Merchantmen, speed, and trade cartels

Your HUGE constant expense is paying off the multi-billion loan on your ship. Assume the freighter costs 3 billion and you have a 40 year note on it at 4.5%. Every month, without fail, you have to come up with 13.5 million to give the bank (AFTER expenses, crew pay - all that stuff). So obviously that sets the base of how much money a ship can earn without fancy drives etc.

Since a ship can earn that much as profit doing 1 run per cycle, if you make two runs per cycle you will clearly gross at least twice that, though of course your expenses would be higher. Expenses have to vastly higher, like order of magnitude higher, to not make that the right answer to making more money.

kzt wrote:Your HUGE constant expense is paying off the multi-billion loan on your ship. Assume the freighter costs 3 billion and you have a 40 year note on it at 4.5%. Every month, without fail, you have to come up with 13.5 million to give the bank (AFTER expenses, crew pay - all that stuff). So obviously that sets the base of how much money a ship can earn without fancy drives etc.

Since a ship can earn that much as profit doing 1 run per cycle, if you make two runs per cycle you will clearly gross at least twice that, though of course your expenses would be higher. Expenses have to vastly higher, like order of magnitude higher, to not make that the right answer to making more money.

There are several other factors to consider. First, the idea that you're paying the bank to rent their money really doesn't apply to large shipping firms; most of them are going to try to finance their ships internally. In other words, they own their ships outright, rather than financing them through debt. They're financing them through stock capitalization.

You've still got insurance costs, which you didn't mention. Most shipping firms aren't going to be so cash-flush that they can insure internally.

Regardless, your primary point is well taken: time is money, and if installing a military grade hyper drive will give them a higher return on their investment than a civilian hyper drive, they'll do it.

The conclusion here is that a military-grade hyper drive is substantially more expensive, in capital expense, maintenance and operation than a civilian-grade hyper drive. If it wasn't, you'd see them all over the place. The reason the military can afford them is that their ships spend a lot of time sitting in orbit rather than traveling; which reduces their operational and maintenance expenses substantially.

kzt wrote:Your HUGE constant expense is paying off the multi-billion loan on your ship. Assume the freighter costs 3 billion and you have a 40 year note on it at 4.5%. Every month, without fail, you have to come up with 13.5 million to give the bank (AFTER expenses, crew pay - all that stuff). So obviously that sets the base of how much money a ship can earn without fancy drives etc.

Since a ship can earn that much as profit doing 1 run per cycle, if you make two runs per cycle you will clearly gross at least twice that, though of course your expenses would be higher. Expenses have to vastly higher, like order of magnitude higher, to not make that the right answer to making more money.

So in all that fancy calculation what is the cost of a Delta band hyper drive? The cost of Theta Band Hyper drive? What about the energy requirements due you need a bigger fusion plant?

I don't know Mr Weber hasn't told us. I don't really care. Word count and story slowness is already a concern.

So it is entirely conceivable that your 3 billion freighter now cost 9 billion or more. Somehow that doesn't enter in the equation.

By the way your numbers for loans are probably off as the freighters would probably last a 100 or even 200 hundred years.

Does depreciation enter into it for tax purposes?

Not to mention what were/are the interest rates and inflation rates. Not like Manticore has a Fed mandate 2% inflation or maybe it does somehow that never gets mentioned in the books either. Other than an off hand comment that Manticore is actually experiencing inflation for the first time ever due to fighting a war. (or some such) Inflation pretty much has a huge impact on interest.

Me, I am wondering where those hydrofoil ocean going transports of the 50's and 60's Scifi went to. Still seeing merchants and tankers driving around the ocean at 10-20 knots back on USS Last ship. Big improvement on the 7 knot Liberty ship. But ... of course warships are still pretty much in the same speed range as the 50's and 60's.

