What's the best way to use caravans? (professional images included)

In 1.09e, which is the latest patch, it is better to connect them all to whichever city has the largest amount of food production before bonuses. Most of the time, that is your capital, which gains 4 from the farm. However, sometimes other cities can end up with higher bonuses than that.

Assuming city 1 is your city which produces the most food and not just "the capital" I would go for image 2 with an addition.  You have 4 cities in that image and only 3 trade routes.  So I would do the following:

Origin -------> Destination

City 1 --------> City 2

City 3 --------> City 1

City 4 --------> City 1

City 2 --------> City 3

This would give City 1 the max food production bonus it could get from the available cities and it would give you a road which cuts across your cities in the other direction.

Since sending all caravans to the greatest food producing city will always leave you with 1 caravan spare, theoretically from the food city, I prefer to have the food city create one of the trade routes with an outlying city which then creates a route to another outlying city to maximize the efficiency of my road network.  Which city gets selected for being the "spare caravan" is always based on road network efficiency and nothing else.  I use this method because it gives me close to the best of both worlds without a lot of effort.

If you're not lazy like me, you could also do the above and then dismiss the 2 -> 3 caravan once the road is built.  Build a new caravan in city 2 and send to 4, dismiss once road is built.  Build another in city 2 and send to 1.  Once it arrives at 1 and says "trade route exists" dismiss the 1 -> 2 caravan and replace with 2 -> 1 caravan on the same turn so you don't "lose food."  Then build a new caravan at 1 and send to 3 on arrival dismiss the 3 -> 1 caravan and replace with 1 -> 3.  Build new caravan in city 3 and send to 4.  You now have max food and roads between 1&2, 1&3, 1&4, 2&3, 2&4, and 3&4.  I've never had the patience to inclination to do this, but it is possible.

Edit: It just occurred to me that due to the weird pathing in this game the caravan from 2 -> 4 and 3 -> 4 would likely follow the road from 2 -> 3 until the junction with 1 -> 4 then follow the road to 4 creating no new roads.  In which case it would be best to create the 2->4 and 3->4 roads prior to the 2->3 road.  Although this really depends on the terrain and assorted other things too complicated to get in to here.  But with careful analysis it is possible to learn how the AI creates roads.  It does not create them on the route the caravan takes.  It doesn't even always create them on the route the caravan takes when you let the AI pathing determine the route.  It seems to prioritize creating the least amount of road squares possible while still maintaining a reasonably direct route.  This means it will join with a preexisting road almost whenever possible which can be very frustrating when you want to create a solid network of roads.  But using the revised system outlined here it would not have the option of efficiently joining with preexisting roads for the 2->3 road and so it would create a new road directly.

It's pretty much how Heavenfall said, though I can list a couple exceptions.

City-String Exception:

In my experience, if you're playing a Kingdom, you only ever get one Caravan.  Because of this, if you ever end up starting on a peninsula, or a canyon, or anything at all causes you to string out cities, it can be a good idea to caravan string from City 2 to 3, 3 to 4, etc etc.  Conceivably, it's always better to send Caravans 2 through X to City 1, but the problem arises where you lose efficiency in creating roads, and it can begin to take tens of turns to get a caravan back, as I've experienced before.  This is especially apparent on the larger map sizes, where, if you end up on one of these terrain-formations that causes you to string cities and your expansion goes unhindered, it's not uncommon to string together 5-15 cities before you hit the mainland.  This is especially apparent in the case of forests, where all units move incredibly slow, requiring twice as much movement per tile to get around, and if you find yourself in one of these situations, you are almost certainly going to have to deal with that.  After the road(s) is(are) created, if you find yourself low on food, then it becomes prudent to dismiss the caravans and send them back to City 1, which will be much quicker with the roads already established from Cities X, Y, and Z, to City 1.

Mega-Farm Exception:

Drachonus alluded to this a little bit.  In most games, you'll find that your Capital is going to be your main source of food production, but some times you end up a finding a city with the potential for both a Farm and Apiary, or something like that.  When this happens, this is usually when I end up actually using the Home City Caravan, which I normally never build, and sending it to that city, as well as re-routing all my other caravans if I can be bothered.  If you're playing a Kingdom, the addendum to this exception is, "Unless you haven't researched Lost Bounty."  The Lost Bounty technology creates new food resources within your territory, making it very profitable to wait until you have a large empire to use it.  More often than not, the tech will spawn a Twilight Bees resource near your capital, making any other food-producing city still moot as far as caravans go, unless it also happens to get a new food resource at the 'Mega-Farm' city, though you don't see it very often.

