There are three ways to get hold of pallets: buy them outright, rent them from a pool system, or use a pallet exchange and deposit system. Whether it is cheaper to buy or rent pallets depends on how many you need, for how long, and whether they come back to you. In this article we go through the costs, benefits and pitfalls of each model, show you how to calculate the payback period with your own figures, and tell you plainly when each option makes sense.
In short: Renting suits short-term or seasonal needs and closed loops where the pallets come back. For continuous or fluctuating use, buying is almost always cheaper and more flexible, especially when used pallets and the buy-back of surplus pallets reduce the net cost. Rule of thumb: if the pallets do not come back to you, the rental model will not work.
Three ways to source pallets
The discussion is often framed simply as buy or rent, but in practice there are three options. They differ in who owns the pallet and what happens to it at the end of the cycle.
| Model | Who owns the pallet | What happens to the pallet | Typical user |
|---|---|---|---|
| Buying | You | Stays with you, surplus can be sold on | A company whose pallets leave the premises |
| Pool rental | A pool operator, such as CHEP or LPR | Returns to the pool, maintenance is the operator’s responsibility | Grocery retail chains and closed loops |
| Exchange and deposit | Varies, the pallet circulates between the parties | Exchanged for an equivalent pallet or credited | Industry and haulage companies, EUR and FIN pallets |
Many companies use these side by side: a base stock of their own pallets, pool pallets for a particular retail chain and an exchange system for domestic transport. We go through each of them separately.
What does pallet rental mean?
When you rent, you do not own the pallets but pay for using them. The most common form is a pool system, where a service provider owns a large pallet stock and invoices for use by time or by quantity. Well-known pool operators include CHEP and LPR, whose pallets can be recognised by their coloured paint: CHEP pallets are blue and LPR pallets are red.
At the end of the cycle a rented pallet goes back to the pool, and maintenance and repair are the service provider’s responsibility. In practice you pay for the use of the pallets much like a subscription, and you do not tie up capital in the pallets themselves. Invoicing is usually based either on the number of trips or on how long the pallet is in your possession.
The key difference from buying is not price but ownership. A pool pallet always belongs to someone else and has to be returned. If a pallet goes missing, you are invoiced for it.
What is a CHEP pallet?
CHEP is an international pallet pool operator whose blue pallets are a common sight, particularly in grocery retail supply chains. A CHEP pallet is not a pallet type of its own in the way a EUR or FIN pallet is. It is an ordinary standard-size pallet painted blue that belongs to the loop owned by CHEP.
| CHEP pallet size | Dimensions | Corresponds to |
|---|---|---|
| Euro size | 1200 x 800 mm | EUR pallet dimensions |
| Larger standard size | 1200 x 1000 mm | Industrial pallet dimensions |
| Half pallet | 800 x 600 mm | Retail and display use |
The dimensions correspond to common standard sizes. Pallet sizes and their uses are covered in more detail in the article pallet sizes and dimensions.
The important thing to remember is that a blue CHEP pallet may not be sold on or kept for yourself, because it is CHEP’s property. If blue pallets build up in your warehouse, they must be returned to the pool. This is a common source of confusion: a company assumes the pallets have become its own and later finds out it is being invoiced for them.
Can you identify the pallet? A pool pallet can be recognised by its colour and the operator’s markings. A genuine EUR pallet, on the other hand, can be identified by its EPAL and EUR markings and the IPPC stamp. Read more in the article how to identify a genuine EUR pallet.
What does buying mean?
A pallet you buy is your company’s property. You can use it however you like, modify and stack it freely, and you are not tied to returns or turnaround times. Pallets can be bought new or used, and the price depends on the type, size and condition.
The advantage of a purchased pallet shows in the long run: after a one-off cost the pallet is yours to use without limit, and when you no longer need it, intact pallets can be sold on. There is more on this in the articles new or used pallets and pallet price.
Used pallets often play a decisive role in this equation. A used pallet costs clearly less than a new one but copes just as well with internal warehouse loops and domestic transport. When the purchase price is low, the payback period is shorter too. There is a separate guide to assessing the condition of a used pallet in the article what to check before buying a used pallet.
Pallet deposits and the exchange system
The third model is the exchange system, which is used especially with EUR and FIN pallets. Here the pallet is neither single-use nor actually rented. It circulates between the parties and is exchanged along with the goods.
In practice the exchange happens in one of two ways. When a load is delivered, the recipient hands over the same number of equivalent pallets in equivalent condition. If no exchange takes place, the pallets are invoiced separately or recorded as a pallet debt that is settled later.
