Pallet pooling, also known as pallet rental or pallet sharing, refers to the practice of rental or sharing of pallets between supply chain participants such as manufacturers, distributors and retailers. In pallet pooling system, pallets are kept circulating within the supply chain instead of being discarded after single use. This allows efficient utilization of pallets and reduces waste.
Need for Pallet Pooling (Rental)
The demand for pallets is quite high across the supply chain due to continuous movement of goods. However, single use pallets lead to wastage as they are often not returned and end up being discarded. With growing awareness about sustainability and waste reduction, pallet pooling has emerged as a viable solution. Some key factors driving the need for pallet pooling include:
Cost Savings for Supply Chain Participants
Pallet pooling helps businesses reduce pallet procurement and disposal costs significantly. Companies pay a rental fee to use pallets and the service provider takes care of maintenance, repair and retrieval. This removes the need for companies to buy and manage their own pallet inventory.
Standardization of Pallets
Pallet Pooling (Rental) are standardized in terms of size, style, material and markings. This allows uniform handling across the supply chain and makes operations more streamlined and efficient. Standard pallets can be easily traced and retrieved.
Sustainability Benefits
Pallet pooling keeps pallets in circulation for extended period through repair and reuse. This reduces wood consumption significantly as compared to single use pallets. It also helps tackle the problem of discarded pallets ending up in landfills.
Operations of Pallet Pooling
A typical pallet pooling system works as follows:
Pallet Provider: Companies which own or rent pallets and are responsible for maintenance, repair, tracking and retrieval. Major providers include CHEP, Loscam, iGPS etc.
Tracking System: Pallets are fitted with tracking devices like RFID tags to enable tracing across different distribution centers. This helps in retrieval.
Rental Fees: Users pay pallet providers fee for rental period which includes repairs during that period. Fees vary based on pallet type, damage rate etc.
Retrieval: Providers coordinate retrieval from users’ facilities and return excess pallets through a defined network of haulers and distribution centers.
Repair & Maintenance: Pallets are regularly inspected, repaired or replaced. Damaged pallets are sent for repairs at specialized shops before being rented again.
Pallet types: Common rental pallet types include wooden, plastic and mixed (with wooden decks and plastic side walls). Material choice depends on load capacity and sustainability needs.
Benefits for Various Supply Chain Participants
Pallet pooling offers tangible benefits to various participants in the supply chain ecosystem:
Benefits for Manufacturers:
– Avoid investments in bulk pallet procurement
– Outsource pallet management and logistics
– Maintain lean inventory with easy access to standardized rental pallets
Benefits for Distributors:
– Seamless pallet movement across manufacturers and retailers
– Efficient inbound and outbound logistics operations
– Optimize warehouse space without investing in own pallet fleet
Benefits for Retailers:
– Focus on core retailing rather than managing Reverse Logistics
– Flexible rental period aligned with inventory turnover
– Ensure sustainable packaging meets ESG goals
Benefits for 3PL providers:
– Opportunity to offer value added pallet services
– Earn pallet rental management fees
– Additional revenues from repairs and recycling services
Challenges in Pallet Pooling
While pallet pooling offers various advantages, it also faces some challenges including:
Higher Upfront Costs: Pallet provider incurs significant investments in pallets, tracking systems and reverse logistics network. This is eventually passed on to customers.
Traceability Issues: Despite RFID, some pallets do get lost requiring replacement pallets to be provided. Improper tracking also affects retrieval.
Damage Rate: Continuous use and handling leads to wear and tear. High damage rates increase repair/replacement costs.
Lack of Standards: Absence of global standards for pallet sizes, materials etc. affects usage of different providers’ pallets.
Resistance to Change: Persuading sectors still relying on single use pallets to shift to rental model requires efforts to highlight long term benefits.
Continuous innovation, increasing awareness and partnerships across supply chain, the industry is working to address the challenges and strengthen the case for sustainable pallet pooling globally. Strong growth projections indicate pallet rental will play a major role in supporting efficiency and reducing packaging waste going forward.
*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
About Author – Alice Mutum
Alice Mutum is a seasoned senior content editor at Coherent Market Insights, leveraging extensive expertise gained from her previous role as a content writer. With seven years in content development, Alice masterfully employs SEO best practices and cutting-edge digital marketing strategies to craft high-ranking, impactful content. As an editor, she meticulously ensures flawless grammar and punctuation, precise data accuracy, and perfect alignment with audience needs in every research report. Alice’s dedication to excellence and her strategic approach to content make her an invaluable asset in the world of market insights. LinkedIn