Making a Jump 2 freighter profitable

[aramis]

Having had players run profitable J3 vessels, it' all in how much and how good you speculate.

Under T20 trade mechanics, the players made money with a J3M1 freight & spec model... Buy the spec first. Use of broker at powerful levels makes spec trade profitable.


I've had players with large J3 ships (1-5KTd) make money under MT, as well, using MT's included MP trade system. You just have to have the broker.

Historically, until transatlantic cables, much trade between europe and the americas was speculative.

Heck, cargo brokerage exists today, so it must be profitable for both the broker and the speculator.

Now (Under CT & T20) one sure fire way to lower your per tonnage op costs per cargo ton is to build at 1000 Td+; you no longer loose out due to bridge tonnage minimums

 

[Fritz_Brown]

Aramis,
A lot of those plying speculative trade 'twixt America and Europe back then also went broke. Sometimes you win, sometimes you lose, and some people seem to never get to the latter half of that.

 

[ChaserCaffey]

Just for fun, I ran the starship costs through the currency converter in TNE. The far trader listed in the back of the book (Jayhawk class) has a listed price of 55.95 MCr and a TL of 12. Assuming it's built at a world with a Starport rating of A, and the players are paying in credits from a TL-15 world with Starport A, the price comes out to 47.56 MCr, 198,166 Cr for monthly payments instead of 233,125.

Would that make enough of a difference to make the ship profitable? If so, we might expect to see higher-TL yards mostly used for Naval and Megacorp construction, while backwater yards in lower-tech systems handle construction for free traders. Means a lot of visits to seedy outback planets for the intrepid PCs.

 

[BetterThanLife]

Originally posted by Aramis:
Having had players run profitable J3 vessels, it' all in how much and how good you speculate.

Under T20 trade mechanics, the players made money with a J3M1 freight & spec model... Buy the spec first. Use of broker at powerful levels makes spec trade profitable.


I've had players with large J3 ships (1-5KTd) make money under MT, as well, using MT's included MP trade system. You just have to have the broker.

Historically, until transatlantic cables, much trade between europe and the americas was speculative.

Heck, cargo brokerage exists today, so it must be profitable for both the broker and the speculator.

Now (Under CT & T20) one sure fire way to lower your per tonnage op costs per cargo ton is to build at 1000 Td+; you no longer loose out due to bridge tonnage minimums

The whole trade and spec is a nice thought. But does it work for the general transport or just for PCs. Think about it. If the seller also has a great broker then the broker skill should pretty much cancel out. Which pokes the big hole in the speculative trade route. You are back to not paying for the ship and Spec Trade becoming extremely dicey. However if only Players can be brokers then for PC ships the system works but not for the average freighter that isn't crewed by Players. So while the players might make it the rest of the Universe goes broke quickly. And the economic model falls apart, especially since many trade centers are not located on mains.

The Concept that the Players can buy low and sell high because one of them has the broker skill doesn't work for me. In a world, especially in Higher Pop worlds there will be whole brokerage firms to deal with these upstart travellers. (And while the PCs may be skilled at it do they have their Series 6, Series 63, Series 7 licenses for this planet?)

For example. I, personally am a very nasty negotiator. I have special training in the subject. I am a hell of a sales person. It has been said that I can sell Ice to Eskimos and Sand to Bedouin. So I cut a good deal on a legal cargo of Coffee in Columbia. I then load it up on a ship, take it into New York harbor, walk into the Commodities Exchange and sell it at a profit? I don't think so. I don't have the connections or the legal licenses to do such a thing. But lets say I did have the license, after all I planned on doing this run on a semi-regular basis. Once I get to New York there aren't going to be better brokers around, better negotiators, people that specialize in this stuff and that is all they do each day is to trade commodities for their clients?

Not having it an opposed test bothers me. It is extremely unrealistic.

