One of the biggest decisions in pallet management is whether to own your pallets or use a pooling service. Both approaches have merit, and the right choice depends on your specific business needs, shipping patterns, and financial priorities.
Quick Comparison
Pooling
- • No capital investment
- • Consistent quality
- • Per-use pricing
Ownership
- • Lower long-term cost
- • Full control
- • Asset on books
What is Pallet Pooling?
Pallet pooling is a rental system where businesses share a common pool of pallets managed by a third-party provider. Major pooling companies include CHEP (blue pallets), PECO (red pallets), and iGPS (plastic pallets).
In a pooling arrangement, you pay a per-trip fee to use pallets. When your customer receives the shipment, they return the pallets to the pool (or the pooling company picks them up). You never own the pallets—you're essentially renting them for each use.
Pros of Pallet Pooling
No capital investment
You pay only for what you use, freeing up capital for other business needs
Consistent quality
Pool pallets are regularly maintained and replaced, ensuring reliability
Simplified logistics
The pooling company handles pickup, repair, and redistribution
No storage requirements
Empty pallets are returned to the pool, not stored at your facility
National network
Pallets can be dropped at any location in the network
Cons of Pallet Pooling
Higher per-trip cost
Pooling fees of $5-8 per trip add up quickly with high volume
Daily rental fees
Fees continue if your customers don't return pallets promptly
Loss and damage charges
You're charged for pallets that aren't returned or are damaged
Less flexibility
Must use their pallets for their system—no mixing with owned pallets
Complex accounting
Tracking pallet movements and managing fees requires dedicated resources
What is Pallet Ownership?
With pallet ownership, you purchase pallets outright and manage them yourself. This includes buying new or used pallets, maintaining them, tracking them through your supply chain, and either getting them back or writing them off.
Pros of Pallet Ownership
Lower cost per use
A $10 pallet used 10 times costs $1 per trip—far less than pooling
Complete control
Choose exactly what type, size, and condition of pallets you use
No daily fees
No penalties if pallets sit at a customer location for extended periods
Asset value
Pallets are an asset that can be depreciated and potentially sold
Flexibility
Mix and match pallets as needed without contract restrictions
Cons of Pallet Ownership
Upfront capital required
You need to purchase pallets before you can use them
Management overhead
You're responsible for tracking, maintaining, and repairing pallets
Storage space needed
Empty pallets take up warehouse space that could be used otherwise
Loss is your problem
If customers don't return pallets, you bear the full cost
Variable quality
Without strict management, pallet condition can degrade over time
Cost Comparison
Let's look at a realistic cost comparison for a business shipping 1,000 pallet loads per month:
| Factor | Pooling (CHEP) | Ownership |
|---|---|---|
| Per-trip cost | $6.50 | $1.50* |
| Monthly cost (1,000 trips) | $6,500 | $1,500 |
| Annual cost | $78,000 | $18,000 |
| Initial investment | $0 | $15,000** |
*Assumes $9 pallet with 6 uses average. **Assumes 1,500 pallets @ $10 each for initial inventory.
Important Consideration
These numbers vary significantly based on your pallet return rate. If you ship one-way and rarely get pallets back, pooling may make more sense. If you have a closed-loop system with high return rates, ownership is typically more economical.
When to Choose Pooling
- You ship to retail customers who are already part of a pooling network
- Your shipments are one-way with no expectation of pallet return
- You want to minimize capital expenditure
- You lack storage space for empty pallets
- You ship nationally and need pallets at various locations
When to Choose Ownership
- You have a closed-loop supply chain with good pallet recovery
- You ship regionally within a manageable geographic area
- You have the capital and want to minimize ongoing costs
- You need custom pallet sizes or specifications
- You have storage space and can manage pallet inventory
The Hybrid Approach
Many businesses find success with a hybrid approach: owning pallets for regular, closed-loop shipments while using pooling for one-way shipments to distant or retail customers. This balances cost savings with flexibility.
Need Help Deciding?
Austin Pallets can help you analyze your pallet needs and determine the most cost-effective approach for your business. Contact us for a free consultation.