01The number that hides everything
Price per pallet is the number on the invoice, so it is the number that gets reported, benchmarked and negotiated. It is also close to useless on its own, because it says nothing about how long the pallet lasts, how often it gets repaired, or whether it comes back at all.
Cost per trip fixes that. It is one line of arithmetic: total pallet spend for a period, divided by the number of pallet movements that spend supported. Everything that matters shows up in it — durability, repair discipline, loss, grade choice, even the quality of your receiving process.
| Input | Where it comes from | Usually known? |
|---|---|---|
| Purchase spend | Accounts payable | Yes |
| Repair spend | Accounts payable or maintenance | Sometimes |
| Loss / shrinkage | Count in minus count out | Almost never |
| Trips completed | Shipment count x pallets per shipment | Derivable |
02A real example
This is a mid-sized food distributor, anonymised with permission. Twelve months apart, same operation, same volume.
| Measure | Before | After 12 months | Direction |
|---|---|---|---|
| Price per pallet | $10.40 | $12.75 | Worse |
| Average trips per pallet | 4.6 | 9.8 | Better |
| Repair spend per pallet | $0.00 | $1.85 | Worse |
| Loss rate | 17% | 6% | Better |
| Cost per trip | $2.72 | $1.79 | 34% better |
| Annual pallet spend | $412,000 | $291,000 | $121,000 saved |
Three of the six lines got worse. The one that mattered got 34% better. If this operation had been managed on price per pallet, every one of the changes that produced the saving would have been rejected in a purchasing review.
03The loss rate nobody has measured
When we start a baseline count with a new customer, the loss number is the uncomfortable part. Almost everybody guesses low. Guesses of 4 to 6% are typical; actuals of 12 to 20% are common in operations with third-party carriers and multiple sites.
A 17% annual loss rate on a 20,000-pallet fleet is 3,400 pallets a year walking off site. At twelve dollars each that is $40,800, and it is invisible because it appears in the purchasing line rather than in a loss line. Nobody is stealing them. They go out under product and do not come back, or they get scrapped by a receiver, or they sit at a customer's site until they are firewood.
04Where the trips come from
The distributor above went from 4.6 to 9.8 average trips. That did not happen by buying better pallets. It happened by four changes, in descending order of effect.
- A repair-first policy. Damaged pallets got repaired rather than scrapped. Repair costs $2.20–$4.80 against $12.75 to replace. This alone was most of the gain.
- Grade matched to application. Floor-stacked storage moved to Grade B and racked storage moved to Grade A, instead of everything being whatever arrived.
- Loss tracking. Measuring it changed behaviour at the sites, without any policy being written.
- Scheduled collection. Empties came back on the same routes that delivered, so they stopped accumulating at satellite locations.
05Reporting it upward
Cost per trip has a property that price per pallet does not: it survives contact with a CFO. It is a unit economic, it trends, and it responds to management action in a way that is visible within a quarter.
It also protects you when lumber moves. If the market rises 15% and your cost per trip holds flat because your repair rate improved, that is a story you can tell. If you are reporting price per pallet, you are reporting the lumber market and calling it performance.
The mechanics of running this as a programme — baselines, routes, repair cycles and quarterly reporting — are on the pallet management page.
