Question-and-Answer Session
Operator
Thank you. (Operator Instructions). Our first question today is from David Ross. You may ask your question and please state your company name.
David Ross - Stifel Nicolaus
Hi good morning. Stifel Nicolaus.
Gregory T. Swienton
Good morning.
David Ross - Stifel Nicolaus
First, I'll start with FMS. I guess we are surprised by the lower miles driven by the existing customers, and also maybe existing customers downsizing their fleet. Our saying has always been that you're protected by contracts now on the downside, when they do downsize their fleet versus last downturn, can you comment a little bit about whether or not you did get the appropriate pricing, when they did reduce their fleet maybe 20 to 15, for example?
Gregory T. Swienton
I would say that reductions in fleet have primarily come at the end of the contract of those leases. So, if they were renewed, I think those prices tend to hold up but that's not the problem that we are talking about right now. The issue was the number of units that actually come out of service. If you realize that these leases are on average going to be 5, 6, 7 years depending on the miles that are anticipated in their service, we are now into the third, third and a half year of a lot of contracts that have been on the books for a while.
So at the time those were created those were all solid leases and solid contracts. A lot of those are beginning to time out and run out, some of them are running out now in a very weak environment. So, the issue is not that we are getting a lot turned back early or that we are taking them back early that really is an issue of timing in which many of these contracts are just terming out and things are so soft that many customers are choosing either not to do renewals or not to do extensions.
The lower miles, I think that's been another bit of evidence that for the contracts that are under lease and that we are still being paid for, clearly a lot of customers are just parking those vehicles right now or they are putting a lot fewer miles on them in consolidated routes.
David Ross - Stifel Nicolaus
Okay. In terms of the mileage that's about 20% of the variable revenue component for the contract. At what point do they run few enough (ph) miles where Ryder is no longer making money on that contract?
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