Shipyard Production

[AnotherDilbert]

I thought everybody understood all this.

Oh well.

You describe an economic perpetuum mobile. It is no more realistic than a physical perpetuum mobile.

Take the worlds Tammuz and Ascalon in the Solomani Rim, two non-descript high-pop worlds.

Buy trade goods on Tammuz (A-F Im) for kCr 4 [base] -1 [HiPop] -1 [Starport A] +1.5 [TL F] = Cr 3500. Sell on Ascalon (TL E): Cr 5000 + 500 [TL] with a rented Broker-4 and Bribery-2. Sell at an average of 210% = Cr 11550 minus a commision of 27% is Cr 8430. You made a profit of about Cr 5000 / dT every jump.

If you are a megacorp you of course toss in a few megaton bulk-freighters carrying ~770 000 dT cargo at a cost of MCr 850 per jump. 770000 dT × Cr 5000 /dT ≈ MCr 3850, so you make a profit of about GCr 3 / jump. If you jump one ship in each direction every day (using 20 ships or so) you make GCr 3 × 2 = GCr 6 every day or 365 × 6 ≈ TCr 2 every year. Business is booming so you add a few more ships and jump one ship per hour in each direction, the markets magically expand and you now make TCr 48 / year shipping 770000 × 2 × 365 × 24 = 13.5 billion dT goods. You also turn over about 15% of the entire trade volume of the Solomani Rim sector.

You now do the same between Vanefa-Suleiman, Vanefa-Azaremiid, Sulaiman-Azaremiid, and Azaremiid-Al Jabry. Since you need J-2 you can only carry 650000 dT cargo at a cost of MCr 970 / jump, so you only make about GCr 2 / jump or TCr 32 per year for each route or TCr 48 + 4 × 32 = TCr 176 per year. Guaranteed, risk free. In a single subsector you are shipping 770000 × 2 × 365 × 24 + 4 × 650000 × 2 × 365 × 24 = 59 billion dT cargo using 5 × 20 × 24 = 2400 megaton freighters.

But why stop there, lets jump a ship every minute on each route. Again the markets magically expand to swallow everything at the same price, so we now make PCr 10 shipping 3.5 trillion dT cargo / year. Note that our profit is now about the same as the sector's GDP.

Note that we have no in-house broker skill, we bought external services for that. The brokers made about Cr 11550 × 20% = Cr 2310 / dT or about half as much as we did. So the brokers on these 6 systems made about PCr 5, that is much more than the subsector's GDP.


The speculative trade system works for free traders, but does obviously not scale up to megacorp level.

 

[kilemall]

Does the term straw man mean anything to you Another Dilbert?

Setting up postulates that are prone to failure and then knocking them down is a time honored way to 'win the internet', but isn't much for an argument, especially one in which it's an entertainment and we don't have firm numbers for how it all works, just contextual clues.

I was saying that Book 7 and other era material points to a very cosy insider and large scale operations style for a lot of the tonnage moves of the 3I. I don't think this is disputable, and I would have thought most canonistas and thoughtful people reading that material would come to the same conclusions.

That isn't the same thing as 'you're wrong about Big Ship economics', which may or may not work, depending.

Now if you insist on using LBB2/HG/LBB7 economics plus your fudge factors to see if it's all consistent, well have fun, fair chance it isn't because a lot of these things are open entertainment material to use, not an economics dissertation.

Fair chance I can make it work, because I think you are being disposed to predetermination. But it doesn't matter that much either way.

However, the straw man part is that you are assuming I would take LBB7 as absolute law and mindlessly allow players to game the system.

If nothing else, if you have a campaign that is all about doing a player version of Oberlindes Lines, then just as a matter of creating content and conflict I'm going to have one of the big boys go after them which will put the brakes to any interstellar cargo moving ponzi schemes quickly.

Big Ships carrying Big Cargo may or may not work by the numbers, but it depends greatly on the 'reality' of varying ATUs or even interpretations of the OTU outside of a set of game rules geared to tramp freighter adventure economics.

So just because LBB7 doesn't have the limits to the system defined, doesn't mean they aren't there, it just doesn't hold our hands to define it for us, we can adapt it to our group's taste.

 

[McPerth]

Take the worlds Tammuz and Ascalon in the Solomani Rim, two non-descript high-pop worlds.

