Key Takeaways
- Pallet pooling transforms pallets from a depreciating asset into a managed supply chain service.
- Internal pallet pooling reduces excess pallet inventory, empty pallet storage, and internal transfer waste.
- Rising U.S. transportation costs make pallet retrieval, repositioning, and inefficiency more expensive than ever.
- Renting pallets lowers total cost of ownership by eliminating repair, disposal, storage, and retrieval labor.
- Plastic pallet pooling delivers the most value for internal networks through consistency, durability, and predictability.
Pallets are one of the most critical—and most overlooked—assets in the supply chain. They support every movement of product between facilities, yet they often create hidden costs tied to storage, labor, transportation, and damage when managed as an owned asset.
As internal supply chains grow more complex and transportation costs remain elevated, how pallets are sourced, managed, and recovered has a measurable impact on total cost of ownership and operational efficiency. Pallet pooling offers a different approach—one that treats pallets as a managed service rather than infrastructure companies must maintain themselves.
What Is Pallet Pooling
Pallet pooling is a shared-use model in which pallets are rented from a third-party provider rather than purchased and owned outright. Instead of managing pallet inventory, repairs, storage, and disposal internally, companies access pallets as a service.
In a pooled pallet rental program, the provider owns the pallet fleet and is responsible for:
- Supplying pallets where and when they are needed
- Recovering pallets after use
- Inspecting, cleaning, and repairing pallets
- Recycling pallets at end of life
This model transforms pallets from a depreciating asset into a managed logistics service, removing variability, waste, and administrative burden from supply chain operations.
Pallet Pooling for Internal and External Networks
Pallet pooling is often associated with customer-facing distribution, but it delivers equal—and in many cases greater—value within internal supply chain networks.
- External pallet pooling supports shipments to retailers, distributors, and end customers. In these networks, pallets move across multiple trading partners and are recovered through a shared pooling system that spans manufacturers, carriers, and receivers. The primary benefits include standardized pallets, broad network coverage, and reduced pallet loss across complex trading ecosystems.
- Internal pallet pooling, by contrast, supports closed-loop movements between a company’s own facilities—such as manufacturing plants, distribution centers, cross-docks, and return locations. In these networks, pallets circulate continuously within the organization rather than being exchanged with customers or external partners.
Both models rely on the same core principles: standardized pallets, predictable availability, and centralized lifecycle management. The key difference lies in network design and recovery patterns. External pooling emphasizes wide geographic recovery, while internal pooling focuses on balancing pallet flow across defined lanes and facilities.
Because pallets circulate continuously within internal networks, pooling often delivers faster payback and greater efficiency than customer-facing pooling models. Pallets move more frequently, losses are lower, recovery is more predictable, and fewer pallets are required to support the same shipping volume—driving stronger utilization and lower total cost of ownership.
For organizations with high inter-facility transfer volumes, internal pallet pooling provides a scalable way to reduce pallet inventory, eliminate excess empties, and improve operational control across the supply chain.
How Does a Pooled Pallet Rental Program Work for Your Business
A pooled pallet rental program integrates into existing supply chain flows rather than replacing them.
At a high level, the process includes:
- Pallet supply: Pallets are replenished to manufacturing plants or distribution centers based on forecasted volume and lane requirements. Deliveries can come daily, weekly, or monthly.
- Use in operations: Pallets are used for shipping, storage, staging, and automation just like owned pallets—without quality variability.
- Recovery and replenishment: After use, pallets are recovered through the provider’s network or repositioned within internal lanes.
- Inspection and lifecycle management: The provider handles cleaning, repair, and end-of-life recycling, maintaining consistent pallet quality over time.
For internal networks, this often means pallets are repositioned between facilities rather than returned from customers—supporting predictable flows and eliminating excess pallet accumulation.
Renting vs Owning Pallets
On the surface, owning pallets may appear less expensive than renting. Purchase price is visible and easy to budget. What’s less visible are the compounding operational and transportation costs that ownership introduces over time.
Those costs matter more than ever as U.S. transportation expenses remain elevated. In 2025, domestic ground shipping rates were more than 30% above their 2018 baseline, according to industry tracking reported by SupplyChainDive. This sustained increase reflects higher carrier pricing, accessorial charges, and operating costs across U.S. supply chains.
A pallet pooling model helps reduce this exposure. Instead of retrieving, storing, and redistributing owned pallets, companies access pallets as needed through a managed network. Pallets move with product, are recovered strategically, and are repositioned based on demand—reducing unnecessary transportation and helping stabilize pallet-related costs as freight rates remain high.
