Renting Pallets? Burning Cash!
This entry was posted on November 26, 2019.
Pallets are indispensable in modern supply chains for the storage and movement of goods. With so many different types and styles available on the market, there is a lot to consider when sourcing a pallet. But, the first decision a business has to make, is by far the most important, as it’s a decision that can significantly impact your bottom line, and that’s whether to rent or buy.
The pros and cons for each option have been debated for years. Although renting pallets may seem at the outset the more cost-effective option, from our experience speaking to rental customers, this is rarely the case.
One company we’ve recently spoken to, a major British retailer, currently has 25,000 wooden pallets on permanent rental at one site, which never leave the building. Not only are their rental costs huge, but for any breakages they encounter significant fines to cover the repair or replacement of the damaged pallets.
We’ve also come across suppliers to our leading supermarkets who appear ‘trapped’ into pallet rental agreements. Here, the supplier will pay the rental company a monthly rental charge or price per trip over a set period, after which the pallet will return to their pool. But whilst this gives the supermarkets free use of the pallets, the suppliers face vast rental charges and hefty penalties for pallets that are lost or broken.
Supermarkets themselves still require pallets to use internally in their warehouses and again are often renting pallets with the perception that it’s cheaper than buying. One supermarket who has recently been trialling some of our plastic pallets, was renting approx. 40,000 wooden pallets for storing Christmas stock. As the goods arrive in late summer, they are storing them for months at a huge rental cost, where buying their own plastic pallets and parking them up for six months would be financially cheaper.
So, where the lower up-front cost for renting pallets might be attractive, it’s important to consider the bigger picture at the outset and the possible pitfalls of pallet rental. These include:
- - Hidden costs i.e. for lost or broken pallets
- - Unexpected paperwork for reporting pallet loss and breakages
- - Outsourced pallet quality control
- - Often inferior customer service working with large rental companies
Without a doubt, in the right circumstances, buying plastic pallets and operating your own plastic pallet pool can show a real return on investment, and in some instances, in as little as six months.
The decision to buy plastic over wooden pallets really comes down to pallet choice and reliability. With so many different sizes and styles of plastic pallets to choose from, at Goplasticpallets.com we invest a lot of time into ensuring that we match our customers with the best plastic pallet for their application. Not only are plastic pallets inherently more durable than wooden pallets, but we also guarantee to recover and recycle each and every one we supply at the end of its use – helping bolster our customers environmental credentials.
Some of our customers that are operating their own plastic pallet pools have even taken the opportunity to generate a revenue from it, by charging their suppliers and other business partners
for the use of the pallets from their pool.
It’s a model that not only works for the owner, but for all members of the pool as the responsibility is shared. For instance, in a retail scenario, the retailer or distribution centre receiving the palletised goods is accountable for collecting the loaded pallets. It is then their responsibility to inspect, sort and clean them. Where several parties are invested in the successful running of the plastic pallet pool, there is naturally greater control.
In summary, a pool of owned plastic pallets provides the owner with greater flexibility and a better return, without incurring the costs associated with renting.