Abstract :Panamax is term for the size limits for ships travelling through the Panama Canal. These kind of vessels are one of the common ship types used in the world dry bulk trade. They are generally used for raw material transportation such as grain, coal and iron ore. However, as is the case in the maritime market, the market in which these vessels are operated is also very volatile. Freight rates and asset values can change dramatically even in the very short run. In maritime markets, it is also possible to obtain huge revenues by not only transporting cargoes but also selling the ships when the time comes. Making this schedule is not easy, but one of the most important factors determining ship values is freight rates. Therefore, knowing the effects of changes in freight rates on the probability of peaking at asset prices can be a very important guide to shipping investors. In this direction, the aim of this study is to determine the price bubbles in the second hand Panamax market and to determine the impact of freight rates on the probability of the formation of these bubbles, if any. Bubble times in the secondhand market were determined using the generalized sup ADF method proposed by Philips et al. (2012) and the effect of freight rates on the probability of occurrence of these bubbles was calculated using the logistic regression method. The data set consists of 227 observations on a monthly basis covering between July 1999 and May 2018. The Baltic Panamax Index calculated based on the incomes of the Panamax vessels in a specific routes and the ship values of 5 years old these vessels were used as variables. According to the results of the research, the existence of 6 price bubbles in the secondhand market were identified and it was also determined that the freight rates are influential in the formation of these bubbles. The marginal effects obtained as a result of the logistic regression revealed that 1000 point increase in index increases the likelihood of price bubble formation by 11%. It is believed that these results guide the maritime stakeholders on the timing of sale and purchase decisions. Keywords : Panamax market, asset values, price bubbles, freight rates