Not really wanting to know more,
T2M

thinkstoomuch wrote:"kzt"]

Your HUGE constant expense is paying off the multi-billion loan on your ship. Assume the freighter costs 3 billion and you have a 40 year note on it at 4.5%. Every month, without fail, you have to come up with 13.5 million to give the bank (AFTER expenses, crew pay - all that stuff). So obviously that sets the base of how much money a ship can earn without fancy drives etc.

[deleted for brevity]


Me, I am wondering where those hydrofoil ocean going transports of the 50's and 60's Scifi went to. Still seeing merchants and tankers driving around the ocean at 10-20 knots back on USS Last ship. Big improvement on the 7 knot Liberty ship. But ... of course warships are still pretty much in the same speed range as the 50's and 60's.

Not really wanting to know more,
T2M

------------------

Back when I glowed in the dark for H.G.Rickover, the adage was "Reactor power follows steam demand"

The same theory applies here, as it did when motor-driven freighters supplanted the sail-driven cargo.

A demonstrated technology will come into general use when there is (1) a market (the demand), and (2) the cost of that technology is affordable and (3) it is available for use.

See the SS Savannah for a similar example -- from Wiki -- As a result of her design handicaps, training requirements, and additional crew members, Savannah cost approximately US$2 million a year more in operating subsidies than a similarly sized Mariner-class ship with a conventional oil-fired steam plant.

In short --

Streak-drive cargo ships will show up when the GA releases the technology (selective licenses to be sure) and there is an economic benefit to the faster deliveries the vessel can provide.
Remember that Sail-driven commercial fishing boats were still in use into the 1950's and only dropped out of general use with the availability of x-military cargo and small-craft re-purposed to civilian use.

-- Stewart

Kzt--another factor you are not including: cost of replacement. Even if you do have a 40-year loan to pay off, the standard hyper generator and other equipment is going to last that long and more. But the military grade equipment will have to be replaced at least four times during the course of that 40-year-loan; more likely ten times or more, given continuous usage (unlike a military ship). How much will that increase your costs, buying not one, but ten sets of military grade equipment over the lifetime of that loan? Might ten sets of military grade equipment cost more than the initial loan for a standard slow freighter? Then add in the increased maintenance costs.

JohnRoth wrote:There are several other factors to consider. First, the idea that you're paying the bank to rent their money really doesn't apply to large shipping firms; most of them are going to try to finance their ships internally. In other words, they own their ships outright, rather than financing them through debt. They're financing them through stock capitalization.

If you can't make at least as much money running a fleet of ships as you could lending it to people buying houses then you won't be in the shipping business. You will find something more profitable to do with your vast cash flow. So no, they still need to make the same sort of money.

Shipping on earth:

Currently there is an overabundance of TEU space. Therefore shipping costs are low and speed is low. A few years ago, there was not as large of a capacity and shipping costs per TEU were higher and likewise speeds were higher to accommodate.

Shipping in HV:

RMN shipping pulls out of SL. Dearth of shipping hull bottoms. Costs will increase and speed will also increase for all hulls in SL space.

RMN dominates verge. Shipping costs will drop as there is an overabundance of hulls available and likewise captains will take it even easier on their hulls, nodes, W-sails.

Smart RMN shippers will claim some independent flag, use their dominated wormholes and collect the much higher shipping charges while loafing along at normal rates creating massive profits.

SL shippers will look around and they now need a gigantic number of new hulls and time increased. So, at least in the short term, I would think that all SL shippers new hull construction will implement better W-sails, radiation shielding, compensator, Hyperdrive, etc as it will be profitable, until of course the SL splits up, the MMM moves back in and cuts these SL shippers off at their knees. Once said SL shippers get cut off at their knees in bankrupcy court, the MMM buy up these fast hulls and then dominate certain routes/cargoes that up to that point were too expensive to initiate dominance in said market place due to the high upfront cost of much more expensive new hulls with all the bells and whistles of their military brethren.

I think a merchant ship could get away with less maintenance than military ships do, because they spend considerably more time at ports. And that little niggling detail, they don't need to maintain a 90%+ readiness state should the need to do battle ever come into play.

