported through certain U.S. ports, collected to fund the maintenance and operation of U.S. harbors and waterways.
Latest Update (March 2025)
Congress is considering legislation that would expand the use of Harbor Maintenance Trust Fund revenues to include additional port infrastructure improvements beyond dredging, potentially including cybersecurity and environmental initiatives.
Read the proposed legislationWhat It Means
HMF in Simple Terms
The Harbor Maintenance Fee is essentially a tax on waterborne imports that helps pay for dredging and maintaining America's ports and shipping channels. Think of it as a small contribution (0.125% of cargo value) that importers make to ensure U.S. ports remain functional and accessible for their shipments. Unlike regular duties that vary by product type, this fee is a flat percentage on virtually all waterborne imports regardless of what the products are.
The HMF applies to cargo imported through water ports at a rate of 0.125% of the cargo's value. This fee is collected by U.S. Customs and Border Protection (CBP) and deposited into the Harbor Maintenance Trust Fund, which finances the U.S. Army Corps of Engineers' maintenance of channels and harbors.
While the fee appears small at just 0.125%, it adds up to approximately $1.8 billion annually in collections. For importers, it's an important but often overlooked cost component that applies even to duty-free goods entering via seaports.
Historical Timeline
HMF Established
Created through the Water Resources Development Act, applied to imports, exports, and domestic shipments
Export Exemption
U.S. Supreme Court ruled HMF on exports was unconstitutional in United States v. U.S. Shoe Corp.
Trust Fund Surplus
Significant surplus accumulated as collections exceeded expenditures for harbor maintenance
WRRDA Reforms
Water Resources Reform and Development Act established targets for increased harbor maintenance spending
ACE Integration
HMF fully integrated into the Automated Commercial Environment for electronic processing
WRDA Full Spending
Water Resources Development Act of 2020 mandated full spending of annual HMF revenue
Trust Fund Balance
Harbor Maintenance Trust Fund balance reached $9.3 billion due to historical underspending
Real-World Example
Case Study: Harbor Maintenance Fee in Supply Chain Planning
Background
OceanWide Distributors, an importer of home furnishings with annual imports valued at $48 million, was analyzing their total landed cost structure for shipments from their suppliers in Asia. While focused primarily on duties and freight costs, their recent supply chain audit revealed they were overlooking the cumulative impact of both the Merchandise Processing Fee (MPF) and Harbor Maintenance Fee (HMF) in their landed cost calculations and routing decisions.
Fee Impact Analysis
| Entry Route | Annual Value | HMF (0.125%) | MPF (0.3464%) | Combined Impact |
|---|---|---|---|---|
| Los Angeles Seaport | $30 million | $37,500 | $103,920 (capped at $538.40 per entry) |
$141,420 (0.47% of value) |
| Seattle Seaport | $12 million | $15,000 | $41,568 | $56,568 (0.47% of value) |
| Air Freight (Various) | $6 million | $0 (exempt) |
$20,784 | $20,784 (0.35% of value) |
| Total Annual Fees | $48 million | $52,500 | $166,272 | $218,772 |
Strategic Routing Considerations
OceanWide Distributors conducted an analysis of alternative routing options, particularly for their northwest region distribution:
Option A: Seattle Direct
- Entry through Port of Seattle
- Subject to both HMF and MPF
- Shorter transit time to regional DC
- Total fees: 0.47% of value
- Ocean freight: $3,200 per container
Option B: Vancouver + Rail
- Entry through Vancouver, Canada
- No HMF applicable (not a U.S. port)
- MPF still applies when crossing land border
- Total fees: 0.35% of value
- Combined ocean+rail: $3,800 per container
Decision Framework
For a shipment valued at $200,000, OceanWide calculated the following cost comparison:
| Cost Component | Seattle Direct | Vancouver + Rail | Difference |
|---|---|---|---|
| Transportation | $3,200 | $3,800 | +$600 |
| HMF (0.125%) | $250 | $0 | -$250 |
| MPF (0.3464%) | $538.40 (capped) |
$538.40 (capped) |
$0 |
| Transit Time | 18 days | 23 days | +5 days |
| Total Cost Difference | +$350 |
Implementation and Results
Strategic Decision
After analyzing the full landed cost model, OceanWide decided to:
- Maintain Seattle routing for time-sensitive goods
- Implement shipment consolidation strategies to maximize MPF cap benefits
- Include HMF in all landed cost calculations
- Develop a value threshold model for routing decisions
Low-Value Shipment Strategy
For lower-value shipments under $100,000, where the transportation cost difference exceeded the HMF savings, OceanWide maintained U.S. port routing. For high-value shipments over $500,000, where HMF costs were more significant, they evaluated alternative routings including Canadian ports when transit time allowed, particularly for seasonal goods with longer lead times.
Key Takeaway: While the Harbor Maintenance Fee represents a relatively small percentage of import value, its impact must be considered alongside other fees and transportation costs in comprehensive supply chain planning. For OceanWide Distributors, the HMF analysis led to a more nuanced approach to port selection based on shipment value, time sensitivity, and total landed cost. Including the HMF in their standard landed cost calculations improved forecasting accuracy and enabled more strategic routing decisions, particularly for high-value, non-time-sensitive merchandise where fee avoidance could outweigh additional transportation costs.
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