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Corporate finance modelling re-applied to accelerate decarbonisation in shipping

Mathematical modelling concepts from corporate finance could help enhance decision-making in maritime shipping with innovative research from the ������.

The research collaboration with Shell Shipping and Maritime integrated the new techniques into the description of ship scheduling and optimisation modelling, supporting the development of smarter and greener practices for the industry’s future.

Postgraduate research student Fangsheng Ge has been driving the research within the Centre for Maritime Futures , an ambitious partnership aiming to transform the energy shipping industry to be safer, cleaner and more efficient through ground-breaking digital and technological advances.

The study, which was supported by the School of Engineering’s Professor Dominic Hudson and Southampton Business School’s Professor Patrick Beullens , capitalised on Fangsheng’s background in operations research and finance.

“It has been very exciting to see financial mathematics and a real-life application come together,” Fangsheng says. “The decision modelling framework can support areas of tramp shipping for bulk carriers and tankers. We have generated significantly novel insights about how journey and port time affect ships’ profitability.”

“I hope this research can help provide a quantitative measure for people assessing both business decisions and environmental policies. In particular, I want to help accelerate the progress of decarbonisation in shipping.”

Fangsheng completed his PhD this summer with external examiner Professor Harilaos Psaraftis from the Technical University of Denmark (DTU) concluding the results could hold strong relevance to the International Maritime Organisation’s (IMO) discussion to decarbonise shipping, particularly in short-term operational measures involving speed reduction and speed optimisation.

“This research can also develop the foundations for longer-term solutions by recognising that the computational methods developed can be redirected towards future ships designs and fuels,” Fangsheng adds.

Fangsheng completed undergraduate studies in mathematics at Wuhan University, China, before progressing to a masters course in Operational Research and Finance at Southampton. His collaborative PhD with Shell Shipping and Maritime was based in the School of Mathematical Sciences and Southampton Marine and Maritime Institute (SMMI).

“Working with a corporate partner has been something special,” he says. “You can have access to the opinions of people working in the frontline, where they often provide another angle to look at the issue. This has been very important to understand what is needed and how we can solve that problem.

“I am excited about creating such a new angle to look at all these problems in maritime shipping with deeper understandings and managerial insights. The next challenge is to convince people to move beyond classic models and influence lasting change in this important global sector.”