Pallet Exchange / Pallet Fee

Pallet exchange – and the fees associated with it – refers to the logistics of managing the wooden or plastic pallets that freight ships on. In a pallet exchange system, the carrier or receiver swaps empty pallets for loaded ones at each pickup or delivery, maintaining a running balance. When pallets aren't returned or exchanged, the shipper or carrier is charged a pallet fee – typically $10 to $25 per pallet – to cover the cost of replacement. Some receivers, particularly in grocery and retail, mandate specific pallet types (like CHEP or PECO) and charge fees when shipments arrive on non-approved pallets.

Pallet management sounds mundane, but at scale it's a meaningful cost center. A shipper moving 200 loads per week at 20 pallets per load is cycling 4,000 pallets weekly – and losing even 5% of those to non-returns, damage, or mismatches adds up to thousands of dollars per month. Retailers and grocery chains with strict pallet programs impose chargebacks for non-compliant pallets, wrong sizes, or pallets in poor condition. These chargebacks often appear weeks after delivery, making them difficult to trace and dispute without good documentation.

Best practice for managing pallet costs includes defining pallet requirements by customer in the order management system, tracking pallet balances with key trading partners, and specifying pallet type and condition requirements in carrier contracts. For shippers using pallet pooling services like CHEP or PECO, accurate pallet counts at ship and receipt are essential for controlling rental costs and avoiding loss fees. Including pallet requirements in the BOL and ASN ensures everyone in the chain – warehouse, carrier, and receiver – is working from the same expectations.