Owning pallets typically includes:
- Capital expenditure to purchase pallets
- Storage space for empties
- Labor to sort, stack, and manage inventory
- Repair and replacement costs
- Disposal fees for damaged pallets
- Transportation costs to retrieve pallets
- Shrink and loss
Renting pallets replaces these variable costs with:
- A predictable per-use or per-trip cost
- No capital tied up in pallets
- No repair, disposal, or recycling responsibility
- No need to manage excess empties or take up important warehouse space to store
When evaluated on a total cost of ownership (TCO) basis, pooled pallet rental programs often reduce both cost and operational friction—especially at scale.
The Main Advantages of Renting Pallets
The advantages of renting pallets extend beyond avoiding upfront capital expense. In today’s cost environment, predictability and operational control are just as important.
U.S. parcel and ground transportation costs continue to rise. For 2025, major carriers, including FedEx and UPS, implemented average rate increases of approximately 5.9%, adding pressure to already tight distribution budgets. These increases affect not just outbound customer shipments, but also internal transfers between plants, distribution centers, and cross-docks.
As shipping costs rise, inefficiencies tied to pallet handling become more expensive to absorb. Managing damaged pallets, storing excess empties, and repositioning owned pallets across facilities all consume labor, space, and transportation capacity.
Pallet rental programs help offset these pressures by simplifying pallet management. With rented pallets, companies avoid the labor and space required to manage pallet inventories and eliminate the need to retrieve or redistribute pallets internally. Costs shift from variable and unpredictable to usage-based and easier to forecast.
Key advantages of renting pallets in this cost environment include:
- More predictable pallet costs amid rising transportation rates
- Lower internal handling and storage requirements, reducing labor exposure
- Fewer empty pallet moves, cutting unnecessary transportation spend
- Consistent pallet quality, reducing damage and rework
- Improved operational efficiency across warehouses and internal lanes
For companies moving materials between their own facilities, these advantages help control cost, reduce friction, and protect margins as transportation and logistics expenses continue to climb across the U.S. supply chain. For internal supply chains, these benefits compound because pallets are reused frequently across the same lanes and facilities.
Building Internal Pooling Networks
Internal pallet pooling is especially valuable for companies with:
- Multiple plants or Distribution Centers
- High inter-facility transfer volume
- Seasonal or variable production schedules
- Automation-dependent operations
Instead of each facility owning and managing its own pallet inventory, a centralized pooling model allows pallets to be shared, balanced, and repositioned across the internal network.
This reduces total pallet count, prevents overstocking at individual sites, and improves system-wide efficiency.
How Pallet Pooling Improves Internal Supply Chain Networks
Internal supply chains are often where pallet inefficiencies hide.
Pallet pooling improves internal networks by:
- Reducing excess inventory
Facilities no longer hoard pallets “just in case,” freeing space and capital. - Improving inter-facility flow
Standardized pallets move predictably between plants, DCs, and cross-docks. - Supporting automation and slotting accuracy
Uniform pallet dimensions improve AS/RS performance, slotting consistency, and material flow. - Lowering transportation waste
Lighter, standardized pallets reduce fuel use and improve trailer utilization across internal lanes. - Eliminating internal pallet repair programs
Maintenance, inspection, and recycling are handled by the provider.
By removing pallet management from internal operations, teams can focus on throughput, service, and cost control rather than asset maintenance.
Why Plastic Pallet Pooling Works Best for Internal Supply Chains
Not all pallet pooling models deliver the same results—especially for internal supply chains. Plastic pallet pooling offers clear advantages over wood block pallets when pallets move repeatedly between a company’s own facilities.
Plastic pallets provide consistent dimensions, predictable weight, and uniform performance across every trip. Additionally, plastic pallets can help reduce maintenance and sanitation costs. There are no wood scraps or sawdust that can negatively affect automation systems. This consistency and durability matter for internal networks, where pallets cycle continuously through the same warehouse layout, storage and retrieval systems, and automation.
Unlike reusable wood block pallets, which vary in condition and require frequent repair, plastic pallet pooling programs eliminate damaged pallets from circulation and maintain consistent quality over time. That stability protects slotting accuracy, reduces downtime, and improves productivity across warehouse operations.
For companies shipping materials between plants, Distribution Centers, and cross-docks, plastic pallet pooling keeps pallets in motion rather than leaving them idle as empty pallets. This reduces storage requirements, frees up capital, and lowers the total cost of business across the internal supply chain.
Conclusion
Pallet pooling is no longer just a customer-facing logistics strategy. For organizations moving high volumes between their own facilities, internal pallet pooling also delivers measurable improvements in cost control, consistency, and operational focus.
By treating pallets as a managed service rather than an owned asset, companies simplify supply chains, reduce waste, and build more resilient, scalable networks—without adding complexity to daily operations.
FAQ
How does pallet pooling reduce total cost of ownership?
Pallet pooling reduces TCO by eliminating capital purchases, repair programs, disposal fees, storage of empties, and retrieval transportation. Costs become predictable and usage-based, while operational variability and hidden labor expenses are removed from the system.
