Depending on the pallet storage rates, external warehouse storage can often be a highly cost-effective strategy for minimising your overheads or for providing essential additional facilities, such as during peak seasonal periods or during a growth phase.
However, if these pallet storage fees become a regular monthly cost, it may be time to consider the potential return of investment presented by alternative solutions, such as investing in high density, dynamic pallet racking or taking on another warehouse.
If you are paying out £100,000 per year in pallet storage costs and you were to invest £150,000 in a new push back racking solution which would accommodate all the pallets you normally store externally, you could achieve a payback period of 18 months.
Using the same example of external pallet storage costs being £100,000, if you were to take a lease on a new warehouse which cost £60,000 per year and invested £50,000 in pallet racking to take all of your pallets stored externally, you achieve a ROI on the racking in just 6 months as well as dramatically reducing your monthly outgoings.
So what are the weekly costs for storing pallets?
Weekly Pallet Storage Rates – External Warehouse
As a rule of thumb, typical external pallet storage rates can vary from £1.50 – £5.00 per pallet per week, however that figure will depend on many factors and may exclude shunting fees, which refers to the cost of loading and unloading pallets from the wagons to the racking and vice versa.
There are a number of factors which will influence the costs, including
- How many pallets are you storing?
As you would expect, discounts are available for larger quantities of pallets.
- Are you storing standard CHEP or euro pallets?
The CHEP pallet is the most common type of pallet used by UK companies and measures 1200mm x 1000mm. However, if you are storing pallets of goods supplied by overseas companies, they are more like to be using EURO pallet which is slightly smaller at 1200mm x 800mm. This difference in size will impact on the number of pallets which can be stored on some racking systems and therefore costs.
- What is the height of the pallets?
Typical pallets tend to be approximately 1.6m in height. Should your pallet heights be greater, you may incur additional costs.
- Can the pallets be block-stacked or do they need racked?
If the pallets to be blocked stacked on the floor, you may be able to enjoy some savings, however they may be offset against the additional handling costs associated. Damage to stock may also need to be considered if you choose to go for block stacking.
- Are the contents fragile/hazardous?
Most warehouse providers will assess the risk associated with storing your pallets and price accordingly. Fragile items will obviously need to be treated with more care and therefore need to be located in certain areas.
Similarly, hazardous items such as chemicals which require IBC storage may be limited to the type of racking they can be stored in.
- Do You Require Cold Storage Facilities?
The costs of running a cold store warehouse are significantly more expensive and therefore the costs of renting space in a third party cold store facility are, as you would expect, greater than a standard warehouse. This may make an investment in dynamic racking within your own cold store more attractive with significant long term cost savings.
The physical location of the external warehouse is obviously going to play a major factor in the storage costs. Warehouses within London and the M25 are going to be more expensive than the North of England and Scotland.
Additional Costs of External Pallet Storage to Consider
Shunting fees can typically be £2-£3 per pallet, per movement. So, taking the pallet from the wagon and storing the pallet in the racking may cost £2-£3. And then removing the pallet from the racking and putting it back on a wagon could be £2-£3.
Additional transportation costs will also have to be considered for delivering the pallets to the external warehouse.
Conclusions on Pallet Storage Rates
So, if you are using external storage on a regular basis or at the point of considering using external storage to cope with your additional storage requirements, it may be worth considering all the options available to you. You may just be surprised at how quickly an investment in high density, dynamic pallet racking could pay dividends.