Understanding Merchandise Processing Fee

Understanding Merchandise Processing Fee

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It can be hard to keep track of all the charges associated with a shipment. Everything from the big line items to the small minute details – they’re too many to count, and sometimes if can be difficult to understand exactly what it is you’re paying for.

If you have ever been in charge of international shipments for your company and have reviewed your invoices, you’ve most likely encountered a “Merchandise Processing Fee” at some point. Although there are cases in which this number may be high, it is usually a small charge (which can be all the more frustrating for shippers – what is it and why is it there?)

What is the Merchandise Processing Fee?

A merchandise processing fee is a fee imposed by U.S. Customs during an international import to the U.S. The rate may fluctuate over time, but is usually set at a low fixed percentage of the cargo value as determined by the commercial invoice.

Usually, merchandise processing fees appear on your freight invoice as a “Customs charge”, so in many cases you may not actually see the MPF as a separate line item.

How Expensive is the Merchandise Processing Fee?

As stated before, the merchandise processing fee is a rather insignificant charge. Customs determines the charge based on a fixed percentage of the value of the cargo. At the time of this blog post’s writing, the MPF is set at 0.3464% of the cargo’s value. Of course, this can be an incredibly low or incredibly high dollar amount depending on the value of the cargo, so Customs has determined a few limitations.

At lowest, the merchandise processing fee will costs $26.79, and at highest, it will cost $519.76. This applies to all cargo over $2,500 in commercial value. However, for cargo under $2,500 in commercial value, the merchandise processing fee is charged at a fixed $2.14 rate.

How Does the MPF Impact Your Freight Bill?

Hopefully not much! Unless you are shipping extremely expensive cargo, the MPF is a rather insignificant dollar amount, since it only amounts to a third of one percent of the value of your cargo. Even in cases where the dollar amount of the MPF extends to the hundreds, this is generally insignificant when contrasted against other associated charges for high-value cargo.

If you are confused about the charges on your freight invoice, or would like to learn more about these “hidden costs” imposed by U.S. Customs, please don’t hesitate to reach out to one of our team members! We deal with this stuff every day and would be happy to answer any and all of your questions on the matter.

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