Why Foreign-Flagged Cruise Ships Cannot Sail Directly Between US Ports
Two century-old maritime laws dictate the exact routes cruise lines and cargo vessels must take when navigating American waters. Understanding the distinction between the Jones Act and the Passenger Vessel Services Act explains why Alaskan cruises detour to Canada and Hawaiian itineraries require a stop in Mexico.
By Baran Demir
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In short
- The Passenger Vessel Services Act of 1886 forces foreign-flagged cruise ships to visit a foreign port when sailing between U.S. cities.
- The Jones Act of 1920 applies similar U.S.-origin requirements exclusively to the transport of cargo and merchandise.
- Closed-loop cruises (e.g., round-trip from Miami) only require a stop at a nearby foreign port, such as in the Bahamas or Mexico.
When the temporary maritime exemptions granted during the pandemic expired in early 2022, foreign-flagged cruise ships operating in American waters immediately returned to a strict regulatory framework that dictates every nautical mile of their itineraries. For a traveler boarding a luxury liner in Seattle bound for the Alaskan glaciers, this means the ship cannot simply sail north and return. It must dock in Victoria, British Columbia, to satisfy a legal requirement that predates the Titanic.[3]
The mechanism driving these mandatory detours is the Passenger Vessel Services Act (PVSA) of 1886. According to U.S. Customs and Border Protection, the law mandates that "no foreign vessel shall transport passengers between ports or places in the United States, either directly or by way of a foreign port." To legally transport travelers between two American cities, a ship must be built in the United States, owned by American citizens, flagged under the U.S. registry, and operated by an American crew.[1][3]
Because modern mega-cruise ships are almost exclusively built in European shipyards and flagged in nations like the Bahamas or Panama, they cannot legally operate as domestic ferries. Instead, cruise lines utilize specific itinerary loopholes. A "closed-loop" voyage—one that departs and returns to the exact same American port, such as a round-trip from Miami—is permitted as long as it visits at least one "nearby foreign port," such as Nassau or Ensenada.[3]
The rules become significantly tighter for travelers booking an "open-loop" cruise, which begins in one U.S. city and ends in another, such as sailing from Los Angeles to Honolulu. Under CBP enforcement, these one-way domestic journeys require the foreign-flagged vessel to call at a "distant foreign port" before disembarking passengers in the final American destination. Ports in North America, Central America, and the Caribbean do not qualify as distant; the ship must travel as far as South America to satisfy the requirement.[3]
While travelers frequently blame these routing quirks on the Jones Act, that legislation actually governs cargo, not people. Enacted as the Merchant Marine Act of 1920, the Jones Act applies the same four U.S.-origin requirements to the transport of merchandise. As the Congressional Research Service notes, the statute ensures that "coastwise trade is restricted to vessels that are built in the United States, owned by U.S. citizens, and documented under the laws of the United States."[1]
For residents of non-contiguous U.S. territories, the Jones Act fundamentally shapes the cost of daily life. A 1988 Government Accountability Office report analyzing the law's impact on Alaska found that the restrictions heavily influence transportation logistics and pricing for the state's residents, while simultaneously serving the federal goal of maintaining a U.S. military sealift capability. Because foreign cargo ships cannot drop off goods in Los Angeles and then carry a second load to Anchorage, domestic shipping lanes remain insulated from international competition.[7]
The logistics sector must navigate these rules meticulously. Promptus LLC, a global logistics firm, highlights that the Jones Act covers all domestic shipping, including the specialized transport of liquefied natural gas (LNG) between American ports. Because there is a severe shortage of Jones Act-compliant LNG tankers, moving energy resources from the Gulf Coast to New England or Puerto Rico often requires complex logistical workarounds or reliance on foreign imports.[5]
The economic utility of these century-old laws remains fiercely debated. In a February 1, 2024, analysis, the Independent Institute argued that "America's maritime policy is fighting the wrong war." The institute contends that shielding the domestic maritime industry from foreign competition has not revitalized American shipbuilding, but rather artificially inflated supply chain costs and reduced the total number of U.S.-flagged vessels available for national defense.[4]
Regulatory oversight of these domestic shipping lanes involves multiple federal agencies. While CBP enforces the border and customs elements, the Surface Transportation Board oversees specific economic and competitive aspects of domestic oceangoing shipping. A 2022 GAO review of the Board's regulatory processes found that stakeholders require transparent, consistent guidelines to navigate the complex tariff and rate requirements imposed on the non-contiguous domestic trade routes.[2]
Enforcement remains rigid, extending even to specialized maritime operations. In Customs Ruling HQ H213099, CBP evaluated whether a foreign-flagged vessel conducting research in U.S. territorial waters violated the coastwise laws under 46 U.S.C. § 55102. The agency strictly scrutinizes whether any "merchandise" or equipment is transported between U.S. points, demonstrating that the federal government actively polices the boundaries of the 1920 statute across all maritime sectors.[6]
For the traveler planning a Hawaiian island-hopping vacation or an Alaskan glacier expedition, these legislative frameworks mean that itinerary design is driven as much by compliance as by scenery. Until Congress amends the 1886 and 1920 statutes—a move strongly opposed by domestic maritime unions and national security advocates—foreign-flagged cruise ships will continue making their mandatory midnight stops in Ensenada, and domestic cargo will continue sailing on a limited fleet of American-built vessels.[1][4]
How we did this
- Method
- A cross-regulatory comparison mapping the cargo restrictions of the Merchant Marine Act of 1920 against the passenger restrictions of the Passenger Vessel Services Act of 1886 to isolate the specific compliance costs and routing inefficiencies imposed on modern domestic itineraries.
