Hello...
Los Angeles, India, or Nagoya are the source of fuel and supply.
Escorts must be in port at one of the source bases in order to be used for routine convoy. The location of tankers or merchant cargo ships is unimportant, for purposes of routine convoys.
There used to be a bug which would take escorts from Los Angeles and leave them in India. But, they were never able to return. This bug has been fixed.
The routine convoy system uses ships it finds in port, in an abstract manner, to carry fuel and supplies from the source to the bases that need it. The ships are taken from any port, used and then returned at the end of the routine convoy phase. There used to be a bug that sometimes prevented the ships from returning to the original bases. This has been fixed.
Originally posted by Warpup:
I've played this game for a huge number of hours, but I really don't understand how the routine convoys work. I leave escorts and groups of merchant ships in Los Angeles, India, or Nagoya, and I see them convoy together, but what is going on with all those merchant groups scattered in other ports??? Are they going to pick up supply for the port where they are based??? Are they shuttling supply elsewhere??? I understand they're not going to attach escorts, though I believe I saw them do just that once from San Francisco.
So what are we supposed to do with merchant ships and tankers when we are not using them for player controlled supply convoys??? Are we supposed to pile them in Los Angeles, India, and Nagoya, or are we supposed to scatter them around a bit???
What's with the way India works in the new version??? I don't see escorts arriving there, nor large numbers of merchant ships. Are the ships there sending out supply elsewhere, or are they going off board into the Indian Ocean to get supply for India??? 
Ships that are not being used for routine convoy still have uses in the game. You may manually load them and move them to a base or invasion site.
Hope this helps...
Michael Wood