Revisiting rationality in ship investment decisions: empirical evidence from the dry bulk market

Purpose In a market of great uncertainty and volatility, shipowners are confronted with critical decisions that largely determine the profitability and viability of their businesses. This article aims to explore whether the decision to purchase a secondhand bulk carrier is rational, using a dataset of both conventional and eco Capesize secondhand prices, along with one-year time charter rates from January 1995 to October 2024. Design/methodology/approach The methodology is based on fundamental and technical analysis approaches, such as Net Present Value and Moving Average, to determine the optimal timing for making a purchase decision. Findings The results reveal a significant discrepancy between expected (rational) and actual decisions for both conventional and eco ships, offering evidence for the rejection of the semi-strong form of the Efficient Market Hypothesis in the dry bulk market. Interestingly, the financial benefits traditionally attributed to eco vessels were not found to affect investment decisions. Originality/value The findings provide empirical support for the assumption, held in behavioral economics, that ship investment decisions may deviate from rational patterns. In light of these findings, the study suggests that a realistic understanding of ship investments should extend beyond the rational explanation of market agents’ economic behavior and investigate the role of cognitive biases in shaping such decisions.