Financial/Security Details of Shipping Cargo

[vutpakdi]

Say Bob Enterprises wants to ship 10 dTons of electronics parts from System A to System B. Far Trader LugNut lands at the starport and contacts Bob Enterprises to say that they're headed that way and have cargo space available at 1000 Cr per dTon. Bob Enterprises arranges to have the cargo loaded, and the Far Trader LugNut takes off for System B.

So, what's to ensure that Far Trader LugNut doesn't just abscond with the cargo? How does Bob Enterprises know that the cargo has been delivered? How/When does the crew of the LugNut get paid?

Seems to me that this aspect of trading/shipping isn't well detailed in the classic traveller or T20 rules. GURPS: Far Trader may have some information, but I don't have that book.

Are there Imperial bonding/escrow agents who handle payment once the cargo is delivered and hiring bounty hunters when the payment isn't? Does the LugNut pay a yearly bond fee to the bonding/escrow agents? Or, is it a percentage of the cargo fee paid by Bob Enterprises? Why would Bob Enterprises trust some random far trader that shows up to deliver the cargo without some sort of 3rd party guarantor?

What do you think?

Ron

 

[Mythmere]

I imagine that cargo brokers or speculators are the ones who have a contract with Captain Lugnut, not the manufacturer of the goods. These middlemen would insure their own risk (probably on an annual basis, not cargo by cargo). Cargo is not sent without a recipient (the freight hauler isn't expected to sell it for the manufacturer), either a pre-arranged buyer or a factor. This person will be notified that the cargo was sent (this notification might arrive weeks later with the mail ship) in batch transmissions from the brokers and factors who carry the risk (though it is an insured risk). If notification comes back that the cargo never arrived, the whole issue is handed to the insurance company to resolve.
With a multi-million credit starship at risk, most captains would never dream of turning rogue by stealing a shipment. Everything about the OTU suggests that there is a huge quantity of traffic (food is shipped, for example).

 

[Antares Administration]

There are several relevant examples on real-life 21st century Terra.

1. Freelance Trucking. Here the manufacturer/consignor contacts the local broker, freight forwarder, terminal or agent, who acts as the go-between to the independant trucker. The broker has insurance that covers any claim by the consignor, and he's the one who gets to sue the consignee (the trucker) for non-compliance. If the manufacturer goes direct to trade (direct to the independant trucker), then the consignor has to ensure that he has coverage/protection. That can be anything from insurance to 'repossession'.

2. Tramp 'Contract' Oceanborne Trade. Again, it's rarely the manufacturer or the trading company that goes direct to trade. The consignor contacts a broker, terminal or agent, who do the dirty work and assume the liability with respect to the consignor.

IMHO, the local freight forwarder/broker/terminal at Starport A would be responsible for freight consigned through him. In turn, before the forwarder consigns freight to a vessel, he will want either:

a. An escrow bond from the Vessel Owner, Master, or Captain. This will be a negotiable deposit worth an amount based upon a fraction of the value of the freight being consigned. This option is unlikely, unless the vessel owner only ever deals with one or two customers, because he'd have to have a seperate bond with each customer.

b. A lien against the vessel, which, if a claim is granted by a court of law, would authorize the forwarder to seize the vessel and other assets of the ship owner. This would form part of the contract. Unfortunately, the consignor would still have to catch up with the ship to be able to execute the seizure.

c. Proof of bonding of the vessel (essentially a guarantee of trustworthiness backed by assurance). The bond would allow financial recovery up to a certain amount. Here, a trusted third party essentially vouches for the vessel. It's like the individual escrow bond, but the vessel owner only needs to do it once in any region where the bonding agency operates.

Of course, another option is that the consignor goes to a third party to buy insurance on the consignment. This would usually be blanket coverage, where the insurance company will review the consignor's shipping policy and procedures, and the level of security of the chosen brokers/shippers, and would assess a rate for insurance coverage. This would remove the owness from the broker/terminal, and should thereby reduce the cost of the consignment.

Finally, in a stable, well-policed region will an extremely low incidence of piracy and theft, the consignor could assume the risk himself, and do nothing. If the freight is lost, the consignor is out of pocket.

Paul Nemeth
AA

 

[Antares Administration]

Originally posted by Ron Vutpakdi:
.... So, what's to ensure that Far Trader LugNut doesn't just abscond with the cargo? How does Bob Enterprises know that the cargo has been delivered?

Again, assuming that we're talking about an independant operator here, not a shipping line... On shipment, the terminal or consignor would send a shipping advise by fastest means possible to the customer or the customer's designated agent. It's just a message with the shipment details. An X-boat is the ideal way to send one of these. At each terminal at which the ship calls on route could/would send a transit advise message to the consignor and the customer advising of the shipment's status. Once the shipment arrives at System B. A receipt advise is transmitted back to the consignor.