This is where the term pallet deposit comes in. A deposit is a value set for the pallet that is charged on delivery and credited when an equivalent pallet is returned or exchanged. So the deposit is not rent but a guarantee that the pallet goes back into circulation. EUR pallets and FIN pallets have their own established values, which vary between operators and according to the condition of the pallet. When the deposit is credited and when it makes more sense to sell the pallets instead is explained in the article EUR pallet return and pallet deposit.
- The deposit is charged for outgoing pallets and credited for returned ones
- The pallet offered in exchange must be of an equivalent type and in acceptable condition
- A broken pallet is not usually accepted in exchange, in which case the deposit remains charged
- Keep track of pallet debt in your accounts, because it is real money
The strength of the exchange system is that neither party ties up capital in pallets permanently. Its weakness is administration: keeping track of pallet debt requires bookkeeping, and condition requirements often lead to disputes. That is why many companies find it simpler to buy their own pallet stock and sell the surplus than to maintain exchange balances.
Exchangeability is what counts. In the exchange system the condition of the pallet determines whether it is accepted in exchange. Grades A, B and C are explained in the article pallet grades. Ask us for current pallet purchase and exchange prices so you know what your pallets are really worth.
Buy or rent pallets: a quick comparison
| Factor | Renting | Buying |
|---|---|---|
| Cost structure | Ongoing payment for the period of use | One-off cost with no further charges |
| Capital tied up | No capital tied up | Ties up capital, less when bought used |
| Maintenance and repair | The service provider’s responsibility | Your own responsibility, but an intact pallet lasts a long time |
| Flexibility | Bound by pool terms and returns | Free use, modification and stacking |
| Lost pallets | Invoiced separately | Loss limited to the value of the pallet |
| Surplus | Returned to the pool | Can be sold back for money |
| Administrative work | Tracking returns and balances | Storage and condition monitoring |
| Best suited to | Short-term or seasonal needs, closed loops | Continuous or fluctuating needs |
When does renting make sense?
Renting can be sensible in a few situations:
- A short project or a seasonal peak. If you need a lot of pallets for only a short time, renting saves you from a large one-off purchase.
- A closed loop. If the pallets move repeatedly between the same parties and come back reliably, the pool model works smoothly.
- Your customer requires pool pallets. Some retail chains require a particular pool pallet for deliveries, in which case the choice has been made for you.
- You do not want to manage pallets. When maintenance, repair and tracking of the pallet stock move to the service provider, you have less work to do yourself.
The downside is that you pay rent for as long as the pallets are in use, and lost or unreturned pallets can lead to extra charges. The pool model also ties the company to certain types of pallets.
When does buying make sense?
For most companies buying is the most practical and the most economical solution. It makes sense especially in these situations:
- Your need is continuous. When you use pallets regularly, the one-off cost pays for itself quickly because there is no rent building up month after month.
- The pallets leave your premises. If the pallets go to your customer and do not come back, the rental model does not work. A pallet you have bought can leave with the load without any worries about returns.
- Exports. In an export load the pallet practically never comes back, so a purchased, heat-treated pallet is the only workable option. Read more in the article heat-treated pallets and ISPM 15.
- You want freedom. You can modify your own pallet, cut it to fit collars or even use it for DIY projects without breaching a rental agreement.
- You want to cut costs with used pallets. A used pallet is clearly cheaper than a new one and is perfectly adequate for internal warehouse loops and transport.
How to calculate the payback period
It pays to make the comparison with your own figures, because the pallet type, quantity and condition have a decisive effect on the price. The formula is simple:
Payback period in months = the purchase price of the pallet divided by the monthly rent. Once this period has passed, the purchased pallet has paid for itself. After that you use it for free, while the rent keeps running.
Example: if the monthly rent for one pallet is one tenth of its purchase price, buying pays for itself in ten months. If the rent is one fifth of the purchase price, the payback comes in just five months. It is the ratio that matters, not the amount in euros.
| Monthly rent relative to purchase price | Buying pays for itself in | What it means in practice |
|---|---|---|
| 1/20, i.e. 5% | 20 months | Renting is cheap, sensible for a short-term need |
| 1/12, i.e. about 8% | 12 months | After a year, buying is cheaper |
| 1/10, i.e. 10% | 10 months | For a need of less than a year, renting may pay off |
| 1/6, i.e. about 17% | 6 months | After six months, buying is clearly cheaper |
| 1/4, i.e. 25% | 4 months | Renting only pays off for a very short project |
Two more things are worth adding to the calculation, and they tip it even further in favour of buying. Firstly, a used pallet costs less than a new one, which directly shortens the payback period. Secondly, you get money back for a purchased pallet when you no longer need it.
