The U.S. Jones Act, formally known as the Merchant Marine Act of 1920, is a piece of legislation that has significant implications for various maritime industries, including the cruise industry.
The Jones Act primarily governs the transportation of goods between U.S. ports but also affects passenger vessels in specific ways. To understand the impact of the Jones Act on the cruise industry, it is essential to examine its requirements, exceptions, and how it influences the operational decisions of cruise lines.
What is the Jones Act?
The Jones Act mandates that goods transported between U.S. ports must be carried on ships that are:
- Built in the United States
- Owned by U.S. citizens
- Registered under the U.S. flag
- Manned primarily by U.S. crews (over 90% crew being US Citizens)
While the Act was initially intended to protect and develop the U.S. maritime industry, its implications extend to various sectors, including cruise lines.
The Impact on the Cruise Industry
While this law primarily applies to cargo ships, its reach extends to passenger vessels, including cruise ships. However, the Passenger Vessel Services Act (PVSA) of 1886, often confused with the Jones Act, is more directly relevant to the cruise industry. Though distinct from the Jones Act, the PVSA shares similar cabotage principles.
Key Provisions Affecting Cruise Lines
- Foreign-Flagged Vessels: Most large cruise lines—such as Royal Caribbean, MSC Cruises, and Carnival—register their ships under foreign flags (mainly the Bahamas or Panama) to benefit from more lenient labor and tax laws. Since these vessels are not U.S.-flagged, they are subject to the Jones Act and PVSA restrictions when it comes to transporting passengers between U.S. ports.
- Cruises Between U.S. Ports: Under the PVSA, foreign-flagged cruise ships are not allowed to transport passengers directly between two U.S. ports without stopping at a distant foreign port. For example, a cruise from Seattle to Honolulu would require a stop at a foreign port, such as in Canada or Mexico, to comply with the law. This rule places significant constraints on the design of cruise itineraries that involve multiple U.S. destinations.
For a more detailed analysis of the PVSA, check out our deep dive into that law.
We can think of it this way. The PVSA states that foreign-flagged ships cannot transport passengers directly between U.S. ports without stopping at a foreign port in between. If you did want to transport passengers on these protected routes, you need to meet the same requirements of the Jones Act. The Jones Act then describes in detail what key items such as what it means to be US Built, what it means to have a ship registered in the US, etc.
Where We’re At Today
There are just a few remaining Jones Act compliant ships that are allowed to trade on PVSA compatible routes.
NCL America from, Norwegian Cruise Line, operates the m/s Pride of America. This ship is currently the largest US flagged commercial vessel at at 80,439gt. Aircraft carriers are of course the largest US Flagged ships. The largest operator of US flagged cruise ships is American Cruise Lines. That company has a fascinating history.
Recent Developments and Calls for Reform
In recent years, there have been discussions about reforming the Jones Act and the PVSA to better accommodate the modern maritime and cruise industries to better reflect on our global economy. Critics argue that these laws are outdated, increase costs, and limit economic growth and tourism opportunities. The COVID-19 pandemic brought these issues to the forefront when the temporary suspension of certain Jones Act provisions was considered to facilitate more flexible travel and shipping arrangements. We also see this during hurricanes and natural disasters when Homeland Security will provide temporary waivers so foreign flagged ships can quickly get finished petroleum products out of the gulf on much larger, readily available ships.
Proponents of the Jones Act, however, argue that it is crucial for national security, protecting American jobs, and supporting the U.S. maritime industry including US shipbuilding which has been in a precarious position over the past 40 years. They believe that loosening these laws could undermine these goals and lead to increased foreign competition that could harm U.S. interests as well as the total closure of major US shipyards.
Conclusion
The Jones Act and the PVSA significantly impact the cruise industry by imposing route restrictions, increasing operational costs, and limiting competition. While the laws aim to protect U.S. maritime interests, they also create challenges for cruise lines and limit itinerary options for passengers. As the cruise industry evolves and adapts to new economic realities, there may be increased pressure to reform or modernize these laws to better align with the current state of global maritime operations. Until then, cruise lines must continue to navigate the complexities of these regulations while striving to provide diverse and appealing itineraries for their passengers.