Unintended Consequences

Thanks to Canada and the Jones Act, it now appears almost certain that Alaska’s cruise season will be canceled for a second straight summer.

On Thursday, Feb. 4, Canada announced a continuation of prohibitions on cruise vessels operating in Canadian waters until February 2022.

Under America’s Jones Act, (Merchant Marine Act of 1920) foreign-flagged ships must stop at a foreign port between two American ports.  Since nearly all large cruise ships are foreign-flagged, there is no way for them to operate cruise schedules to Alaska, without starting in Canada or stopping in Canada, somewhere between the lower 48 and Alaska.

Investors should be alert to the potential of being blinded-sided by unintended consequences.  In this case, by the confluence of two separate and independent regulations.  Canada certainly has an interest in protecting its citizens and health care systems, and the Jones Act was enacted to maintain a U.S. controlled maritime cargo capability and protect seaman’s rights.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA