Book 2 economics, again! Beating the dead horse...

[daryen]

Sigg,

That is speculative cargo, not freight. Speculative cargo doesn't have a "per-jump" or "per-parsec" model. You buy at the source (wherever that is) and you sell at the destination (wherever that is).

I have seen nothing in the various descriptions of the OTU to even indicate the megacorps operate purely on speculative cargo. I have seen lots of evidence that they do operate on contract freight. A given captain may have permission to use "odd space" for personal speculation, but a megacorp freighter is hauling freight, not speculative cargo.

A megacorp is completely uninterested in speculative cargo. Gambling is for suckers; let the little guys take the risk. The megacorp's game is contracts that produce guaranteed profit, regardless of the means achieved.

This, IMHO, is what the megacorps do on a large scale, and their surplus cargo space is what sets the price for freight shipping per jump.

And, no. Their "surplus cargo space" is nearly irrelevant. The list of cargos available for free traders is there precisely because the big ships don't have any more surplus cargo space. If they did have more surplus cargo space, the free traders wouldn't even see the cargo.

The freight available to free traders is there because the regular freighters don't have room and the shipper doesn't want to wait. If that doesn't say "price increase", I don't know what does.

 

[mike wightman]

In the Alien Realms module there is a scenario that involves the hijacking of a Tukera freighter.
There are 1000t of electronic parts in her hold.

That's MCr100 worth of goods - base price.

Is Tukers shipping them for someone else? Not likely.
More likely is that Tukera has bought them on an Industrial or Rich world, and is now tranporting them to a Non-Industrial world to make a massive profit.

 

[daryen]

Originally posted by robject:
Daryen et al,

I think your economic rationale for a per-parsec model is sound. I don't like it, and I may never use it, but it appears to make sense.

Fair enough.

Vilani corporations in competition?

You betcha! Just because they are button-down (or whatever they wear) and hidebound to the extreme doesn't mean they don't compete. How do you think they get their areas of operation? They had to have duked it out to set it up, and probably keep duking it out to expand their territory at the expense of the others.

Besides, none of that matters after the First Imperium, anyway. In the Third Imperium there are Solomani megacorps and lots of mixed-blood megacorps. The Vilani megacorps are going to be in there fighting just as hard and viciously as any of the "newcomers".

It's probable that megacorps make their money through long-term, nailed-down contracts, and the making of those deals is where all the assassinations take place. They couldn't care less what the prices are.

It probably depends on how busy the interstellar scene is.

Well, I wouldn't say they don't care what the prices are, because they do (otherwise why have the contracts). I just would say they don't really care what prices the little guys get. Unless it is too high too consistenly, then the big boys move in and crush the little guys. Just like in real life.

But, yes, I agree with that.

 

[mike wightman]

daryen,

I disagree. The megacorp exists to buy and sell. It buys raw materials, makes finished goods, and ships stuff wherever there is a profit to be made.

The megacorp doesn't take much of a gamble. They can afford the best brokers, the most skilled Captains (admin or bribery - take your pick ).

In my opinion speculative type trade is where the megacorps make most of their money, with freight being incidental.

If you are shipping freight, someone else is taking the risk and is going to reap the rewards.

 

[robject]

Yeah, I'm a sloppy poster, comes from having a sloppy mind.

Of course megacorps will care what their contracts are worth. And no, I don't think they care what prices the little guys get -- their paths don't seem to cross much anyways.

It's a gnat-swatting metaphor, perhaps.

 

[robject]

Originally posted by Sigg Oddra:
daryen,

I disagree. The megacorp exists to buy and sell. It buys raw materials, makes finished goods, and ships stuff wherever there is a profit to be made.

The megacorp doesn't take much of a gamble. They can afford the best brokers, the most skilled Captains (admin or bribery - take your pick ).

In my opinion speculative type trade is where the megacorps make most of their money, with freight being incidental.

If you are shipping freight, someone else is taking the risk and is going to reap the rewards.

Agree on the Brokerage, and the potential for a megacorp to be duped (I'd hate to be nearby when that happens). But I imagine their Brokers can be used more effectively when making the 100-year supply contract that fixes the income for maintaining a specific route.

But, for example, Ling Standard. Their commercial shipping is one-way: straight from their factories direct to their markets, no matter how far away. Their raw materials are gathered locally and shipped to factories, but all of that is probably owned by Ling Std already, from the belt to the mining colony to the freighter to the factory to the distribution network.

edit In fact, doesn't this sort of define what a megacorporation is and does? It's a heavy self-sufficient megaconglomerate thing.

Ling Standard Products:

Division: Beltmetallfabrik. Operates belter colonies in the Solomani Rim.

Division: Shishime (colloquially misnomered "Sunshine") Freighter LIC. Operates a fleet of freight haulers in the Rim.

Division: Kanushad LIC. Operates smelting and refining factories in the Rim.

Division: Ling Facilities. Produces finished goods.

Division: Ling Standard Market Strategies. Nurtures LSP markets around the Rim.

 

[mike wightman]

Tukera buys Zilan wine...

 

[robject]

In fact, it seems like megacorporations themselves are quite outside the per parsec/per jump argument.

 

[robject]

Much to my surprise, Marc responded. Once again, he looks at the local situation, at the seller and the player-level.

Bolding mine.

Subject to change and suggestions, but here's my rationale.


Cost is Cr 1000 per ton per jump.

Remember that we have similar pricing on passages. Per jump rather than per mileage.

I send a parcel from here to the UK. and it costs $12. Same price applies to Germany, even Poland, Israel. I think the same applies here.

I can understand a far more complex pricing structure, but if we did that we would implement "air line pricing" and have some tons ship at Cr700, but oops, that pricing isn't available any more, so you'll have to pay Cr1300. And this very last minute ton will have to ship for Cr2000.

Very unsatisfying for a customer; too much room for gouging by the starship operator. and lots of work for the GM.

Everyone understands Cr1000 per ton per jump. Beowulfs carry the J-1 Trade. Maravas carry the J-2 trade. Tukera carries the J-3 and J-4 trade. But Tukera generally doesn't call on the outlying worlds, so a customer needs to use a Beowulf to get to the main routes. Or maybe there is no economic profit to be made if the shipping costs are too much.

At this local C starport, there's a Marava and a Beowulf waiting for freight. If I were shipping, I would choose Marava if the goal is 2 parsecs away, and the Beowulf if it's 1 parsec away.

There are some strange economies possible. A Beowulf doesn't always cost TWICE as much. If the goal is 3 parsecs away, the Beowulf costs Cr3000, and the Marava costs Cr2000.

In a well developed economy, there would be shippers for each route operating efficiently.

We're assuming an inefficient economy where customers need to take whatever is available. More like stage coaches in the old west or sailing ships on the Spanish Main.

That said, I can see two types of freight (cargo, you may remember, is speculative) available. Standard (= Cr1,000 per ton per jump), and Standby (cheapest way, non time sensitive, =Cr500 per ton per parsec).

That requires some additions to the freight availability tables. Maybe a Beowulf would take it if there is nothing else to ship.

But where does this lead us? a J-3 ship makes more money carrying standby cargo (Cr1,500) than regular cargo (Cr1,000).

 

[mike wightman]

One way to get an understanding of how a megacorp makes its money is to consider each step in the manufacturing process as one division of the megacorp trading with the next one up.

Example - the mining division extracts the metals, gems, petrochemicals, and radioactives which are then "sold" to the next division (thus paying for machinery, personel costs etc.)
the next division produces special alloys, polymers which are then "sold" to the next division where they can be turned into air/rafts, electronic parts, computers etc.

 

[daryen]

Originally posted by Sigg Oddra:
daryen,

I disagree. The megacorp exists to buy and sell. It buys raw materials, makes finished goods, and ships stuff wherever there is a profit to be made.

I don't argue with that. But that is not speculative cargo, that is more of a "vertical business".

If you are shipping freight, someone else is taking the risk and is going to reap the rewards.

Yes and no.

Some percentage of megacorp cargo holds are filled with its own merchandise headed out to market. You may be right that this is a high percentage (90+), but this is pretty much outside my arguments, and isn't really speculative cargo. It is internal freight.

The portion of cargo used to ship someone else's freight (which may indeed be a small percentage) is the part I am arguing about.

And the percentage of space devoted to someone else's cargo is irrelevant. If it is a large portion, then megacorps want as reasonable a price as they can get, because they need it to cover the bills. If, as you say, it is a very small portion, the megacorps have little influence on the price, as they are not really a default option like has been mentioned before.

Either way, the freight that a free trader sees isn't going on megacorp ships regardless of what the free trader does. At that point they can demand whatever they want.

 

[robject]

Originally posted by Sigg Oddra:
One way to get an understanding of how a megacorp makes its money is to consider each step in the manufacturing process as one division of the megacorp trading with the next one up.

