A risk-based decision-making scheme for short-sea liner fleet renewal to achieve carbon reduction targets

Abstract

This paper presents a green fleet renewal decision model for carbon reduction technologies in the short and medium-term planning horizon. The objective is to explore the commercial decisions over green fleet renewal made by short-sea liner shipping companies in response to the carbon reduction targets set by the International Maritime Organization. To address the environmental constraints and uncertainty surrounding operational demand and fuel prices, a two-stage stochastic programming model was developed. This model integrates various factors including ship buying and selling, retrofitting, operation area allocation, and speed determination, intending to maximize expected profits. When it comes to fleet renewal issues involving investments in carbon reduction technologies, the conditional value at risk was utilized to manage the risk of bankruptcy. The study also examines the relationship between bankruptcy risk and expected profit, offering time- and risk-related strategies for liner shipping companies operating in short seas.