OK lets try something else. I get a load of the other Columbian product at a great price. I successfully dodge the Coast Guard, get it into New York Harbor, unload it, walk up to the front door of the head of the Gambino family's home and offer it to him? (As if I knew his address.) Again local connections are the key. The Local Broker is going to have an advantage over the guy coming in town. On both ends of the deal.

How about we pick up something on the New York Exchange and then transport it and sell it on the London Exchange. (Serious sharks at both ends.) I don't care how good a broker you are the brokers on both ends of this trip are going to be better.

But lets use the Broker skill only for Players. No opposed tests. What do the other thousands of ships do to make ends meet? Or are PCs the only ones that can make a Jump-2+ ship profitable?

 

[mike wightman]

A couple of solutions to the problem of making higher jump freighters and liners profitable, without rewriting the basic trade and commerce rules.

Buy a secondhand ship - unfortunately Traveller doesn't allow for this, except for the Scout/Courier in Traders and Gunboats, and only cash payment is usually accepted
MegaCorporations and large shipping lines must be able to buy ships at cost, without being crippled by mortgage payments the higher jump numbers can be made to pay their way.

Do Megacorps sell off last years models???

Re-mortgage a ship result from character generation.
Say your referee is kind enough to grant pooling of ship results and/or to select alternative merchant models to the type A each extra receipt is ten years payment.
Calculate how much is still left to pay and remortgage over 40 years.

 

[daryen]

I completely agree with Bhoin's assessment of Brokers. I imagine that most hi-pop worlds (with any sort of LL) will require the use of local brokers. Regardless of whether they are better or not, I doubt the local broker brotherhood is going to look kindly at the intrusion of alien competition.

So, even if a given group of players, with the right skills, can make money from a broken system, it doesn't mean the system isn't still broken.

As for how to make trading work, do the following:
- use a per parsec model.
- allow ships to be bought and financed used.
- never use Book 5 or MT ship prices.

(I have no idea why, but Book 5 and MT (which was apparently completely based on Book 5) ship prices are absolutely insane. Compared to either Book 2 or TNE, the prices are massively inflated. If you insist on Book 5 or MT, you must divide prices by at least a factor of 2.)

I have posted the per parsec price model already, but I can do so again, if it would help. But per parsec pricing is the only way to make the system remotely workable.

 

[BetterThanLife]

Originally posted by Sigg Oddra:
A couple of solutions to the problem of making higher jump freighters and liners profitable, without rewriting the basic trade and commerce rules.

Buy a secondhand ship - unfortunately Traveller doesn't allow for this, except for the Scout/Courier in Traders and Gunboats, and only cash payment is usually accepted
MegaCorporations and large shipping lines must be able to buy ships at cost, without being crippled by mortgage payments the higher jump numbers can be made to pay their way.

Do Megacorps sell off last years models???

Re-mortgage a ship result from character generation.
Say your referee is kind enough to grant pooling of ship results and/or to select alternative merchant models to the type A each extra receipt is ten years payment.
Calculate how much is still left to pay and remortgage over 40 years.

Interesting points. However, when buying a preowned (used) car, do you get the same financing rates as a new car? Or the same financing term lengths? Not likely. Why would ships be different?

OK so Mega Corporations pay cash for their ships. (Or have one division loan the money to another division and write off the interest as operating expenses for tax purposes, or whatever. Same difference.) The Corporation, or individual for that matter that pays cash for a ship, is still going to take more than 20 years to recover their investment when buying a jump>1 ship. Most corporations that stay in business have to show a profit most quarters and virtually all years. If you don't the stock holders sell off their stock, devaluing the company and potentially causing it to fail. (Remember the Dot-bomb debacle?) Corporations are out there to make a profit. That is the nature of their existance. Most are not willing to take losses for 20 years before making profits.

Corporations may sell off these ships after 25-40 years but unless there are maintenance problems not generally before they have actually made a profit. (I figure more like 30-40 years, if that soon.)