That's very likely, but definitely beyond my scope. Large companies here use that 'funny money' style of internal accounting, which is not taken as seriously as spending real money, by the way.

In a megacorp, the divisions are wider, such that two companies may not know that they're both owned by the same megacorp. So you've an interesting point.


Editorial Edit I greatly prefer this low-heat discussion setting to any sort of cold-war discussion that seem more common. Thank you, Mike and Mike, for making this enjoyable!

 

[daryen]

Of course I can always avoid the whole thing.

"Obviously, this cargo is important enough for you to get somewhere quickly, otherwise you would have waited for your turn with the big guy. Since time is important, this is not 'freight', it is a charter. And I do high-priority charters for 2000Cr per dton."

Once I enter "charter" or "high-priority" status, I don't even have to be nice and stick with 1000Cr per parsec.

 

[robject]

Originally posted by daryen:

"Obviously, this cargo is important enough for you to get somewhere quickly, otherwise you would have waited for your turn with the big guy. Since time is important, this is not 'freight', it is a charter. And I do high-priority charters for 2000Cr per dton."

The mark of a truly evil and seasoned referee. I like it.

 

[daryen]

Man! Now I know how you guys get such a high message count!

Originally posted by robject:
Much to my surprise, Marc responded. Once again, he looks at the local situation, at the seller and the player-level. </font><blockquote>quote:</font><hr />
Subject to change and suggestions, but here's my rationale. ...
That said, I can see two types of freight (cargo, you may remember, is speculative) available. Standard (= Cr1,000 per ton per jump), and Standby (cheapest way, non time sensitive, =Cr500 per ton per parsec).

</font>[/QUOTE]Since he is willing to take more input ...

Make Standby freight Cr750 instead of Cr500, and I will live with it. Standby needs to give a J2 a reason to exist, and Cr500 doesn't provide it. Cr750 will still likely cause whining, but I can live with it.

Note that I do disagree with the premise. I would see the freight broken down differently:
- Standard at Cr1000/dton per jump.
- High Priority at Cr500/dton per parsec + Cr500.

This gives an incentive for freight haulers to move cargo in more than J1 increments and more accurately follows a "time = money" paradigm.

Do note that real parcel services (not common POs like the USPS, but actual services like FedEx) do charge different races based on speed. And they do address distance, at least indirectly (you can't ship third day ground from Dallas to Hawaii). So a premium for high-priority cargo is quite justified.

 

[BillDowns]

And FedEx, USPS, and UPS do not ship multi-ton packages of anything. Only small parcels - a totally different ball of wax.

If I am shipping a 20-ton tractor somewhere, those 3 outfits won't take it. It would a railroad, or OTR or some other form of freighting company to take that shipment.

And, for that matter, I would not want to ship ONE 20-ton tractor anywhere without getting paid for it. Ten 20-ton tractors would be cheaper per unit.

 

[Black Globe Generator]

Originally posted by Sigg Oddra:
More likely is that Tukera has bought them on an Industrial or Rich world, and is now tranporting them to a Non-Industrial world to make a massive profit.

That's how I've always pictured it as well - the big shippers speculate, too. In fact, it's easier for them because they have factors stationed on a planet to buy up choice cargos, which is another reason the independent merchants have to scramble for the leftovers (i.e., "one cargo available per week").

 

[mike wightman]

Originally posted by daryen:
But that is not speculative cargo, that is more of a "vertical business".

Agreed. That's a better way to put it

Either way, the freight that a free trader sees isn't going on megacorp ships regardless of what the free trader does. At that point they can demand whatever they want.

Again I agree, but the problem is that the competition will try and undercut you - and I'll bet those megacorps are behind the scenes somewhere

 

[mike wightman]

Originally posted by daryen:
Of course I can always avoid the whole thing.

"Obviously, this cargo is important enough for you to get somewhere quickly, otherwise you would have waited for your turn with the big guy. Since time is important, this is not 'freight', it is a charter. And I do high-priority charters for 2000Cr per dton."

Once I enter "charter" or "high-priority" status, I don't even have to be nice and stick with 1000Cr per parsec.

Nice one daryen

 

[mike wightman]

Originally posted by Black Globe Generator:
That's how I've always pictured it as well - the big shippers speculate, too. In fact, it's easier for them because they have factors stationed on a planet to buy up choice cargos, which is another reason the independent merchants have to scramble for the leftovers (i.e., "one cargo available per week").

Hence the need for a Factor career

By the way, over at the SJGs site Qoltar has reminded me of the term Shipping Agent...