PIGS (sorry, Profits) IN SPACE..

On Starship Economics, and the problem of how to make a profit in space :

> Steve Higginbotham writes

> In fact, that analysis  can  be  applied  to  EVERY  merchant  ship  ever
> designed  for  MT. Virtually all J-3 ships will tend to suck up money for
> generations. MOST J-2 ships will also. Given  that  the  J -2  ships  are
> primarily  passenger  ships,   with  adequate stewards, they can come out
> slightly ahead. They don't come out ahead of  the  savings  account,  but
> that  is  someone  else's  problem.  J -1 ships will mostly make a little
> money. They even make more money than a savings  account.  Not  quite  so
> much as most Money Market accounts, but, again someone else's problem.

This  is the problem everyone seems to be having with interstellar trade,
it's just too difficult to make a profit with the given freight costs.

> Cynthia has just suggested that passenger/freight fees could	be  raised.
> Possibly.   In   a   normal  economy,  doing	so  would  encourage  local
> development of resources, rather than  interstellar  trade.  More  people
> would  stay  home,  and ships would be in worse shape than ever. Besides,
> there are indications that the Imperium regulates passenger/freight  fees
> to the existing levels.

Well,  if  we  can't change the fees, maybe we should look at the problem
from a different angle :  A  highly  skilled  crew  can  make  reasonable
profits on speculative trade...

> As to the suggestion that the starships  operate  by	spec  trade  rather
> than	 freight  consignment,	this  IS  possible.  It  is  also  possible
> (probable, in fact) that  the  smart	investor  will	buy  the  stuff  up
> WITHOUT  pouring  money into a starship, and ship it as freight. Let some
> other fool lose money by buying a ship. There will always be	idiots	who
> go  broke  doing  this, who can be milked by an alert investor. Note that
> in the case of a  subsidized	route,	the  government  is  the  idiot  in
> question,  and  the  populace  is  the  entity  being milked by the alert
> investor.
> Therefore, most investors will NOT invest in a starship, which will  lose
> them	gobs  of  money, but rather make use of someone else's starship (so
> someone else can lose gobs of money, while  you  MAKE  gobs  of  money ).
> There  is  every indication (from the tables) that only a small ship (400
> tons or less) can make any significant amount of  money  by  spec  trade.
> Significant  in  terms of starship payments. If there was that much money
> to be made, Tukera would get an exclusive contract, and the profit  to  a
> starship owner would vanish.

The  assumptions  behind  this  is  that  there's  an unlimited supply of
starships available to transport your cargo wherever you want it  to  be,
but  given  the  costs  and  risks involved, no-one is going to be stupid
enough to run any such ship, let alone a plentiful supply of them.

> The  upshot  is  that no ship will ever make enough money to convince the
> buyer to buy it. So either there are NO ships,  or  the  government  buys
> and  runs  them  all, to the detriment of the private sector (read: PCs).
> Or we lower ship costs. Which we did.
> 					--- Steve & Cynthia Higginbotham

Somewhere in the Starship Operators Manual (I  think ),  there's  a  line
that  may  help  explain  this dilemma - It refers to the *reason* anyone
would be operating a starship in the first place, and says (paraphrased )
that  the  large  company ships don't make their profits on cargo, but on
transporting goods for their parent companies.

Looked at that way, the large companies use large starships because  they
can  get  cargos  cheaper  on some other planet, their passenger space is
used for moving their executives and employees, and  they  just  use  the
'standard'  freight and passenger charges to fill up unused spaces, which
wouldn't be making them any profit empty.

The same thing goes for small starships - Ok, so  It's  cheaper  to  have
someone  else  move the cargo on their starship, but they aren't going to
have a starship in the first place unless they're  intending  to  make  a
profit on it themselves by moving speculative cargo's.

This  means  there  can be lots of smaller free and far-traders shuttling
back and forth, only taking regular freight when they can't  find  enough
speculative  cargo.  The  free  traders  are  there because the planetary
governments want people who haven't got access to their own  starship  to
have a chance to make some money too - then they can tax them :-)

As  Steve  says,  there  are  NO ships, at least none that are willing to
carry your freight at a worthless 1000 Cr/ton :

"You want the stuff shifted, get your own ******** starship !"

Unless, of course, I've missed something in the rules about how  easy  it
is to find someone to move your freight for you (sigh).

That's  the  way  I've  always  seen Traveller trade working, but I can't
explain the passenger spaces  found  in  the  'standard'  designs  (small
traders)  though -  it's  easier  to  make a profit by converting it into
more cargo space,  given a highly skilled  crew.  Anybody  else  got  any
ideas ?

> P.S. Does anybody remember the cheap "standard" hulls from Old  Traveller
> Book 2? And the cheap A & B jump drives? Where did those go? And why?

Yes, I remember them - much cheaper if you  could  fit  what  you  wanted
into them. I guess they just didn't fit with the new design rules.

Personally,   I'm   all  in  favour  of  making  the  starships  cheaper,
especially the computers - Price/size per tech level, like  the  rest  of
it.
				Simon Anderson