Pallet procurement is usually run on unit price, which is a reasonable way to buy a commodity and a poor way to manage an asset. The useful number is cost per trip, and calculating it changes most people's buying decisions.
The cost stack
| Line | Share of total | Commonly counted? |
|---|---|---|
| Purchase or rental | 34% | Always |
| Inbound freight | 9% | Usually |
| Storage and yard space | 11% | Rarely |
| Sorting and inspection labour | 14% | Rarely |
| Repair | 8% | Sometimes |
| Disposal of unusable units | 6% | Rarely |
| Product damage attributable to pallet failure | 18% | Almost never |
The last line is the one that reframes the whole exercise. Damage caused by pallet failure — a broken deck board that lets a bottom carton drop, a racked pallet that twists — is almost universally coded as handling damage or packaging failure. It is neither.
Working the number
Take your annual total across all seven lines, divide by the number of pallet trips in the year. A trip is one loaded movement, not one pallet. A pallet used eleven times in a year has made eleven trips.
For most operations this produces a number between one and four dollars per trip, and the spread between the best and worst sites we have looked at is roughly threefold — driven almost entirely by trips per pallet rather than purchase price.
Where the leverage is
- Trips per pallet. Doubling it nearly halves cost per trip. Nothing else on the list comes close.
- Inspection at receipt. Catching a failing pallet before it enters a rack converts an 18%-of-cost damage event into an 8%-of-cost repair.
- Repair rather than replace. A GMA pallet with one cracked deck board is about a twenty-minute bench job.
- Buying graded rather than mixed. A sorted B-grade pallet has a known life; a mixed load has an average and a tail.
- Storage practice. Pallets stored outdoors absorb water, lose fastener holding strength and fail early.
The repair arithmetic
We repair recovered pallets in-house with reclaimed lumber and grade them A or B. The economics hold comfortably at one or two replaced boards. They stop holding at two broken stringers, where labour exceeds value and you end up with something nobody fully trusts. Knowing where that line sits matters more than any individual repair.
Repair is only cheaper than replacement up to a point, and the point arrives sooner than enthusiasm suggests.
Rental pools versus ownership
Rental pools transfer the sorting, repair and disposal lines to somebody else and charge for it. Whether that is good value depends almost entirely on your trips per pallet and your internal labour cost. Operations with high trip counts and cheap sorting labour generally do better owning. Operations with sprawling networks and no inspection capability generally do better renting.
What is never good value is owning pallets with no inspection step, no repair path and no measurement of trips. That combination gets you the costs of ownership and the service level of neglect.
The thing to do this week
Count trips. Mark fifty pallets with a stencil and log them for a quarter. Almost nobody knows their real figure, and it is the denominator in every decision you are about to make.
Our pieces are written by the people who do the work rather than by a content agency, which is why they contain more numbers and fewer adjectives than is fashionable. If a figure here does not match your experience, we would genuinely like to hear about it — two of our published coefficients have changed that way.