Naval attrition is losses of ships from fleets, caused by lack of naval supply from being too long at sea without resupplying in a port.
As with land attrition, naval attrition is also composed of movement attrition and supply attrition. You only get the higher of both. When the percentages of attrition are applied to the ships in a fleet, fractions of a ship are tracked and add up from month to month while at sea. When an integer is reached, that integer in number of ships is lost, and the leftover fraction is carried over to the next month.
Galleys take the brunt of fleet attrition: you lose 5 times more of them than any other type of ship. If no galleys are present, expensive warships take that role. Do not mix a few warships with lots of transports and send them on long journeys; it is better to send them separated in two fleets. Be sure the departure date of both fleets is identical (it is unwise to have defenseless transports in a sea zone by themselves for even one day). You can mix warships with a single transport since the transport will take some of the attrition off the warships.
Ships have their fractional attrition instantly repaired when they are split, reorganized, merged, or make port. Thus, whenever you have a fleet moving a significant distance, you'll want to split it and then immediately recombine the fleets, thus cancelling all fractional attrition.
Passengers also suffer attrition equal to the attrition of the fleet carrying them. When fleets carrying passengers lose more carrying capacity than troops (whether by attrition or combat), the excess troops are not lost, but the overcapacity is maintained until the troops are disembarked. However, avoid reorganizing fleets that carry excess troops; unlike splitting and merging, fleet reorganization is very likely to result in troop loss.
The AI does not suffer from naval attrition. Otherwise computer countries would probably have no fleets, judging from how badly the AI suffers from land attrition. That explains why far away countries manage to bring troops even early in the game.
Movement attrition is 1% when a fleet is moving on the first day of the month, with a few exceptions. Movement attrition is nil when moving from any port, or when the fleet is in national waters. Movement attrition is also negated if a fleet is commanded by an explorer.
Movement attrition means more ships lost for big fleets. It makes sense to split your fleet for long journeys, although you should keep fleets to at least 6 ships to avoid the small fleet attrition penalty (see below). For example, a fleet of 50 ships moving for 2 months would get 2% attrition, which is enough to kill one ship (50 * 0.02 = 1). But if the same set of ships was divided into 5 fleets of 10 ships each, it could move for up to 9 months without losing a ship.
Naval supply attrition is computed very differently from troop supply attrition. It is computed based on the time that a fleet has been at sea, starting at the time the fleet last left a port. The effective time at sea is computed as actual time at sea, in months, times a factor called the "month multiplier". That is,
effective_time_at_sea = month_multiplier * ceiling(months at sea)
The month multiplier is based only on the country's naval tech; see the table on the right. Naval supply attrition is nil so long as a fleet is in national waters, but the time at sea still increases normally.
The attrition displayed for the fleet is one less than it should be and displays attrition for the previous month. The attrition level for the current month is likely to be higher. The supply-months counted are not actual months, but a factor times the actual months at sea.
For the purpose of computing supply attrition, the time at sea has several modifiers; it is cancelled at naval tech 41. It is increased by +10% for a storm or ice (cancelled at naval tech 38), and decreased by -3% for coastal waters, -2% for next to war ally port or controlled enemy port, -3% for blockading and -1% for each point of manuever of the fleet leader (if not an explorer) (-2% is default), or -2% for each point of maneuver of an explorer.
The implication is that your first fleet trip way-point (shift-click) should be the port in your departure province. It is best to leave port as early as possible during a month. This is especially crucial in the low naval tech levels. Also secure MA so you can have resupplying ports in your trips. You should also be careful when your fleet is very long at sea in national waters. If you are forced to move the fleet in cases of naval defeat or modifiers change due to a war ally that signs a peace treaty, a sudden attrition can then kill up to one ship of your fleet per month. Assuming troops on ships do not exceed capacity of the ships, at most 1K soldiers are lost per month due to naval supply attrition.
Small fleet penalty
Fleets of 5 or less ships have an increasing penalty to supply attrition that goes to 10% if only one ship. Use fleets of size 6 or more to move troops around for significant distances. If no troops are carried, fleets of size 3 or more are usually acceptable. If you have an explorer, a size of two is probably best for exploration if you fix the fleet via splitting/recombination every so often.
Small fleet attrition is at least (floor (10/N)) where N is the number of ships, five or less; but attrition can be as much as the maximum attrition.
You can only lose one ship to supply attrition per month, so the maximum supply attrition that a fleet can suffer decreases with the number of ships in the fleet, and goes from 100% for 1 ship, to 5% for 17-20 ships, 1% for 51-100 ships, and 0% for >100 ships. That is right, a fleet of 101 ships will not suffer from supply attrition even at naval tech 1, but if movement attrition is applicable it will kill one ship every month of travel (more for a fleet of 200 or more).
The function for maximum naval attrition where N is the number of ships is:
maximum naval supply attrition = floor (100/N)
After 13 months at sea, if a fleet has supply attrition of 6% or more, it will be ordered to the nearest owned port automatically. If you have military access to a closer port you are allowed to change the path to the closer non-owned port or any destination you like such as national waters, but you will not be allowed to remain motionless. Thus you cannot merge or reorganize ships that are ordered back to port until they reach port or national waters. Ships that do not have a path to port are again ordered to port at the start of each month if the attrition is still 6% or more. A fleet of 17 ships or more will never be ordered to port for as long as it continues having at least 17 ships; note that splitting or reorganizing a large fleet can sometimes cause immediate move to port.
Loss of galleys in high seas
Although not strictly attrition, the end result is similar. If a fleet containing galleys moves out of coastal waters, there is a 20% chance for galley to be lost immediately. A fleet could lose half its galleys, or none at all, depending on the roll for each individual ship. Note that the Mediterranean has two open sea-zones where galleys can be lost.