- What we found
- While often conflated by travelers as a single maritime law, the routing inefficiencies that force cruise ships to detour to Ensenada or Victoria stem entirely from the 1886 PVSA, whereas the supply chain bottlenecks affecting domestic island territories are governed by the 1920 Jones Act, creating two distinct regulatory compliance burdens that compound operational costs for mixed-use vessels.
- What we worked from
- Coastwise merchandise transport restrictions: 46 U.S.C. § 55102 — Congressional Research Service
- Passenger transport routing requirements and distant foreign port criteria: 46 U.S.C. § 55103 — U.S. Customs and Border Protection
- Limits of this analysis
- The analysis relies on statutory text and agency rulings, which do not capture the proprietary fuel and docking costs cruise lines absorb to maintain compliance.
Definitions
- Passenger Vessel Services Act (PVSA)
- An 1886 U.S. law that prohibits foreign-flagged vessels from transporting passengers directly between two U.S. ports.
- Jones Act
- Section 27 of the Merchant Marine Act of 1920, which restricts the domestic transport of cargo to ships that are U.S.-built, owned, flagged, and crewed.
- Closed-Loop Cruise
- A cruise itinerary that begins and ends at the exact same U.S. port, requiring only a stop at a 'nearby foreign port' to satisfy legal requirements.
- Distant Foreign Port
- A port outside of North America, Central America, Bermuda, or the West Indies, which foreign-flagged ships must visit if they transport passengers on a one-way trip between two different U.S. ports.
Questions & answers
Can I take a cruise from Los Angeles to Hawaii without stopping in another country?
No, unless the ship is U.S.-built, U.S.-owned, and U.S.-crewed. Because almost all large cruise ships are foreign-flagged, an open-loop cruise from California to Hawaii must stop at a 'distant foreign port,' such as one in South America, to comply with the PVSA.
Why do Alaska cruises always stop in Canada?
Most Alaska cruises depart from Seattle and return to Seattle (a closed-loop cruise). To satisfy the Passenger Vessel Services Act, the foreign-flagged ship must visit at least one 'nearby foreign port' during the voyage, which is typically Victoria or Vancouver, British Columbia.
Does the Jones Act apply to cruise ships?
No, the Jones Act (Merchant Marine Act of 1920) strictly applies to the transport of merchandise and cargo. The transport of passengers is governed by the older Passenger Vessel Services Act (PVSA) of 1886, though both laws share similar U.S.-origin requirements.
Analysis by camp
Domestic Maritime Industry
Views the restrictions as essential for national security and the preservation of American shipbuilding.
Proponents of the Jones Act and PVSA argue that without these protections, the United States would lose its domestic shipbuilding capacity entirely to heavily subsidized foreign yards. They point to the necessity of maintaining a fleet of U.S.-flagged vessels and trained American mariners who can be mobilized during times of war or national emergency to provide critical sealift capabilities.
Free Trade Advocates
Argues that the century-old laws artificially inflate costs and harm residents of non-contiguous states.
Critics, including economic think tanks like the Independent Institute, argue that the laws function as a hidden tax on consumers, particularly in Hawaii, Alaska, and Puerto Rico. They contend that shielding the industry from international competition has actually resulted in a smaller, older, and more expensive domestic fleet, failing to deliver the promised national security benefits while driving up the cost of energy and consumer goods.
Cruise Lines & Tourism Boards
Navigates the regulations as a fixed operational reality that dictates itinerary planning and port partnerships.
For the global cruise industry, the PVSA is a logistical hurdle that requires careful itinerary engineering. Because building a modern mega-ship in a U.S. yard is financially unviable, cruise lines design their routes specifically to include mandatory foreign stops. This regulatory quirk has inadvertently created massive economic boons for "nearby foreign ports" like Victoria, British Columbia, and Ensenada, Mexico, which receive millions of American tourists annually simply because the law requires ships to dock there.
- Regulatory & Enforcement Bodies
- Focuses on strict adherence to statutory text and maintaining the legal boundaries of coastwise trade.
- Free Market Critics
- Argues that protectionist maritime laws inflate consumer costs and fail to achieve their national security goals.
- Logistics & Analysis
- Examines the practical workarounds and supply chain realities required to operate within the legal framework.
Perspectives this story doesn't cover
- Foreign Shipbuilders
- Territorial Residents (Puerto Rico/Hawaii)
Sources
[1]Congressional Research ServiceRegulatory & Enforcement BodiesShipping Under the Jones Act: Legislative and Regulatory Background
Read on Congressional Research Service →
[2]U.S. Government Accountability OfficeRegulatory & Enforcement BodiesDomestic Oceangoing Shipping: Information on the Surface Transportation Board's Regulatory Processes
Read on U.S. Government Accountability Office →
[3]U.S. Customs and Border ProtectionRegulatory & Enforcement BodiesThe Jones Act & The Passenger Vessel Services Act
Read on U.S. Customs and Border Protection →
[4]Independent InstituteFree Market CriticsAmerica's Maritime Policy Is Fighting the Wrong War
Read on Independent Institute →
[5]Promptus LLCLogistics & AnalysisUnderstanding the Jones Act: What It Means for U.S. Shipping and Its Territories
Read on Promptus LLC →
[6]U.S. Customs and Border ProtectionRegulatory & Enforcement BodiesCustoms Ruling HQ H213099 - Coastwise Transportation; Research; 46 U.S.C. § 55102
Read on U.S. Customs and Border Protection →
[7]U.S. Government Accountability OfficeRegulatory & Enforcement BodiesRCED-88-107 - The Jones Act: Impact on Alaska Transportation and U.S. Military Sealift Capability
Read on U.S. Government Accountability Office →
[8]Factlen Editorial TeamLogistics & AnalysisSynthesis by Factlen editorial team
Read on Factlen Editorial Team →
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