Buy trade goods on Tammuz (A-F Im) for kCr 4 [base] -1 [HiPop] -1 [Starport A] +1.5 [TL F] = Cr 3500. Sell on Ascalon (TL E): Cr 5000 + 500 [TL] with a rented Broker-4 and Bribery-2. Sell at an average of 210% = Cr 11550 minus a commision of 27% is Cr 8430. You made a profit of about Cr 5000 / dT every jump.

Merchant prince is quite flawled in speculation trade. All you say is peanuts when compared with those Golden pairs:

And all of this is for Bk2 rules, for MP will allow you to find a golden pair that can be profitable:

e.g. at Glisten (SM 2036) the nomatterwats are purchased at 1500 Cr (KCr 4 -1 (Hi) -1 (In) -1 (As) -1 (stA) + 15*0.1 = KCr 1.5), while the same nomatterwats are sold at Tirem (SM 2233, 4 parsecs away) at 13500 Cr (KCr 5 + 1 (Hi to Hi) + 1 (In to Hi) +1 (In to Ind) + 1 (In to Fl) + 50% TL difference), 12000 Cr profit per dton, while the reverse trade is 5000 Cr per ton (KCr 4 – 1 (Hi) -1 (In) +1 (Fl) + 1 (stC) + 10*0.1) and sold for (KCr 5 + 1 (Hi to Hi) + 1 (In to In) + 1 (In to Hi) + 1 (Fl to In) – 50% TL diff) 4500, for a loss of 500 Cr/dton, but if you carry freight, this will give you 1000 Cr/dton, achieveing a 13000 Cr/dton profit per round trip (modified by actual value table, that, if you have a broker in your crew will give you a 10-20% extra profit).

I have not run the numbers, but I guess this might maintain a J4 trader…

Let’s see a more extreme case of Merchant Prince (and MT trade system, for what’s worth, as it’s a carbon paper copy of MP):

We buy cargo at Glisten (SM 2036, A000986-F, Hi, Na, In, As). Cost is:

KCr 4 -1 (Hi) -1 (In) -1 (As) -1 (stA) + 15*0.1 = KCr 1.5

We jump to Aki (SM 2035, B443987-9, Hi, In, Po)

We sell our cargo for:

KCr5 +1 (Hi to Hi) +1 (As to In)+1 (In to Hi) +1 (In to In) +1 (In to Po) + (15-9)*10%, so KCr10 + 60%= KCr16 (benefit KCr14.5/ton)

There, we buy cargo at a cost of:

KCr4 -1 (Hi) -1 (In) -1 (Po) + 9*0.1 = KCr 1.9

Returning to Glisten, we sell them for:

KCr5 +1 (Hi to Hi) +1 (In to Hi) +1 (In to In) + 9-15*0.1, so 8 – 60%= KCr4.8 (benefit KCr2.9/ton).

We have a Fat Trader (cargo 200 ton) at Glisten, move to Aki with our hold full of Glisten’s goods (no matter what) and sell them at a benefit of KCr2900, then return with our hold full at a benefit of KCr580, so we net MCr3.48 per round trip. And I didn't count any passenger...

Assuming one jump per two weeks, this will be one round trip a month. Discounting the cost of 80 fuel tons (per round trip), KCr40 (why use unrefined fuel?), and crew salaries of KCr20 (Pilot, Navigator, Engineer, Medic and Steward), our monthly benefit is MCr3.42. In less than 3 years we can buy a brand new fat trader (MCr 101.03) without financing.

See that in this latter case, we could charter the fat trader for about KCr 250 a month, (so reducing our benefits to about "only" over MCr 3 a month, but we could yet buy our first owned fat trader in less than 3 years without any financing...

Yes, I know Glisten is an extreme case (and there are not too many tres there for the money to row on them :devil, being perfect to buy specualtive goods with MP rules, but sure other very profitable pairs exist...

 

[AnotherDilbert]

Merchant prince is quite flawled in speculation trade. All you say is peanuts when compared with those Golden pairs:

I stand corrected; The LBB7 is clearly not working for free traders either. Thank you.

 

[AnotherDilbert]

I was saying that Book 7 and other era material points to a very cosy insider and large scale operations style for a lot of the tonnage moves of the 3I. I don't think this is disputable, and I would have thought most canonistas and thoughtful people reading that material would come to the same conclusions.