Remember the buy-back. When you buy pallets, you can sell surplus intact pallets back, which reduces their real net cost. You get nothing back from a rented pallet. We buy both pallets and pallet collars, so your pallet flow stays under control. Read more on the page we buy pallets and in the guide how to sell your company’s surplus pallets.
The exact figures always depend on the pallet type, quantity and condition, so the best way to compare is to request a quote and work through your own situation.
Hidden costs to take into account
The pallet price or rental price alone does not tell the whole story. Every model has costs that are easily overlooked in a first comparison.
With renting
- Lost pallets. Unreturned or missing pallets are usually invoiced separately, and the amount can come as a surprise.
- Administration. Tracking the pallet flow, reporting and arranging returns take up working time, even though maintenance is the service provider’s responsibility.
- Return transport. Returning empty pallets to the pool costs freight, which is not always included in the comparison.
- Lock-in. The pool model ties you to a particular pallet type and contract terms, which reduces flexibility.
With buying
- Storage. Your own pallets take up space, so think about where you will store them between uses.
- Upkeep. An intact pallet lasts a long time, but broken pallets have to be repaired or taken out of circulation. It helps that we buy back surplus pallets and pallets that are being retired.
With the exchange and deposit system
- Pallet debt. Pallets that have not been exchanged build up into a balance that is real money and has to be settled at some point.
- Disputes over condition. The other party does not always accept the pallets offered in exchange, in which case the deposit remains charged.
- Bookkeeping. Tracking balances needs its own process, and without one losses go unnoticed.
When you take these into account, the overall picture becomes clearer. The hidden costs of buying often end up lower than the ongoing payments of renting, as long as the pallet stock is kept intact and the surplus is sold off.
Hybrid model: buy a base stock, stay flexible for peaks
Most of the time the best solution is not to choose just one model. Pallet needs rarely stay steady: seasons, campaigns and projects push up consumption temporarily.
A model that works well in practice is to buy the number of pallets that are in use all year round and handle the peaks separately. Buying the base stock removes the ongoing rental cost, and for the peaks you can get inexpensive used pallets that are sold off after the season.
- Work out the smallest number of pallets that is constantly in circulation and buy it outright
- For seasonal peaks, get used pallets that you can sell back
- Use pool pallets only in the retail chains that require them
- Agree with your pallet supplier on regular deliveries and buy-back
This way your pallet stock stays flexible without you paying for idle time or tying up capital in pallets that sit unused for most of the year.
How to decide: six questions
The comparison quickly becomes clear when you answer these questions for your own operations.
- Do the pallets come back to you? If not, renting is practically ruled out and the decision is made right here.
- How long is the need? For a one-off project of a few months or less, renting may be enough; for a continuous need, it is not.
- How many pallets are constantly in circulation? This is the number worth owning yourself.
- Does your customer require a particular pallet? Retail chains may require pool pallets, in which case there is no choice for that part of the loop.
- Are pallets going for export? An export pallet does not come back and requires ISPM 15 heat treatment, so it has to be bought.
- Is a used pallet good enough for you? If it is, the purchase price drops and the payback period becomes significantly shorter.
The most common mistakes when choosing
- Comparing only the monthly price. The monthly rent looks small, but it is multiplied by the number of months of use. Always calculate the total for the whole period of use.
- Forgetting the residual value of the pallet. An intact purchased pallet is not a cost but an asset with a resale value. That changes the outcome of the comparison.
- Buying new when used would do. A new pallet makes sense for exports and customer-facing use, but in an internal warehouse loop a used pallet does the same job for less.
- Keeping pool pallets as your own. Blue or red pool pallets may not be sold or kept for your own use, and you will be invoiced for them.
- Not tracking pallet debt. In the exchange system an unsettled balance is money quietly draining away.
- Buying too small a batch at a time. In a larger batch the delivery costs are spread over more pallets, so the cost per pallet is lower.
Summary
Choose renting if
- your need is short-term or seasonal
- the pallets circulate in a closed loop and come back
- your customer requires pool pallets
- you do not want to manage a pallet stock yourself
Choose buying if
- your need is continuous or fluctuating
- the pallets leave your premises and do not come back
- pallets go for export
- you want freedom and the option to sell the surplus
In practice, for the vast majority of companies with a continuous need, buying is the most flexible option and the cheapest in terms of total cost. When you combine new and used pallets and sell the surplus back, you get a low net cost without being tied to rental terms. Renting and the exchange system complement this where the pallets genuinely come back.
Buy your pallets outright
We supply new and used EUR and FIN pallets and other pallet types from our own warehouse, and we buy back surplus pallets. Request a quote and we will work out the most cost-effective solution for you.