Under the finance rules, a Free Trader will recover its 20% down in between (depending on the rule set) 5 and 10 years. A Far Trader will operate at a significant loss until it is paid off. (40 years).

Now if you switch to the per parsec model, again depending on the rule set, the Free Trader, the Far Trader, the Sub Merchant and the Sub Liner all pay off the 20% down in about the same time frame, between 5 and 10 years. How close they are depends on how often you are able to travel at the limits of your jump drive and/or how full you can travel. Remember the bigger ships are less likely to be able to travel full.

With major trade centers off the mains, the way financing works and the fact that trade happens even in areas like the Gateway Domain where there are no long mains and very few large clusters it almost seems that the Per Parsec model was part of the original concept of the rules. It just seems to work better. Perhaps that is a question that should be asked of MWM.

 

[mike wightman]

Interesting points. However, when buying a preowned (used) car, do you get the same financing rates as a new car? Or the same financing term lengths? Not likely. Why would ships be different?

Yes, yes I can
I don't know how it works in the States, but here in Blighty I can take out a bank loan to buy a car up to my credit rating.
It wouldn't matter to the bank if I buy a brand new Ford or a secondhand Lexus.

But I take your point, especially since ships aren't financed like cars

 

[BetterThanLife]

BTW Corporations are going to finance ships. Why buy one when you can leverage the use of 5 for the same amount. As long as they can recover their investment in a reasonable amount of time and then start turning a profit then that is a better route for corporations. In this way they are moving more product and expanding. In LBB2 a Free Trader makes back its 20% down in about 6 years of running full. So you take the price of a Free Trader, and finance 5 of them. You write off the price of the Free Trader. You bank the profits of each free trader above its mortgage. At the end of 6-7 years you go out and use that money to buy 5 more free traders. Still banking the money 6-7 more years, you buy 10 free traders, 6-7 more years you buy 20 Free Traders. so in 24-28 years you now have 40 free traders plying the space lanes and moving your product. If you pay cash for the ships then at the end of 30 years you have 4 ships. Granted they are paid for but you only have 4 ships. Under the other model you have 40-80 ships in space the at about 30 years. And you are making a profit all with the seed capital of the price of one Free Trader.

If you stop at 40 you are definitely making more profit at that point with the 40 ships that you are making payments on than the 4 that are paid off. Or you can grow a little slower. The first 6 years for each ship is to buy a new ship then the rest is banked as profit. At the end of 30 years you have 25 ships, which is still going to keep expanding your fleet and putting money in your accounts, more than the 4 paid for ships will.

 

[BetterThanLife]

Originally posted by Sigg Oddra:
</font><blockquote>quote:</font><hr />Interesting points. However, when buying a preowned (used) car, do you get the same financing rates as a new car? Or the same financing term lengths? Not likely. Why would ships be different?

Yes, yes I can
I don't know how it works in the States, but here in Blighty I can take out a bank loan to buy a car up to my credit rating.
It wouldn't matter to the bank if I buy a brand new Ford or a secondhand Lexus.

But I take your point, especially since ships aren't financed like cars </font>[/QUOTE]Here in the States, good credit new car loans run between 0% and 4% interest. Used Car loans tend to start at 6% and can run as high as 13%. New car loans can have a term up to 6 years, used car loans tend to run no more than 3-4 years.

BTW a new home, at least here in the States, (new construction, not just new to you) can usually be bought at a lower mortgage rate (or at least a lower initial mortgage rate) than a new to you but pre-existing home.

 

[mike wightman]

Does anyone know how shipping lines finance their ships in the real world?

 

[BetterThanLife]

I seem to remember reading that the US pays for Aircraft Carriers over 10 years.

 

[Straybow]

The real economic price per ton for Traveller starships makes the comparison fall into the air carrier range rather than surface ship range.

Air carriers finance by issuing bonds and other investment instruments, as well as leveraging assets by as much as 10:1 with investment bankers. Investment trading is one of those things that goes on behind the scenes and wackos think it is the Illuminati taking over the world.

