Without those rules, what is to stop foreign vessels from replacing domestic passenger ships? The Staten Island ferry might just adopt a foreign flag and staff the ships according to foreign (ie cheap) labor laws.
Look at the average age of the people writing laws. I'd say that 90% or more of current law was created by people now "long dead".
There's a handful of cruise ships that are US flagged specifically for the Hawaii route. That's it.
If you're concerned about car ferries, you can make specific laws about them. Or better yet, New York state could, since that's in their jurisdiction.
This is the original purpose of the law, but it has failed completely and utterly. At some point you have to stand back and survey what the actual results of legislation are, as opposed to the intended results, and if those two aren't in any way congruent, scrap things and start over.
Airlines have similar rules, yet I never see people grousing that you can't take an Air Malay flight from Chicago to LA.
Without the requirement for US ships to go from one US port to another, the shipbuilding industry would still be dead, and you'd have a dead shipping industry with it. You would have foreign-flagged crews moving cargo with foreign-built ships, against which you'd have zero recourse, in the event of disaster.
https://www.youtube.com/watch?v=OyU6NtwspLM
The Egyptians have told him he cannot leave the ship. He has been stuck as its "master" for over a year. These things happen in the world of international shipping. Human rights tend to disappear.