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Capital equipment costs head upward

By Staff -- Logistics Management, 11/1/2003

Prices for capital equipment are cooking, thanks to a combination of margin pressures on manufacturers and strengthening demand. In September, average aircraft prices rose 4.2% from year-ago levels, but tags for large civilian aircraft rose 6.9% and parts prices soared 8.4%. U.S. shipbuilders pushed through a 5.4% price hike in September, and railroad equipment makers boosted prices by 1.6% on average. Only truck manufacturers seemed immune, as average prices for truck bodies and truck trailers were up just 0.7% and 1%, respectively, compared to year-ago levels. Carriers that do their homework may be able to mitigate the damage caused by higher prices, since equipment manufacturers may be vulnerable to attack by negotiators who examine the relationship between prices and underlying cost trends.

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