Now to do all this, you need a fairly well developed freight industry and infrastructure, say Starport of Class A to C. Where that sophistication doesn't exist, the consignor will have to rely on insurance, and perhaps an eventual response from the customer. Many times, consignments in these high-risk environments will be pre-paid or otherwise guaranteed by the customer.

And of course, we haven't even talked about the different ways of shipping freight (Door-to-door, port-to-port). GURPS Far Trader has a fairly good explanation of the options.

How/When does the crew of the LugNut get paid?

Again, it depends upon the delivery terms. Generally, a free trader won't get paid until he arrives at the destination port, he'd be entitled to hold the goods until payment is made, and if payment isn't made within a fixed period of time, he could dispose of the goods to cover his costs. On trade-friendly worlds, the starport brokers would assume this liability (for a cut) so that the vessel doesn't have to wait in port, i.e. the terminal broker pays the Vessel around 90-95% of the rate due, and he pockets the rest to cover his costs and make a profit.

.... Are there Imperial bonding/escrow agents who handle payment once the cargo is delivered and hiring bounty hunters when the payment isn't? Does the LugNut pay a yearly bond fee to the bonding/escrow agents? Or, is it a percentage of the cargo fee paid by Bob Enterprises? Why would Bob Enterprises trust some random far trader that shows up to deliver the cargo without some sort of 3rd party guarantor?

See detail above and in the previous posting.

What do you think?

Ron

In the real world, there are a lot of variations on the theme, and a lot of complexities that I didn't cover above, these are the basic answers to your questions.

Hope they help.

Paul Nemeth
AA

 

[trader jim]

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HEY...NEW TRAVELLER PC!!!!!!
somebody do a WORKUP/STATS!!!!!!

 

[flykiller]

Say Bob Enterprises wants to ship 10 dTons of electronics parts from System A to System B. Far Trader LugNut lands at the starport and contacts Bob Enterprises to say that they're headed that way and have cargo space available at 1000 Cr per dTon. Bob Enterprises arranges to have the cargo loaded, and the Far Trader LugNut takes off for System B.

So, what's to ensure that Far Trader LugNut doesn't just abscond with the cargo? How does Bob Enterprises know that the cargo has been delivered?

why not just have the shipper buy the cargo? bob can turn around and walk away - he has his money. the shipper doesn't have to register or certify with anyone - he just has to deliver. if any legal action does arise it would be strictly local, and not involve lawyers from different legal systems interfacing across jump distances.

 

[Anthony]

Originally posted by flykiller:
why not just have the shipper buy the cargo?

Because the shipper may not want to buy the cargo?

If Bob is shipping electronics from world A to world B, it's because he thinks there's a demand on world B, or has a contact on world B who specifically wants the cargo. If Bob is wrong, he's lost a bunch of money; if he's right, most of the profits are his.

Now, if the shipper buys the cargo from Bob, it's no longer Bob who loses money, or who makes money if his guess was correct.

In addition, it's quite possible that the shipper doesn't want to get into the business of selling electronics parts; he may not have the contacts to find a seller in short order.

 

[flykiller]

Originally posted by Anthony:
</font><blockquote>quote:</font><hr />Originally posted by flykiller:
why not just have the shipper buy the cargo?

Because the shipper may not want to buy the cargo?

If Bob is shipping electronics from world A to world B, it's because he thinks there's a demand on world B, or has a contact on world B who specifically wants the cargo. If Bob is wrong, he's lost a bunch of money; if he's right, most of the profits are his.

Now, if the shipper buys the cargo from Bob, it's no longer Bob who loses money, or who makes money if his guess was correct.

In addition, it's quite possible that the shipper doesn't want to get into the business of selling electronics parts; he may not have the contacts to find a seller in short order. </font>[/QUOTE]that's what brokers are for - they make the connections. and most markets aren't going to be brand-new blind startups - most manufacturers, brokers, and shippers already are going to have a good idea of what is going on in their subsectors.

 

[Antares Administration]

Originally posted by Anthony:
</font><blockquote>quote:</font><hr />Originally posted by flykiller:
why not just have the shipper buy the cargo?

Because the shipper may not want to buy the cargo?

If Bob is shipping electronics from world A to world B, it's because he thinks there's a demand on world B, or has a contact on world B who specifically wants the cargo. If Bob is wrong, he's lost a bunch of money; if he's right, most of the profits are his.

Now, if the shipper buys the cargo from Bob, it's no longer Bob who loses money, or who makes money if his guess was correct.

In addition, it's quite possible that the shipper doesn't want to get into the business of selling electronics parts; he may not have the contacts to find a seller in short order. </font>[/QUOTE]That's pretty much it.