It was suggested earlier in the thread that LBB7 was some sort of model for how Megacorps worked. I thought you agreed, I'm sorry if I misunderstood you.

I haven't used LBB7 since the '80s, so I had to take a quick look to see what the fuss was about. I made a simple example and remembered why I haven't used it: It is utterly ludicrous. I did not consider it a strawman to point out that it is completely unusable. I'm perhaps not very thoughtful, and certainly no canonista, but I would not accept LBB7 as an argument for anything.

To my knowledge CT contains no usable economic model for corporations nor societies. To draw any real conclusions, such as "Megacorps work by speculative trade, not freight" is to me definitely a bridge too far.

 

[atpollard]

To my knowledge CT contains no usable economic model for corporations nor societies. To draw any real conclusions, such as "Megacorps work by speculative trade, not freight" is to me definitely a bridge too far.

I would think that the Chargen tables in Merchant Prince for what departments one can work in for different sized lines and what skills one can learn in those departments is very suggestive of how some things work in corporations of various sizes in the CT Era and mindset.

YMMV.

 

[kilemall]

It was suggested earlier in the thread that LBB7 was some sort of model for how Megacorps worked. I thought you agreed, I'm sorry if I misunderstood you.

I haven't used LBB7 since the '80s, so I had to take a quick look to see what the fuss was about. I made a simple example and remembered why I haven't used it: It is utterly ludicrous. I did not consider it a strawman to point out that it is completely unusable. I'm perhaps not very thoughtful, and certainly no canonista, but I would not accept LBB7 as an argument for anything.

To my knowledge CT contains no usable economic model for corporations nor societies. To draw any real conclusions, such as "Megacorps work by speculative trade, not freight" is to me definitely a bridge too far.

Ummm. If that is your contention point, I don't think you understood the phrase then, at least as I understand it.

Whip is of course eminently capable of clarifying what he meant, and will I suspect given half a chance.

However, for whatever it is worth, my interpretation of his phrase and what I thought I was agreeing with was that LBB7 speculation OR LBB2 hauling plain trade is right out.

They are actually doing large versions of the LBB2 speculation table, likely in a market manipulative/collusional connected manner, on a grand scale that beggars the wildest dreams of Captain Jamison.

 

[Whipsnade]

Whip is of course eminently capable of clarifying what he meant, and will I suspect given half a chance.

I suppose I'll have to...

First, we all too often forget that the trade rules in LBB:2, LBB:7, MT. TNE, T4, and every other version including the allegedly most accurate trade system GT:FT are all designed for player level economics only.

All those trade systems are meant to provide adventure seeds and not truthful economic models. Anyone parsing the various trade systems to "uncover" accurate economic information about the 3I/OTU is making the same gross conceptual error as anyone using the various ship combat systems to "uncover" accurate information regarding naval designs. force structures, combat, and all the rest.

Putting is another way, the speculative trade sections of the various trade systems do not scale up from player level to megacorp level.

One Traveller author, a working economist, opined that attempting to model megacorp economics with the player level mechanisms available to us is akin to "using the Indian ocean dhow trade to model containerized freight crossing the Pacific."

Another Great Old One reminded us that "Traveller is about adventure in the Far Future and not accounting in the Far Future."

Finally, about the Old Timer's comments in SSOM, he's pointed out that the megacorps don't earn a living by carrying other people's freight. They own the ships, the warehouses, the brokers, the factors, the resources, the refineries, the factories, the goods, and even the ports and markets where they earn credits at every turn.

 

[kilemall]

Finally, about the Old Timer's comments in SSOM, he's pointed out that the megacorps don't earn a living by carrying other people's freight. They own the ships, the warehouses, the brokers, the factors, the resources, the refineries, the factories, the goods, and even the ports and markets where they earn credits at every turn.

RL example, the Reading Railroad, vertical integration, owning the mines, the railroad and the docks, once the most capitalized company on earth.

https://en.wikipedia.org/wiki/Reading_Company

 

[AnotherDilbert]

Putting is another way, the speculative trade sections of the various trade systems do not scale up from player level to megacorp level.

Which is what I tried to say, hence trying to say anything about megacorps based on LBB7 is folly.

The speculative trade system works for free traders, but does obviously not scale up to megacorp level.

Even that was an overstatement of the capabilities of the LBB7 system, as McPerth demonstrated.

