Two Pallets, Two Different Business Models
If you've spent any time in a warehouse, you've seen them both: the distinctive blue CHEP pallet and the standard unfinished "whitewood" pallet. They look different, and they operate under fundamentally different business models. Understanding these differences helps you choose the right pallet program — or the right combination — for your supply chain.
What Is a CHEP Pallet?
CHEP (Commonwealth Handling Equipment Pool) is the world's largest pallet pooling company. Their blue pallets are not sold — they're rented. CHEP owns the pallet, maintains it, tracks it, and charges customers fees for its use. When you "buy" a CHEP pallet, you're actually paying an issue fee to send it out into the supply chain, plus ongoing daily rental fees until the pallet is returned to a CHEP service center.
CHEP pallets are block pallets (nine-block design), offering true four-way entry for both forklifts and pallet jacks. They're built to consistent specifications and inspected/repaired by CHEP between uses.
What Is a Whitewood Pallet?
"Whitewood" is the industry term for any non-pooled, privately owned wooden pallet — the standard, unfinished, unpainted pallets that make up the vast majority of the pallet market. When you buy a whitewood pallet, you own it outright. You can use it, reuse it, sell it, recycle it, or dispose of it as you see fit. There are no rental fees, no tracking requirements, and no return obligations.
Whitewood pallets can be stringer or block design, new or recycled, and built to any specification. Most are stringer pallets in the standard 48×40 GMA size.
Cost Comparison
CHEP costs include:
- Issue fee: $4.75–$6.00 per pallet (varies by contract)
- Daily rental: $0.04–$0.08 per pallet per day
- Transfer fees when pallets move between participants
- Lost pallet fees: $25–$30 per pallet if not returned
- Sorting and handling labor at your facility
Whitewood costs include:
- Purchase price: $5–$15 for recycled, $11–$25 for new
- No ongoing fees — you own it
- Optional buyback revenue when you sell used pallets back to a recycler
- Repair costs if you choose to maintain pallets in-house
For a pallet that's out in the supply chain for 60 days, CHEP costs can total $8–$11 per trip (issue fee + 60 days of rental). A recycled whitewood pallet costs $5–$10 with no ongoing fees. If the whitewood pallet makes 3–5 trips before needing replacement, the cost per trip drops to $1–$3.
Logistics and Convenience
CHEP's value proposition is convenience. They handle pallet supply, maintenance, and recovery. You don't need to manage pallet inventory, arrange repairs, or deal with disposal. For companies with complex, multi-destination supply chains where getting pallets back is logistically difficult, this convenience has real value.
Whitewood requires you to manage your own pallet supply chain — or partner with a company like Universal Pallet Supply that manages it for you. The tradeoff is greater flexibility and lower cost, but more management responsibility.
When CHEP Makes Sense
- You ship to many retail destinations where pallet recovery is impractical
- You value standardized, consistent pallet quality for automated systems
- You prefer predictable rental costs over capital expenditure on pallet inventory
- Your customers are already in the CHEP network and can facilitate returns
When Whitewood Makes Sense
- You operate a closed-loop supply chain where pallets come back to you
- Cost per pallet is a primary concern
- You need non-standard sizes, custom specifications, or mixed grades
- You want ownership and control over your pallet assets
- You generate revenue through pallet buyback and recycling
The Hybrid Approach
Many companies use both: CHEP for their most complex outbound channels (grocery retail, multi-stop distribution) and whitewood for internal operations, closed-loop routes, and cost-sensitive one-way shipments. This hybrid strategy optimizes cost and convenience across different parts of the supply chain.
Universal Pallet Supply is your whitewood partner. Whether you need new, recycled, or custom pallets, we deliver quality and reliability at a fraction of pooling costs. And we'll buy back your used pallets when you're done with them.