The Harbor Maintenance Tax (HMT) discourages new customers for the marine highway. It may not be the only number in the logistics calculus but it tops most to-fix lists. Why?
- The truck that could easily roll onto Gregg Ward’s Detroit-Windsor Truck Ferry instead takes a long detour in the Canada-to-U.S. move.
- A shipper or trucker contemplates having an additional cost factor and the hassle of filing an unfamiliar quarterly tax payment with Customs, then chooses the more familiar, if congested, land route.
Vessel operators, maritime labor, ports, and others agree that the HMT is most in need of a policy fix. But the diversity of perspective sometimes means the prescriptions for a fix will vary…as will the way of explaining the issue.
If you ask someone to explain the HMT issue the response may be: “It’s a double tax on cargo.” I have heard that lone, simple statement made many times including by an industry witness at a committee hearing. It is how others are coming to know the issue. A key Member of Congress recently explained the issue that same way. Double taxation, period.
The double hit of the ad valorem tax is a valid reason. Imported cargo pays on entering a U.S. port, and then, when transshipped by coastal service to another American port, pays again. But that explanation leaves out an equally important reason for Congress to approve legislation such as the Cummings bill in the House (H.R. 638) or the Lautenberg bill in the Senate (S. 551).
The single hit of the HMT on domestic cargo–much of which moves in trailers–is the other principal reason. Domestic freight represents the greater percentage of goods moving on the roads today…far more than international boxes. When the Port Authority of New York & New Jersey studied trucking in that congested metro region less than 5 percent of the trucks on the road were carrying containers to or from the port. This is hardly surprising.
So whether the cargo is riding in a 53′ trailer, or is a vehicle itself, that is the freight we need to attract to the marine highway. Unlike the imports the domestic freight would pay only once. That also is too much.
If the marine highway is to fulfill our expectation to enhance the surface transportation system and mitigate the interstate burden the J.B. Hunts, the FedExs and other companies should participate in blue and brown water services.
Exempting both international and domestic non-bulk cargo moving in the American domestic trade, and among Great Lakes ports, is the objective. It is a low-cost way to remove a disincentive for the use of efficient marine transportation and signal a policy change to the logistics industry where the business decisions are made.
That says it all. Pbea