Lyric discussion by cadences 

I think his journey on the sea represents his emotional journey of leaving a girl whom he has been with for a long time. The song seems to suggest that the physical and emotional journeys are happening together. He makes note of many landmarks, which describe a long nautical distance. I think in doing so he is emphasizing what a long emotional journey this is. In the hussle and bussle of life (represented by a "noisy bar in Avalon" he clings to her, but when he has time to reflect ("on a midnight watch") he knows it's time to move on. This certainty is elucidated by his description of the sea voyage: "sailing a reach before a following sea," which means he is going with the current, "nicely making way," and later references to "larger voices calling" him onward.

I think the reference to the Southern Cross is a crucial symbol in the song. Sailors navigate by this constellation, and in the song it brings him emotional navigation too. Throughout the ages, people have felt a sense of awe looking at the stars, which make them feel like such a tiny piece of the universe ("the truth you might be running from is so small"), and for him it reiterates how small a piece of his life that relationship was, and it makes him feel like "larger voices [are] calling" him to another saga in his life: to "the promise of the coming day". Then he starts to view her as an anchor, holding him back from his resolution of following a larger calling.

Despite this resolve, he makes it a point to remember her fondly ("what heaven brought you and me cannot be forgotten," describing his ties to her as "a silver chain"), admitting that her loss leaves him feeling bereft nonetheless ("my dreams are a dying" and "she [the ship] is all that I have left").

It's a profound and eloquent song about moving on from a failed relationship.

@cadences Upvoted! But with one point of contention. I think he doesn't view her as the anchor, but rather his love is an anchor tied to her, weighing her and him both down. In other words his loving intentions were thought to be pure but in reality are selfish and self-destructive, and he's got the clarity to now realize that. If you really love someone you don't capture or drag them down you need to set them free.

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