The Hidden Costs of Cheap Recycled Pallets: Why Low Prices Can Hurt Your Supply Chain

Mike Schmitz
Sep 3
3 min read

Recycled pallet prices are rising across Wisconsin and the Midwest, but the real risk isn’t just cost, it’s quality. As more businesses move toward automation in warehouses and distribution centers, pallets that are warped, over-repaired, or inconsistent can cause major problems: conveyor jams, damaged equipment, and expensive downtime.

If your facility is investing in automation, the quality of recycled pallets is no longer optional—it’s mission-critical.

1. Why Recycled Pallet Quality Is Declining

The surge in demand for recycled pallets started during the Covid years. With more new pallets entering the supply chain during that period, many are now being recycled. To move this inventory, recyclers cut prices, driving demand even higher.

As a result, pallets are:

Circulating longer than before.
Repaired multiple times, often past their useful life.
Showing up in worse condition, with broken boards or inconsistent structure.

For manual warehouses, these issues may be manageable. But for automated facilities, they introduce dangerous risks.

2. How Price Pressure Leads to Poor Quality

When buyers focus only on price, they often end up with:

Over-repaired pallets that fail under load.
Inconsistent dimensions that disrupt automated systems.
B-grade pallets sold as “good enough”, but unfit for precision environments.

The cheapest pallet upfront often becomes the most expensive once you factor in downtime, repairs, and equipment damage.

3. The Rise of Premium Recycled Pallet Grades (AAA, A+, Super A)

To address quality concerns, recyclers introduced premium grades such as AAA grade, A+ grade, or Super A grade. These pallets are nearly indistinguishable from new ones, making them attractive to buyers who want new pallet performance at recycled pallet pricing.

But this trend creates two challenges:

Higher costs – demand for near-new recycled pallets drives prices up.
Limited supply – top-tier pallets are scarce, especially in the Midwest.

While premium recycled pallets can be a smart choice, overreliance on them strains budgets and availability.

4. Automation Raises the Stakes

In automated systems, precision is everything. A pallet that’s slightly off-square or has a cracked deckboard can:

Jam a conveyor line.
Damage expensive robotic equipment.
Cause hours of costly downtime.

As more operations invest in automated warehouses and robotics, pallet quality directly impacts productivity and profitability.

5. Protecting Your Supply Chain From Pallet Risks

Smart buyers are already adapting their pallet strategies:

Set strict specifications – require consistent dimensions, repair standards, and quality grading.
Segment pallet use – reserve premium or new pallets for automated systems, while using lower grades in manual environments.
Choose transparent suppliers – partner with recyclers who guarantee quality and clearly define pallet grades.

This proactive approach prevents automation breakdowns and ensures long-term cost savings.

Conclusion

In 2025, recycled pallets cost more—but often deliver less. For automated facilities, relying on low-cost, low-quality pallets is a hidden risk that can shut down operations and damage equipment.

The solution? Choose the right pallets and the right supplier. By prioritizing quality and transparency, your business can avoid downtime, protect equipment, and keep your supply chain running smoothly.

Frequently Asked Questions (FAQ)

Why are recycled pallet prices rising in 2025?

Recycled pallet prices are increasing because demand in Wisconsin and the Midwest has surged while supply has tightened. Many pallets are being repaired and reused multiple times, which reduces overall quality and drives up costs for premium recycled grades.

Are recycled pallets good for automated warehouses?

Only high-quality recycled pallets—such as AAA or A+ grades—are suitable for automation. Lower-grade or over-repaired pallets can jam conveyors, damage robotics, and cause costly downtime.

What is an AAA or A+ grade recycled pallet?

These are premium recycled pallets that look and perform almost like new. They are highly consistent in size and structure, making them ideal for automated systems, though they come at a higher price and are harder to source.

How do I know if my recycled pallets are automation-ready?

Look for strict grading standards, consistent dimensions, and clear quality guarantees from your supplier. A transparent supplier should be able to certify which pallets are suitable for automation.

Should I use new pallets or recycled pallets?

It depends on your operation. Automated facilities benefit from new or premium recycled pallets due to their consistency. Manual warehouses can often use lower-grade pallets safely, but may still save money long term by reducing product damage with higher-quality pallets.