 

[Fritz_Brown]

A lot of freight carrier finances are a house of cards. Bhoins example (on the previous page of posts) is right - the financing pyramid. One bad year, though, (if you were too agressive) and you have 36 debts and no ships. That is what has happened with US air carriers after 9/11 - they weren't really leveraged for a downturn.

I just bring that up to point out that there are a lot of barriers to entry for the small operator. A majority of small businesses fail. A lot of great ideas end up in bankruptcy court. The difference is, of course, that we don't our PCs to be a statistic - we want them to (eventually

) succeed, as it is more fun for all that way.

How to do this, while keeping all us gear/finance/mil-heads happy is what makes these forums so much fun.

 

[aramis]

Spec Trade, using paid brokers, is all that's needed to break a profit. Brokers make money at both ends; using the +3 or +4 broker is all that is really needed, plus careful use of the predict a die ability of trader skill.

Most merchants in the pre-cable days made money, mostly on spec. In the age of sail, most merchants made money most of the time on spec. If there hadn't been more people making money than not, it would not have been a long term business.

You are approaching it from a distance=money standpoint, like the airlines: freight and passengers both carried for hire only. That is NOT the model for traveller. The age of sail is... and paid freight and passengers were incidentals, not staples.

Lets face it, mechanically, Broker +3, and a trader roll showing us a 1st die of purchase price of 3 or less, allows us to figure that that load will cost at most 90% of base. if we know that we can get a +3 broker at the other end (B or A port), and the roll is 3+, we know that the sale will be at a minimum 100% base price, probably more. so at worst, you're looking at 10% base value more than half the time. with Bk7 T&C, that's a base purchase of about 4.5K and base sale of about 5.5K, or about 4.1K purchased max, and 5.5 K sale min. Sooo, you can expect a minimum return, IF YOU ARE SMART AND USE YOUR TRADER SKILL, of about 1400 cr/ton, with occasional bursts up to KCr5 per ton, and occasional losses. (The losses are usually from failed trader rolls.)

Now, under Bk2 or T20, apply the same restrictions, and the base buy and sell are the same. Under T20, you have the advantage of multiple lots available; 2/6th of lots will meet the requirements above; it's not uncommon to have 6 to 10 lots available. you need a base value of KCr5 to guarantee a match to paid freight; but 35/36 of the time, you make more than that on those loads. Fill rest with freight, and voila, profit.

And, by the way, with a little care, a J2 can make better on spec than a J1. J3 and J3 breaks about even; the lost revenue in hold is made up for by better targets. J4 even spec gets dicey.

 

[far-trader]

Originally posted by Aramis:
Spec Trade, using paid brokers, is all that's needed to break a profit. Brokers make money at both ends; using the +3 or +4 broker is all that is really needed, plus careful use of the predict a die ability of trader skill.

Of course that presumes that you can find a Broker of that skill, and trust them not to rob you. I use rolls for both those tests.

In my CT you could find a Broker on a roll of 8+ with DM -X and Starport DM's of +1 for class A, -1 for class C, or -2 for class D. No Brokers on class E and lower. X is Broker skill level, maximum value of 4 but the player chooses it. I then roll 2d6 and reference the table below with a DM across the top for the Broker skill level and a DM down the side for the Starport class (rolls off table are treated as 1 or 6 as appropriate).

</font><blockquote>code:</font><hr /><pre style="font-size:x-small; font-family: monospace;"> 1 2 3 4 5 6 < (DM +X)

1 F C C F F F

2 C C F F F F

3 C F F F F F

4 F F F C F F

5 F F F F F C

6 F F F F C C

^ (DM for Port)</pre>[/QUOTE]F is a fair deal, the Broker does their best and charges the standard rate.