The Empire Exception:

And now the biggest exception of all, the Empire's.  With only a few points in their Diplomacy tech tree, you can have two caravans per city.  The second Caravan makes the City-String Exception moot, as you can just use the first of the two to get a road, then the second one to send back to City 1.  If you can micro it well, it can also make the Mega-Farm Exception moot, especially if you haven't used both caravans already, since you can send a Caravan both to your Home City and to the Mega-Farm city.  If you have used the extra caravan, finding the one traveling between City X and City Y can be a little tricky, but if you can find it, you can just dismiss it and then send the extra caravan to the Mega-Farm city.  It's also worth keeping in mind that the Mega-Farm Exceptions Addendum, as stated above, doesn't apply to Empire's since they don't have a Food-Resource-Creating tech like the Kingdoms do, so go ahead and shoot those caravans straight to both Farming Cities.

As i understand the changes in caravans in the release notes for 1.1 beta, caravans will

1) generate money, not food.  and

2) distance (length of trade route) will not affect amount of guilders generated.

3) upgraded roads will generate additional revenue.

This has several consequences:

Assuming roads upgrade according to 'usage' by the generating caravan, (as in 1.09e), short routes are much preferred.

Controlling the pattern of your road network will be easier because you wont have to deal with trade offs related to choosing the long route to get max benefit.

So, as i understand it, the 1.1 beta changes caravan routes from food increasing to gilder increasing. The beta also eliminates any relationship between length of the trade route and the economic benefit of the route. Further, if the number of times the creating caravan travels the route is still the mechanism that prompts the road to upgrade, then shorter routes are preferred, because the quicker the road upgrades, the quicker your guilder revenue for that route increases.  The only things that would modify this are: 1) is trade route revenue subject to multipliers in the settlement (building, choices made when settlement levels up)? 2) military considerations in  road building.

Have I missed anything?

Question:  do 'improved' roads provide faster movement?  or just nigher guilder revenue?

Now that the caravans create money and not food, how do we make up for that lost food in the game?  Will there be more food resources?

Wait and see. I think roads and caravans are taking a more transportative role in the coming beta. I never used them anyway since the only map I play on has so much forest and creature features. I will still want to mod roads to only need 5 trips per upgrade.

I think the mega-city road web will still exist in 1.1.  A level 1 road provides a 10% gildar bonus (additive) and a level 4 road provides a 50% bonus, if I've read the changelog right.  10% of 11 (2 gold mines, 1 moneymaker) =1.1. gildar.  50% of 1 (1 moneymaker) =0.5 gildar.  There are other advantages of roads but I reckon the gildar bonus will be decisive in most cases.

You will be able to build farms without fertile land.

I hope not, they are all ready seeding to much resources and food into the game as it is.

Edit****

I want them to add the random creatures back in to kill the caravans that aren't protected.

They have previously stated that resource tiles will be reduced, and the ability of cities to create resources without tiles increased.

The way you deal with the 'lack' of food is by not needing as much.

Outposts are going to cost a food just to get off the ground now, making city-spamming, and therefor food, less of a problem.

I dunno if farms are going to be non-requisite anymore.  Any Dev posts you can link to for verification?  If that's the case, I hope they're only provided one or two a pop, and 4-5 for Apiaries and Farms built on Fertile Land/Wheat, etc.

Another thing, roads in 1.09 were bugged.  You could have multiple Caravans traveling a route, but only the generating one would ever prompt the first upgrade.  After that, it was whichever completed the route first.  This wasn't supposed to be the case.  Using the road with Caravans, period, was supposed to upgrade it, at least in my understanding, with the usage count being additive, not separate.  I could be mistaken of course, but I'm pretty sure this was the case for all Caravans, not just a specific Caravan or two going from A to B.  I.E., if you had a Caravan going from A to B, and A to C, then the road between A-B should've improved twice as fast, since CaravanA-C was traveling the road on top of A-B.

I think the idea with Caravans is, now that the city-spam is starting to get fixed, we'll see a more GalCiv-esque style of play, where you settle resources first, despite distance, as a means of laying claim, and probably filling in the gaps much further on, if at all.  So we'll see rather disjointed Realms to begin with, but in order to protect those Realms, especially since the monsters got nastier, you'll need to be able to build standing armies at individual cities or city-clusters...  Obviously, you have the Gold-Cost of creation, plus the Maintenance, so the new +Gold mechanic suits, especially if we're still going to see astronomical costs for producing units.  To my knowledge, that's pretty likely, since from what I've read, they've only balanced Weapon Stats for Attack, Defense, etc, and not costs yet.

Edit:  Oh, yeah, on the unit costs thing...  With Citizens providing gold now, that should help too.

I heard that as well.  In my opinion it was getting silly how they started every starting position with food, gold, plus one other.  I just wanted it to be harder than that.

Do you know if they are going to bring back the random monsters and bandits.  I really thing they should.