Airplanes and Panamax cargo ships redefined the parcel service in the 20th century, but those days may be fading quickly.
Morgan Stanley believes the SpaceX plan for the Big Falcon Rocket as a reusable mode of Earth transportation could change the game for United Parcel Services and FedEx.
"The freight transportation business — especially parcel delivery — is on the cusp of transformation from multiple new transportation modalities," a team of Morgan Stanley analysts wrote in a note Thursday. "Elon Musk recently announced a new option that could potentially have the biggest impact of all — rockets."
The booster system BFR is a 42-engine rocket capable of holding around 100 people – and yes, the code name connotes more than just "Falcon" to those inside SpaceX. With a payload capacity of 150 tons, BFR would be nearly 10 times the capacity of the flight-proven Falcon 9 rocket and five times that of the soon-to-be-tested Falcon Heavy rocket.
SpaceX wants to use BFR to land two cargo ships on Mars by 2022, establishing a human presence two years later. But Musk also announced that the technology could be used to speed up transportation on Earth, an idea Morgan Stanley says could have serious shipping implications.
"If you build a ship that's capable of going to Mars, what if you take that same ship and use it to go from place to place on Earth," Musk said on Sept. 29, showing a promotional video of a rocket taking passengers from New York to Shanghai in 30 minutes.
The parcel service "industry could see a fundamental reset with the introduction of rockets as a transportation modality," Morgan Stanley said.
The firm noted that parcel service portion of the freight transportation market is "the most obvious and effective application" of rockets. Morgan Stanley says parcel delivery is a service characterized by slow, GDP-like growth of 2 to 3 percent per year.
Rockets could push the ceiling for the parcel service industry, which Morgan Stanley says "suffers from excess capacity," and give new meaning to same-day delivery.