C is a cheat, the Broker does their best but skims off the top to the tune of reducing the final value roll by 1. So for example the final value roll with all the DM's is actually 11, you (the Broker) reports it to the player(s) as a 10. The player(s) collect 130% and the Broker (and his collaborators) skim 20% for themselves.

Naturally you can't let the player's see the final value roll and you'll have to make sure the result is within the realm of possibility, unless you want the crooked Broker to get caught ...

"But if I don't have the 10K by end of business today the Marquis will sell my family into bondage and I'll never see them again <sob> so I had to try to cheat you, can't you help me please <wahhhh>... "

What I'm saying is there are as many reasons for cheating the PC's as your imagination can conceive, this is just one example. Have a few ready in case they catch on, or get suspicious enough to do some checking

And of course Travellers (i.e. PC's unless you have a non-travelling kind of game) are never Brokers. Brokers require time in a market to develop contacts and knowledge, you can't be a roving broker. I mention it only because I seem to recall someone (maybe one of our old games) wanting Broker skill for a PC.

 

[mike wightman]

I notice that Broker became a PC skill in SS:Merchant Prince, LBB7 and MT...

So unless you stick to basic character generation PC Merchants may well have Broker skill.

 

[BetterThanLife]

Originally posted by Sigg Oddra:
I notice that Broker became a PC skill in SS:Merchant Prince, LBB7 and MT...

So unless you stick to basic character generation PC Merchants may well have Broker skill.

Certainly PCs may have the skill. That doesn't mean that without proper contacts they are going to get lots of mileage out of it. Now if they settle down on a planet, develope contacts then use it that should work. (Which is probably how they aquired it during prior history.) But Brokers, like Real Estate, and Insurance are highly regulated businesses. Licensing requirements are stiff, regulation is serious and review is virtually automatic if someone, anyone, thinks they have been cheated. The reason for all these licenses is that you are dealing with people's life savings. And Governments are expected to protect the people. Now if you are dealing with long exposure to a couple of planets and you have the skill you might get a license.

For example I have a license to sell Insurance in Indiana. To sell in Michigan, a total of 10 miles from my door to the Michigan state line, I would need a license specific to Michigan. I can see broker's licenses being good for a cluster, if you are established as a resident on one of the planets in the cluster. But roaming brokers, just doesn't make sense to me.

 

[far-trader]

I recalled it being MT for sure, I was less certain about Book 7 but that sounds about right for when I remember the issue of PC Broker's coming up. I still say it makes no sense but eh, whatever works right. So mtu won't have travelling PC brokers. If they want to settle down and take a desk job like that fine. Cultivate your client list or go indy, maybe struggle for a month to make the minimum contacts you need and then you can apply your Broker skill at a minus -4 and reduce that penalty by 1 each month. So 5 months to become as good as any other local broker with equal talents. Unless I and the player(s) wanted to play a Homeworld version of Traveller. Kinda like DS-9, let the adventures come to the PC's.

edit - Bhoins types faster than I

 

[BetterThanLife]

Originally posted by Aramis:
Spec Trade, using paid brokers, is all that's needed to break a profit. Brokers make money at both ends; using the +3 or +4 broker is all that is really needed, plus careful use of the predict a die ability of trader skill. <SNIP>

The point I am trying to make is still valid. Yes you have a broker working for you that is a Broker-3. And yes that will give you an advantage on your roll. But what if the seller is a Broker-4 and the guy you hired is only a broker-3. At the otherend you find a Broker-4 but the buyer is a Broker-5. You just probably got hosed on that trip. And whether you make money or lose money the broker still gets their commission. (Brokers are just high class bookies after all.

)

Given the way the economics work in Traveller, the most successful Merchant character wouldn't have a ship. He would have Broker-4, set up an office at the highport and broker deals for cargos. collecting commissions. You can sell for one customer in the morning and buy for another in the afternoon. After a few months you buy a ship for cash, then when you get bored or want to go on an adventure you take a vacation. Now that is the way to make a killing in the merchant business.