The trade network is just that - a network.
In the same way that a city can be linked by road via another city already linked by road - they don't all need their own roads directly to the capital - your trade network will spread via harbours.
What this means is you need at least one harbour within each "sub network" of your trade network. Here is a quick diagram:
Continent A Water Continent B
|~ ~ ~ ~ ~ ~|
1------2 ~ ~ ~ ~ ~ 3------4-----5
|~ ~ ~ ~ ~ ~|
City 1
is your capital, and linked by road to city 2
. If city 2
and city 3
both have a harbour then they extend the trade route across the water, this means 4
and 5
are also connected, because they are linked to 3
and so, by proxy, use it's harbour link.
If in this example, even if 2
was your capital it would still need a harbour to extend your trade route accross the water, having a harbour in 3
alone is not sufficent.
This also works if 2
and 3
were on the same continent, but not connected by road/rail.
While the caravan/cargo ship does have a graphic that goes back and forth, the trade route gives food/production/gold per turn, not per graphical trip.
I just tested the effects of distance in my current game (all routes comes from the same port city).
Internal cities:
I sent 2 cargo ships to cities in my own empire:
- City 1 is 10 hexes away, the trade route gives 9 production/turn, for 30 turns.
- City 2 is 21 hexes away, the trade route gives 9 production/turn, for 30 turns.
So, distance does not effect how long internal trade routes lasts, or how much food/production you get (from what I can see).
Foreign Cities:
I tested it with some cargo ships to foreign cities and city states:
- City 3 is 28 hexes away (other civ), trade route lasts 28 turns
- City 4 is 29 hexes away (city state), trade route lasts 29 turns
- City 5 is 40 hexes away (city state), trade route lasts 40 turns
- City 6 is 42 hexes away (city state), trade route lasts 42 turns
It does effect the length of time that a foreign trade route remains active, the trade route appears to last 1 turn per hex of the trade route length.
Distance does not appear to influence the calculation of gold/turn with foreign cities. Based on the trade screen, that is related to "difference in resources", and the two cities local gold/turn generation.
Defence:
Distance will be a consideration in the defence of trade routes, because if a trade route is very long you will have more distance to protect from barbarians or enemies.
Best Answer
Extra goods are generated via trade. Or “poofs out of thin air”. To me it makes sense: you are using your government’s military might to allow civilian trading transactions on designated routes.