Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Justin Yagerman - Wachovia Services.
Justin Yagerman - Wachovia Services
I guess, John you laid option compelling reasons why the container lesser is gaining some market share in this environment and given those reasons and others and with the inclination on the part of some of your customers to keep hold of containers and where container pricing is right now.
Are you seeing any pricing power with customers or is it your best hope basically to hold on to the rates that you have and perhaps reassign a current rate and stature it or is there an opportunity with maybe a container coming off of a 5-year lease to give it to another customer and may be slightly better than what it was earnings with you guys but still lower than what it would cost them to originate an new billed lease at these rates.
John Maccarone
Well as you know Justin pricing for brand new containers it’s always a function of the cost of the new container at the time you’re placing it on lease, the prevailing interest rates and the profit margins. So, in terms of pricing power for new containers it still a lot of competition out there. I would say we are seeing a slightly better spread than we did in the last year, but nothing dramatic so far.
In terms of containers that are ending in initial 5 year long term lease, we are finding a good market for renewing the containers and some of the deals that I have seen so far this year representing significant quantities, 10,000, 20,000 TEU at a pop have been able to be extended for up to three years for very small incremental decrease in perhaps $0.01 or $0.02 which is quite encouraging.
One of the things that we have the ability to do unlike some of the smaller leasing companies that don’t have the developed infrastructure is to tell a customer if we can’t come to terms, please go ahead and bring the containers back, so we haven’t seen a lot of that, but we are prepared to take them back. If we can’t take them back now in a 93% utilization environment, then there will never be a better time for that. Not sure if I covered all the points that you asked but if not please let me know.
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