If you’ve ever seen the back of a cruise ship and wondered why it’s named after a seemingly random city, you’re not alone. This city represents the country in which the vessel is registered. But when cruise lines from the United States account for the largest number of passengers in the global cruise market, why aren’t cruise ships registered in the United States?

Here, I’ll explain why you’re unlikely to see American city names listed on cruise ships.

Why are cruise ships registered in the Bahamas, Panama and other countries?

Because the ships were not built in the United States

U.S. law does not allow ships to fly the U.S. flag unless they were built there. Unfortunately, no American shipyard has the capacity or expertise to build ships as large as today’s behemoths. built abroad – mainly in Europe.

Because cruise lines want to pay less taxes

Cruise lines pay taxes to their home country, that is, the countries where their ships are registered. Airlines often pay less taxes when their ships are flagged in countries like Panama and the Bahamaswhich allows them to save money.

This does not mean, however, that cruise lines do not pay taxes, including in the United States. Although the United States has a reciprocal agreement with most countries in which cruise ships are registered – meaning that if the United States does not tax ships from those countries at the federal level, it will not tax neither do those in the United States – cruise lines still pay taxes in the United States. in the United States each year, but at a reduced federal rate.

For example, in 2023, Carnival Corporation & PLC — which operates Carnival Cruise Line, Princess Cruises, Holland America Line, Cunard, Seabourn and other brands — paid $13 million in taxes on a $62 million loss, according to its annual report. It also pays port berthing fees and, in some ports, such as those in Alaska, a per-passenger entry tax collected each time the ship visits.

U.S. cruise industry spending in 2019 – before the COVID-19 shutdown – supported approximately $2.6 billion in direct taxes and more than $7.2 billion in total taxes (including direct, indirect and induced) for U.S. federal, state and local governments, according to the Cruise Lines International Association. On average, every $1 million spent by the U.S. cruise industry generates approximately $102,000 in direct tax revenue at the federal, state, and local levels.

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 can earn more money on ships than they would working on land in their country of origin. In addition to their salary, crews receive passenger tips and opportunities for advancement to a higher paying position.

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Ships registered in the United States must employ American crew and pay them in accordance with American laws that require a minimum wage. Of course, this increases costs for airlines – and, in turn, passengers – so it’s more economical for cruise lines to flag their ships overseas.

By registering their ships outside the United States, cruise lines can also require their employees to work more than 40 hours per week without overtime pay – which is necessary due to the operational nature of cruise ships. cruising almost 24/7 and the limited number of crew stations.

The only mainstream megaship registered in the United States is Norwegian cruise line‘s Pride of America, which required a special government exception for its registration. Because it flies the American flag, it can sail exclusively within the island. cruises around Hawaii without calling at a foreign port – which is required for foreign-flagged ships under the Passenger Vessel Services Act.

Additionally, some small cruise ships registered in the United States include those in the fleets owned by UnCruise Adventures and American Cruise Lines. These companies operate smaller expedition-style vessels, riverboats, and U.S.-flagged Great Lakes vessels. Due to their smaller sizes, they could be built and therefore registered in the United States.