To Buy or Rent Pallets? That is the question!
05 May 2014
If your business needs pallets, and most businesses dealing with stocks and products do, is it better to buy pallets or to rent them?
Companies do not usually place an advertisement in a newspaper saying wooden pallets wanted. They make a quick decision after a couple of telephone calls to pallet suppliers.
Rental and Ownership Advantages
The advantage of renting is that there need not be a large upfront cost for the pallets. A large supplier will be able to provide pallets and other containers in bespoke sizes, designs and materials, whether wood, plastic or metal.
Often the rental charges can be set against tax liabilities to provide a more efficient use of company funds. In addition, materials handling becomes easier as any unusual size of pallet can be ordered and supplied immediately. The company does not have to keep idle stock in a warehouse to use during those few weeks of seasonal busy periods, such as during Christmas.
Pallet suppliers are able to offer a tracking service, storage space and management control of goods in transit. The pallets will be inspected after each period of use to ensure that they are in top industry-standard condition. Those that are not will be either repaired or discarded.
All this leaves the company free to develop its core business without the distraction of such matters.
However, the advantage to owning pallets is that a company can specify the exact size and material for a unique load rather than choosing between the varieties of wood pallets for sale.
Rental and Ownership Disadvantages
But the real advantage of renting pallets is that they offer a service that combines high quality, low maintenance and predictable costs. What are the disadvantages?
These depend on the size of a company. A large, vertically integrated company may take a different view of the cost of renting pallets through its entire supply chain.
These costs can be greater than just the quoted monthly fee for a comprehensive service of rental, maintenance and tracking.
Pallets suppliers can impose surcharges for extra daily use and for damaged or lost pallets, even if the original client is not at fault, as well as pallets return costs. A company must return pallets to a given distribution centre rather than the pallet supplier picking them up from a company’s premises.
Once all of these costs are put together, the advantages of renting pallets no longer exist for many larger companies. Pallet ownership also provides a company with the possibility of re-selling used pallets on to other businesses, partially offsetting the capital expenditure for the initial acquisition costs.
In the end, renting or buying is an individual choice to be made by a company based on its size and the nature of its business.