I have played my campaign well into 1940 now and attacked quite a few merchants. And something is really fishy about the damage model.
I do not know why, maybe it is because I have map updates on, I get to see a white and a blue damage bar above ships that get attacked.
When shooting, this bar slowly decreases. Sometimes the blue bar is affected as well, but if at all, then only once. That is, as long any white is left. Only after that blue decreases.
I suspect white is structural integrity, blue is the level of water penetration. (if that is in the manual, mea culpa, I didn't bother to read it
)
Topedos kinda do the same, just here the blue bar is effected the most. As a general thumb of rule, each ship will stay afloat as long this blue bar is not decreased below at least 2 thirds, which is not affected by where the fish hits.
That aside ships are highly resistant to topedo. Tankers and Liberty ships will definitily require 3 torps at least, Big steamers and the likes 2 and so on. Sometimes more, almost never less. I also never saw any progress in either flooding or fire caused damage despite beeing forced to wait quite a bit of time on several occasions.
That does appear a bit exxessive to me