The main reason that Hafnarfjörður was a popular trading centre throughout the centuries was the fact that it was the best natural harbour, not only in southwest Iceland but over a much larger area. The channel was clean, the bottom good, and the water deep. In the beginning of the 20th-century, the town grew rapidly and the fishing industry followed suit. It soon became a matter of crucial importance to improve the harbour facilities and build a pier for ocean-going vessels. On 8 December 1908, a harbour regulation was approved for the town of Hafnarfjörður. The regulation included provisions for harbour fees and anchorage fees to be paid into a harbour fund. This laid the financial groundwork for the necessary harbour construction.
The construction of the pier, which began in May 1912, was based on the technical drawings made by national engineer Th. Krabbe. The actual construction was handled by Björn Jónsson from Bíldudalur. The first ship that docked at the new pier was the steamship Sterling, which landed on 28 December 1912. The pier was not formally inaugurated, however, until the following year, when it was consecrated at a large and festive ceremony held on 16 February 1913. The first pier master to be hired was Steingrímur Torfason. The pier was constructed entirely of timber, but the load-bearing posts were clad with metal up to a point above sea level in order to protect them from decomposition. The anchorage space for trawlers and larger transport vessels totalled approximately 120 meters, and the water depth at spring ebb tide ranged from 4.5-5.5 meters. Three storage facilities were built on the cargo platform above the pier. A railway system, upon which ran wagons for cargo transport and debarkation, was laid along the pier and the cargo platform.
In 1919, the Hafnarfjörður Town Council decided to sell the pier to Ólafur V. Davíðsson, as pier operations had been losing money and the harbour fund was in debt to the town. Two years later, the pier was sold again, this time to a company called Skipabryggja Ltd, which enlarged the pier considerably in 1925. It quickly became clear that the pier was too small for Hafnarfjörður’s constantly growing fishery operations. A decision was made to build a new 190-metre pier, and a large section of the harbour was deepened soon thereafter. These improvements were completed in February 1931. The next large-scale construction, which was completed in 1960, involved the building of a wharf in front of the Hafnarfjörður City Fishery’s fish processing plant. The wharf was enlarged in 1969, at which time the old pier was torn down. Since that time, the Hafnarfjörður harbour has been continually changing and growing, with its operations centre in the area just south of the harbour.