When you lose a ship, you somehow get to keep all of it's cargo, people, and fuel. While this might seem useful at first to the player, it causes a couple problems. Example: I had a bad autoresolve experience in iron mode and lost virtually my entire fleet except for one Vigilance. Unfortunately, I still had all of my supplies and the accident risk instantly went to extreme. I had an 'major accident' occur literally 10 seconds after the battle ended and lost my last ship. To avoid this in the future, the player should lose all crew, cargo, and fuel upon losing a ship (to the point where the remaining ships can hold everything without an accident).
I'm in agreement with this 100%. There's nothing wrong with the encumbrance system
per se, but how hitting the limit is handled really should get revisited at some point.
It's realistic; those ships holding cargo are dead, you delegated where that cargo was stored and it's not under your direct control what's gone, and frankly, it's just part of war, just like losing credits if you lose your entire fleet.
I think it greatly enhances the experience if bad planning and bad luck happen; in the real world, we don't get control over outcomes when dealing with complex events, and this is one of those areas where a game-design issue can be solved best by simply treating it like the real world.
As a kinder, gentler alternative, it could be made so that after a battle where you've lost ships but are victorious, some (but not all) of the cargo is "floating around" and can be picked up. Then you might get that Tachyon Lance back, but you have the conscious choice and plenty of warning that you're going over your storage limits.
That said, the current system is both unintuitive and unrealistic; you get to keep all your loot, but that loot can immediately (and randomly) do far more damage than losing your stuff can. I had one early fight where I lost a cargo ship, had only a Lasher left and 200 cargo, immediately had an accident that took the Lasher out and destroyed my fleet, putting me back to square one. That's a lot more un-fun than losing some juicy loot, which is something that I expect after years of playing RPGs- that's a major setback, akin to having a level reset in a roguelike due to random chance.