As long as they don't let their hyper generator fall into such disreputable state like the Hali Sowle, which had a military grade hyper drive, and it had that pole that needed to be replaced ~1,000 hours prior to them even going near Mesa, and the Green Pines incident.

If a tramp freighter, that passed through multiple hands and was used as a smuggler... then larger corporations should also be able to operate military-grade, or near-military hyper generators.

Cut into their margins slightly? Sure, most definitely.
Cut into their margins enough to make it inefficient? Almost certainly not.

Somtaaw wrote:I think a merchant ship could get away with less maintenance than military ships do, because they spend considerably more time at ports. And that little niggling detail, they don't need to maintain a 90%+ readiness state should the need to do battle ever come into play.

As long as they don't let their hyper generator fall into such disreputable state like the Hali Sowle, which had a military grade hyper drive, and it had that pole that needed to be replaced ~1,000 hours prior to them even going near Mesa, and the Green Pines incident.

If a tramp freighter, that passed through multiple hands and was used as a smuggler... then larger corporations should also be able to operate military-grade, or near-military hyper generators.

Cut into their margins slightly? Sure, most definitely.
Cut into their margins enough to make it inefficient? Almost certainly not.

Hmm, you do realize that "readiness" rates for commercial shipping are vastly superior to that of military vessels? Likewise they are designed so they can be maintained WHILE they are moving under power. For instance one can can completely overhaul a piston crank shaft, etc on a freighter WHILE it is moving.

In Honorverse terms, If reality were inserted(Its not) I would fully expect the ability to shut down an alpha node and repair it. Or have a secondary fusion plant, or work on a W-sails components while underway in a grav wave. Especially since RFC has stated that for many, a freighter IS their home. There is NO WAY that such folks will put up with single point failure maintenance nightmares when it is ALSO their one and ONLY home.

wastedfly wrote:Hmm, you do realize that "readiness" rates for commercial shipping are vastly superior to that of military vessels? Likewise they are designed so they can be maintained WHILE they are moving under power. For instance one can can completely overhaul a piston crank shaft, etc on a freighter WHILE it is moving.

Warships have to maintain readiness much higher than merchies, because if a hostile enters system, you have to be able to pull battle maneuvers, be ready (and trust) to pull red-line stunts, take battle damage, so on and so forth. You can't afford to leave anything at less than near-perfection, because of those what-ifs, and Murphy's Law would probably hop in and take out your high-readiness stuff, leaving you only your "oh, I'll repair that node/generator/shield/weapon next week/month" stuff.

We've also seen it, that Naval officers have low opinions of merchants. That they tend to run slack ships, dirty ships. TextEv would be beginning of uhm, War of Honor I believe, when the Andermani officer is taking pirate prisoners off Captain Bachfish. He was highly surprised at how tight a ship he ran... until he found out the particulars. Further textev would be when Terekhov had his XO and some junior officers sneak through Monica. "Nah, we won't answer the hail right now. Let them hail us another three or four times before sending our arrival message." <- pretty slack, and slackness in one area will usually transmit into slackness elsewhere (like maintenance)

Merchants would "let slide" a maintenance cycle if a minor problem pops up until they can get to a better (or cheaper?) yard. We've seen it repeatedly in Silesian space.

One example, Warnecke's pirates when they occupied Marsh... Honor spoofed her Alpha nodes to project a node failure, and they didn't even bat an eyelash at a freighter entering that hick system. Another example is, the Hali Sowle again with its military-grade hyper drive. Andrew opened that sucker up and worked on it casually to find out that the pipe was worn almost through and cracked to boot while they were in hyper.

So merchies (and smugglers) have been shown to delay maintenance, probably until they can get somewhere it's going to be dirt cheap to do it like Mesa orbit, or secure (non-Silesian) systems. And warships do not delay maintenance, without pressing need (like Manticore over-straining to occupy Trevor's Star)