Question-and-Answer Session
Operator
(Operator Instructions). First up in the roster from Jefferies, we have Rick Shane.
Rick Shane - Jefferies
In the press release you made the comment that utilization was impacted by the decision to accept re-delivery from some containers from lessees with whom you had credit concerns. Two questions related to that, one how many containers did you take back related to early re-delivery? How many containers do you still have to those counterparties?
John Nishibori
I don't have the exact numbers here. I wouldn't say that it was the primary factor in the declining utilization. It was just a contributing factor. A lot of the companies that were taking equipment back from tend to be some of the smaller companies where we're just not sure that they are downsizing their fleets. We know that they're having some revenue issues. So from our standpoint its better to just take some equipment back, but I don't have exact figures for you.
Victor Garcia
It is really negligible. If you look at the magnitude of decline, it was basically because of the market.
Rick Shane - Jefferies
Okay. So a couple hundred containers type of thing?
John Nishibori
I will say more in the thousands, but still from a portfolio that has some thousand to use. That is not a very large number.
Rick Shane - Jefferies
So you saw basically about a 400 basis points decline in utilization, would it be fair to say that a quarter of that came from early returns?
John Nishibori
No even, not even. I think the conceptual calculation of things I think you can pretty much disregard that. It's really because of the market downturn. However, when we say that during the past couple of months we have seen an extreme improvement in terms of utilization or the decline in the utilization rate is really stabilizing. In fact from June to July the decline has been almost negligible, and in fact the two major regional culprits of a massive turn-in in the past have been China and Europe; but now Europe as a whole has turned to a net lease-out region, while in China basically the turn-ins equal the lease-outs.
This is a big improvement. I really think that we are now seeing the bottom of things and in fact we are seeing now signs of improvement, especially as we see the 40s and high cube starting to go out. Usually, in an economic recovery situation, it starts with the 20-footers and we have seen that already. Over the past few months, as far as 20's are concerned, we were leasing out more and experiencing turn-ins. The 40's and the high cubes were very stagnant and in fact more turn-ins.
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