If you've ever seen the back of a cruise ship and wondered why it was named after a seemingly random city, you're not alone. The city represents the country in which the ship is registered. But since American cruise ships carry the most passengers in the global cruise market, why are cruise ships not registered in the United States?
Here, I'll explain why you're unlikely to see the names of American cities on a cruise ship.
Where to register for a cruise ship?
The most common names you'll see on ships are cities in the Bahamas, Bermuda, Panama, the Netherlands, and the United Kingdom. (For decades, Liberia also flew the Liberian flag on the ships of several popular cruise lines, but that has since changed.) Registering the ship in a foreign country—these companies charge cruise lines for the privilege of registering abroad— — Known as a “flag of convenience.” “
Why do cruise ships need to be registered in countries like the Bahamas and Panama?
Because these ships are not built in the United States
U.S. law does not allow ships to fly the U.S. flag unless they are built in the United States. Unfortunately, no shipyard in the United States has the capability or expertise to build ships as large as today's behemoths, so they Overseas construction – Mainly in Europe.
Because cruise lines want to pay less tax
Cruise lines pay taxes to their home country, the country where their ships are registered. Shipping companies typically pay less tax when their ships are flagged by: Panama and Bahamaswhich saves them money.
But that’s not to say cruise lines don’t pay taxes, including in the United States. Even though the U.S. has reciprocity agreements with most countries where cruise ships are registered — meaning if the U.S. doesn’t tax ships from those countries, they won’t tax U.S. ships — cruise lines still pay taxes in the U.S. The U.S. federal tax rate decreases every year.
For example, in 2023, Carnival Corporation The company, which operates Carnival Cruise Lines, Princess Cruises, Holland America Line, Cunard, Seabourn and other brands, said it paid $13 million in taxes despite a loss of $62 million. annual report. It also pays for port calls, and in some ports, such as those in Alaska, a per-passenger head tax is collected every time a ship visits.
According to data, U.S. cruise industry spending in 2019 (before COVID-19 shutdowns) provided U.S. federal, state and local governments with approximately $2.6 billion in direct taxes and more than $7.2 billion in total taxes (including direct, indirect and inducement taxes ). Cruise Lines International Association. On average, the cruise industry supports approximately $102,000 in direct U.S. federal, state and local tax revenue for every $1 million spent in the United States.
Because cruise lines want to reduce labor costs
Wages for the lowest-paid workers on cruise ships are low by U.S. standards, but many crew members make more on board than working on land in their home countries. In addition to wages, crew members also receive Tips for passengers and opportunities for advancement into higher paying positions.
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Ships registered in the United States must employ American crew members and pay them the minimum wages required by U.S. law. Of course, this increases costs for the cruise line and therefore the passengers, so it is more economical for the cruise lines to hang their ships abroad.
By registering a ship outside the U.S., cruise lines can also require employees to work more than 40 hours per week without paying overtime — a necessity due to the near-24/7 nature of cruise ships and the limited number of crew berths.
Which cruise ship is registered in the United States?
The only mainstream mega-ship registered in the United States is norwegian cruise linePride of America, requires special government exception to register. Because it flies the American flag, it can only sail within the island Cruise around Hawaii No need to call at foreign ports – foreign-flagged ships are required to do so under the rule Passenger Ship Services Act.
In addition, some of the smaller cruise ships registered in the United States include those owned by UnCruise Adventures and American Cruise Lines. These companies operate U.S.-flagged small adventure vessels, river boats and Great Lakes vessels. Due to their smaller size, they can be built and registered in the United States
bottom line
Cruise lines almost always register their ships in countries other than the United States to gain benefits such as lower taxes and fewer labor regulations. By reducing operating costs, cruise lines can pass these savings on to passengers and keep cruise fares affordable.
Learn more about cruising with the following TPG resources:
