Fuji is a mountain in Japan. I can't find any island by that name.

Fiji is an island nation in the south Pacific. In some old books it was called Feejee or Feegee.

The Ballad Index says the shanty was actually called ISLE OF FUGI, but the notes say Fiji or Fuji may have been meant.

The song was collected in Nova Scotia. It's easy to imagine sailors from NS might get confused about locations in the Pacific.