What are the top pallet pooling providers in 2026?
Leading pallet pooling providers in 2026 are those that offer durable, standardized pallets, broad network coverage, tracking technology, and closed-loop recycling. Providers that support both external distribution and internal supply chain networks are increasingly preferred.
iGPS Logistics is recognized for its recyclable plastic pallet pooling model, RFID-enabled tracking, and a national network that supports both customer-facing and internal supply chain use cases.
What types of pallets are included in pooling programs?
Most pooling programs offer block-style pallets designed for compatibility with modern warehouses, automation, and racking systems. Plastic pallets are increasingly used due to their consistency, durability, hygiene benefits, and recyclability.
What data is tracked in pallet pooling tracking systems?
Modern pooling systems may track:
- Pallet location and movement
- Trip counts and dwell time
- Lane utilization
- Loss and recovery rates
- Inventory balances by facility
RFID-enabled pallets provide more accurate, real-time visibility than manual tracking methods.
What are the common challenges with pallet rental programs?
Challenges can include unclear lane definitions, inconsistent recovery processes, or lack of internal alignment early in adoption. These are typically addressed through pilot programs, clear KPIs, and network design that matches actual shipping patterns—especially for internal pooling networks.
Is pallet pooling better than owning pallets for internal transfers?
For internal supply chains, pallet pooling is often more cost-effective than pallet ownership. Ownership requires companies to purchase pallets, store empties, manage repairs, and retrieve pallets between facilities. Pooling replaces those variable costs with a predictable rental model and eliminates internal pallet management labor.
How does plastic pallet pooling compare to reusable wood block pallets?
Reusable wood block pallets still require repair, sorting, and replacement due to breakage and inconsistent quality. Plastic pallet pooling delivers better pallet quality, consistent dimensions, minimal maintenance, and longer service life—reducing damage, downtime, and variability across internal lanes.
How does pallet pooling reduce empty pallet buildup?
Pooling systems allow pallets to be repositioned based on demand instead of stockpiled at individual facilities. This reduces the number of empty pallets stored on-site and eliminates unnecessary internal transfers dedicated solely to pallet recovery.
What ROI can companies expect from adopting pallet pooling?
ROI typically comes from lower pallet costs per trip, reduced labor, fewer damaged pallets, improved warehouse efficiency, and freed-up capital. Companies also avoid ongoing expenses tied to pallet ownership, such as repairs, disposal, and storage of used pallets.
How many pallets do companies typically eliminate when they switch to pooling?
Companies that move from pallet ownership to a pooled pallet rental program typically operate with significantly fewer pallets across their network. The exact reduction varies by operation, but internal supply chains often see meaningful decreases once excess buffers and idle pallets are removed.
Under an ownership model, pallets are frequently over-purchased to guard against loss, damage, or imbalances between facilities. This leads to surplus pallets sitting unused in yards and warehouses, consuming space and tying up labor and capital without adding value.
Pallet pooling changes this dynamic. Pallets are shared across the network, recovered after use, and repositioned based on actual demand rather than worst-case assumptions. The result is a smaller, more productive pallet population that stays in motion—freeing warehouse space, reducing handling labor, and eliminating many of the hidden costs associated with managing excess pallet inventory.
What is the ROI of switching from pallet ownership to a pooling model?
The ROI of switching from pallet ownership to a pallet pooling model comes from lower total cost of business, not just lower pallet costs per unit.
Companies typically see returns from several areas:
- Capital freed up by eliminating pallet purchases and ownership
- Lower labor costs tied to sorting, repairing, and managing damaged pallets
- Reduced storage and retrieval costs for empty pallets
- Fewer damaged pallets and product losses, improving perfect order and GMROI
- More predictable pallet costs through a rental or per-trip pricing model
- Improved operational efficiency across warehouse operations and internal lanes
In internal supply chains, ROI is often stronger because pallets circulate continuously between facilities rather than being lost or exchanged with customers. This allows pooling programs to optimize pallet flows, reduce excess inventory, and stabilize supply chain operations.
When evaluated over time, many companies find that pallet pooling delivers a faster payback than purchasing new pallets, while also improving efficiency, sustainability, and control across the entire supply chain.
Internal supply chains run best when pallets are consistent, predictable, and managed as part of the network rather than as an asset to maintain. As transportation costs rise and internal transfers increase, pallet pooling helps supply chain leaders reduce total cost of ownership, improve KPI performance, and eliminate hidden inefficiencies tied to pallet ownership.
iGPS plastic pallet pooling supports internal and external networks with durable, standardized pallets, RFID-enabled visibility, and a closed-loop recovery model. To learn how pallet pooling can strengthen internal supply chain performance and cost control, call 1-866-556-8015, email switch@igps.net, or visit the contact page.