Finally, about the Old Timer's comments in SSOM, he's pointed out that the megacorps don't earn a living by carrying other people's freight. They own the ships, the warehouses, the brokers, the factors, the resources, the refineries, the factories, the goods, and even the ports and markets where they earn credits at every turn.

I suppose you mean "Tukera Lines isn't a transport company. Sure, they transport things — but that is not where they make their money. Tukera Lines is a trading company. Most of their load consist of goods they own, bought at one world and resold at the next for a profit."

So an NPC offers an opinion. Unless he worked in Tukera HQ he doesn't know. Maybe Tukera or a subsidiary worked that way in some subsector he was familiar with? He said nothing about any other megacorp, or owning the resources, factories, or ports. Systematic sources, such as library data, says otherwise. The level of vertical integration you describe is not something I can find in any Traveller source.

As far as I can see Sharurshid specialises in speculative trade, but is no manufacturing giant, that is perhaps a better example of what you mean?

In the words of the same old-timer: "One word of warning — Don't believe everything you hear — even from me."

 

[AnotherDilbert]

RL example, the Reading Railroad, vertical integration, owning the mines, the railroad and the docks, once the most capitalized company on earth.

https://en.wikipedia.org/wiki/Reading_Company

Yes, vertical integration exist. A better example might be modern oil companies, such as Shell, BP, or Exxon, which, I think, operate drilling, shipping, refineries, and at least at some time even retail.

But they are the exception, not the rule. Most oil is not produced, or sold, by them.

 

[aramis]

Yes, vertical integration exist. A better example might be modern oil companies, such as Shell, BP, or Exxon, which, I think, operate drilling, shipping, refineries, and at least at some time even retail.

But they are the exception, not the rule. Most oil is not produced, or sold, by them.

Shell, BP, and Exxon all ship oil from the North Slope via the Alyeska Pipeline, down to Valdez where they loaded it on their own ships. BP then shipped it to outside refineries in Asia, then shipped it back to the US in their own tankers. Exxon shipped on their own tankers, most of which were US flagged, so mostly to California refineries. (Supposedly, the costs of shipping were lower than the differential costs of operating a refinery in Alaska. At least, that's what Exxon told Sarah Palin...)

 

[Garnfellow]

Interesting to read this article in light of the discussion of megacorps:

https://www.bloomberg.com/view/articles/2016-06-14/ships-have-gotten-too-big

Essentially, the big shipping companies have moved to container ships so large that they are not really economical.

 

[Condottiere]

Return on investment.

Most of these ships are ordered when demand is high, and get delivered during a recession.

They could probably make airliners that can stack a thousand passengers in, and even if flying is safer than swimming in Australia, when the crocodile bites, that's a thousand souls in one go.

 

[AnotherDilbert]

Essentially, the big shipping companies have moved to container ships so large that they are not really economical.

I think everyone's hurting, not just the biggest ships. The problem is overcapacity.

Most of these ships are ordered when demand is high, and get delivered during a recession.

They seem to take only about a year to build, so the orders are probably fairly recent. And they keep building even bigger ships.


Either the shipping companies expect much higher volumes, or they expect bigger ships to be more economical?

 

[Garnfellow]

I think this also ties into the battleship size discussion -- that markets, with apologies to Adam Smith, do not always behave in a rational manner.

 

[aramis]

I think everyone's hurting, not just the biggest ships. The problem is overcapacity.

They seem to take only about a year to build, so the orders are probably fairly recent. And they keep building even bigger ships.


Either the shipping companies expect much higher volumes, or they expect bigger ships to be more economical?

Last I heard, the Daewoo complex was more than 5 years backlogged. Hyundai, as well. Each has multiple constructionways... I was watching a documentary about them last summer, and it was dated to 2014.

 

[flykiller]

markets, with apologies to Adam Smith, do not always behave in a rational manner.

sure they do. it's just that what we're seeing isn't a market. it's a policy, enacted by those with power, using other people's money. as soon as it starts costing those with power a single penny of their own, you'll see changes, but not until then.

 

[AnotherDilbert]

Last I heard, the Daewoo complex was more than 5 years backlogged. Hyundai, as well. Each has multiple constructionways... I was watching a documentary about them last summer, and it was dated to 2014.

Are the orders firm, or can the buyers cancel the order before building starts?

 

[aramis]

Are the orders firm, or can the buyers cancel the order before building starts?

Firm enough... They're signing pretty ironclad contracts.