I was very frustrated this morning.
I spotted an unescorted convoy of 11 ships loaded with land troops. They were slightly damaged, at 80/110 hit points. So I dispatched a cruiser and a destroyer to intercept them, both L3. A cool 125 hit points, and war ships as well, so an easy victory, right? No need to complicate things by firing from range with the cruiser, so I just went melee. Well, no.
I was shocked to see my ships being sank, while hardly doing any damage. In just a few rounds, the transports sank my warships; in the meantime, I did about 25 damage to them. They sailed off at about 55 HP.
Later on, I found another convoy, 12 ships at full health, 120 HP. I had a bigger fleet available now, 2 battleships, 1 cruiser, and three destroyers, all L3; and being especially cautious this time, I decided to kill them from range.
I was disappointed to see my damage per round; it was about 10-13 points. I shot at them three times; then an enemy fleet showed up, and I transferred fire to it. Suddenly, my shots went up hugely in efficiency: in two rounds, I did 60 points of damage. 2 BS and a cruiser should do 37.5 damage and I was a bit damaged myself, so it was much more like a result I would expect.
Later on, I transferred fire to the transports again, and my damage dropped to around 12 again.
Then I realized what was happening. I checked the LAND damage of 2 BS and a cruiser - indeed, 15 points! So, even while the land units were loaded in a ship, they were considered land targets - and thus extremely hard to kill.
@freezy, I don't really know how this bug was unnoticed for such a long time (or was it introduced at some point?) but it may be the explanation why hunting naval convoys has become so hard since 1.5... you explained earlier that this was intended, but I'm pretty sure the above was absolutely NOT as intended. I suggest you check the code next week, and you'll probably find that what I figured out above is true: warships firing at convoys to their LAND damage ("shore bombardment") against them, NOT their naval damage! If so, I suggest you fix this bug with urgency.