We're really not talking about speculative cargo here, we're talking about bulk cargo. With bulk cargo, the carrier has a consignor and a consignee, i.e. a client (that one that pays) and a customer (the one that receives a service without paying). In industry, you hear the terms F.O.B. (free on board). If it's F.O.B. point of origin, the receiver/consignee will pay the bill for transportation. If it's F.O.B. point of destination, then the shipper/consignor pays the bill.

For bulk freight, a lot of free trader traffic will be F.O.B. point of destination, i.e. with delivery included in the price paid to the supplier for the goods. That way, the carrier gets paid up front, at least partially.

Speculative trade is where the carrier buys goods that he doesn't have a firm buyer for yet, but the carrier is reasonably sure that he'll be able to unload the goods for a profit.

Paul Nemeth
AA

 

[RainOfSteel]

Originally posted by Mythmere:
I imagine that cargo brokers or speculators are the ones who have a contract with Captain Lugnut, not the manufacturer of the goods. These middlemen would insure their own risk (probably on an annual basis, not cargo by cargo). Cargo is not sent without a recipient (the freight hauler isn't expected to sell it for the manufacturer), either a pre-arranged buyer or a factor. This person will be notified that the cargo was sent (this notification might arrive weeks later with the mail ship) in batch transmissions from the brokers and factors who carry the risk (though it is an insured risk). If notification comes back that the cargo never arrived, the whole issue is handed to the insurance company to resolve.
With a multi-million credit starship at risk, most captains would never dream of turning rogue by stealing a shipment. Everything about the OTU suggests that there is a huge quantity of traffic (food is shipped, for example).

Cannon-text from the OTU may suggest food is shipped, but the actual starship economics mechanics presented show that shipping fees make it too expensive to ship food even one jump; the 1000Cr/ton fee imposed on, say, grain, would make a bread produced from such grain cost 20-40Cr/loaf.

See the topic "Commerce: Shipping Low-Value Cargos (and Starship Design & Construction)" http://www.travellerrpg.com/cgi-bin/Trav/CotI/Discuss/ultimatebb.cgi?ubb=get_topic;f=1;t=000801

 

[Anthony]

Originally posted by RainOfSteel:
[/qb]

Cannon-text from the OTU may suggest food is shipped, but the actual starship economics mechanics presented show that shipping fees make it too expensive to ship food even one jump; the 1000Cr/ton fee imposed on, say, grain, would make a bread produced from such grain cost 20-40Cr/loaf. [/QUOTE]

Bear in mind that's per dton; one dton of grain is about 10 tons. Also, I'm not sure there's a kilo of grain in a loaf of bread, but assuming there is, the transport charges are only about Cr 0.1 on a loaf of bread.

That's still substantial; I suspect most food shipping in the Imperium is for luxury goods.

 

[RainOfSteel]

Originally posted by Anthony:
</font><blockquote>quote:</font><hr />Originally posted by RainOfSteel:
[qbCannon-text from the OTU may suggest food is shipped, but the actual starship economics mechanics presented show that shipping fees make it too expensive to ship food even one jump; the 1000Cr/ton fee imposed on, say, grain, would make a bread produced from such grain cost 20-40Cr/loaf.

Bear in mind that's per dton; one dton of grain is about 10 tons. Also, I'm not sure there's a kilo of grain in a loaf of bread, but assuming there is, the transport charges are only about Cr 0.1 on a loaf of bread.

That's still substantial; I suspect most food shipping in the Imperium is for luxury goods. </font>[/QUOTE]T20 Rules: Page 361: Bottom of Page: "Quantity: This is the quantity of the goods available in the lot, expressed in tons . . . "

I've scanned through the T20 rules, and it never says dTons or displacement tons in the sections I read through. I can't remember them being described that way in book 3, either, although my book 3 is long gone now, and the Book 0-8 reprint is out of print! Book 7 also discusses in terms of tons. Digging out TNE and GURPS: Far Trader, though; both talk about dTons for cargo. Well, isn't that nice for consistency, considering I don't play either TNE or GUPRS?


I always knew cargo space was given out in dTons during starship design, but always thought cargo was always loaded by weight in tons because everything talked about it that way; and assumed it was a game handwave to avoid the problem of most everything having different weights by volume.

Well, that changes a great many things I've worked on in relation to MTU.

 

[jchurchill]

Interesting points made and I only intrude to note that speculative cargo is/would be the province of tramp vessels. As already mentioned --- liner trade will have a consignee for goods shipped.

Also there are other shipping methods besides FOB.

FAS (Free Alongside} -- a variant of FOB. Usually written as "FAS vessel name" at a specified port. e.g "FAS SS Peerless at Regina"
Under FAs there is no duty to supervise loading. Deliver to the wharf/dock is enough. FOB requires supervised loading on the SS Peerless.
FAS Regina = no duty to load.

