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Watch crew still spotting ships at about 12000m, when I see nothing (clear sky, no fog).
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In clear sky and light fog (I.e. crew will report "good visibility" conditions) crew will spot ships at that distance, and they should be rendered on your screen. They might be subtle to see in the horizon, but they should be there. Ensure your gamma settings are not obscuring the view (You can tweak them from inside the game mission, no need to exit: Just hit ESC and select the graphic options), and observe carefully.