CIF [cost, insurance, freight] is the most prevalent modern use. Usually written as "CIF Regina" where REgina is the destination port. Under CIF the buyer/consignee bears the risk of loss in transit. If the buyer buys his own insurance the shipping is then "C&F" or cost and freight.

Finally, under FOB, the risk of loss passes to he buyer at the FOB point. [i.e. once the cargo is loaded aboard the SS Peerless.] FOB Regina then seller bears the risk of loss during transit until arrival in Regina.

SS stands for Starship of course.

 

[RainOfSteel]

secretagent,

If you ever compile a portion of your shipping and legal knowledge into written game material, and, say, post it to the eLibrary, don't forget to tell us it's there. I'd very much like to read it.

<sits back and awaits edification />

 

[Whipsnade]

RainOfSteel wrote:

"If you ever compile a portion of your shipping and legal knowledge into written game material, and, say, post it to the eLibrary, don't forget to tell us it's there. I'd very much like to read it."


Mr. Agent,

Let me *strongly* second that.

Some of the terms are covered in GT:FT but I, for one, have had trouble wrapping my head around the descriptions. A little primer regarding them with examples of how to inflic^^^ (ahem) 'apply' them in a game setting would be marvelous.


Sincerely,
Larsen

 

[jchurchill]

secretagent,

If you ever compile a portion of your shipping and legal knowledge into written game material, and, say, post it to the eLibrary, don't forget to tell us it's there. I'd very much like to read it.

<sits back and awaits edification>
=================================================
I have begun such a project and am still cleaning it up. I sent a short draft to JTAS and as soon as JTAS rejects it [any minute now to be sure] then I will happily post it. It is not a sweeping treatise to be sure and simplifies some things but it might inject a bit more realism into things.

 

[jchurchill]

Mr. Agent,

Let me *strongly* second that.

Some of the terms are covered in GT:FT but I, for one, have had trouble wrapping my head around the descriptions. A little primer regarding them with examples of how to inflic^^^ (ahem) 'apply' them in a game setting would be marvelous.


Sincerely,
Larsen
=================================================
As I told Rain, I will give it a shot. Years ago it was to me the least interesting and most ignored aspect of campaigning with the gang in which I played.

Finding a balance between clear explanation of shipping/cargo and workable rules is my modest goal.

Thanks for your insight on the vessel design and never mind my snarky defensiveness. Only rampant hubris can explain why I thought I had come up with something new that had not been addressed in a rules set 20+ years old.

 

[RainOfSteel]

Originally posted by secretagent:


<snip>

Only rampant hubris can explain why I thought I had come up with something new that had not been addressed in a rules set 20+ years old.

Yes, but you clearly write as though you have walked the walk and talked the talk . . . and that gives your writing a special ring to it.

 

[kaladorn]

Secret Agent, you know I think you do some great work

1. FOB is a very important concept for shippers/recievers. I knew some of our receivers who would NOT take anything that was not FOB our shipping dock, but that required enough clout to make the shipper willing to eat the insurance/responsibility.

2. We treat all shipping as if it is Starport to Starport, but I suspect for practical reasons, much of it would be point to point (facility to facility, in some non-port location at both ends).

3. Sending advisories of freight status where there are no X-boat routes gets more dodgy, but even here I suspect someone is often contracted to deliver mail. (PS anyone know how often Xboats travel the route?) If you get way out, you won't be getting a report if some Captain doesn't bring it for you.

4. You certainly would want an escrow agent or something like that to have someone release the funds upon delivery, rather than waiting to inform the shipper and get him to reply with a funds release, that would lead to massive downtime.

5. I suspect many of the baseline shipping rules in the games various versions are.... bent or broken. I forsee ongoing costs as pretty high, cargo volumes in some rules variants as waaaay to low, and some of the stuff shipped as just plain insane. I do recommend BITS 101 Cargos to give you some thoughts.....

6. Since I'd assumed cargo was dTons, how does one translate that to tons? Plus, does anyone have any idea how much a dTon of 25 year old (plus transit time) Terran Single Malt Scotch might go for in the Marches? It'd be more than 5000 Cr, I suspect. (Pointing out the broken nature of some of the shipping... some cargos should have astronomical values per dTon....)

All in all, a brilliant topic and close to my heart.

 

[kaladorn]

Another interesting point of interstellar commerce:

Why are all passages of equivalent cost? What about differing levels of service, internal appointments of the ship, speed of delivery, etc.? And since it costs more to board a J4 ship (the J4 ship cost more to build and more to operate in fuel and upkeep), why should a high passage on such a vessel cost the same as on a tramp freighter with J1?

Passenger trade is as badly broken as other forms of trade.