Kansas City Southern (company)

Kansas City Southern (KCS) was a transportation holding company with railroad investments in the United States, Mexico, and Panama and operated from 1887 to 2023. The KCS rail network included about of track in the U.S. and Mexico.

thumb|upright=1.1|KCS network map ([[trackage rights in purple)]]

Its primary U.S. holding was the Kansas City Southern Railway (KCS), a Class I railroad that operated about KCS's hubs included Kansas City, Missouri; Shreveport, Louisiana; New Orleans; Dallas; and Houston. Among Class I railroads, KCS had the shortest route between Kansas City, the second-largest rail hub in the country, and the Gulf of Mexico. Its primary international holding was Kansas City Southern de México (KCSM), which operated about KCS obtained 100% ownership of KCSM in 2005, making KCS the only U.S. Class I Railroad to own track in Mexico.

The company also owned half of the Panama Canal Railway Company (PCRC), which operates the Panama Canal Railway, providing ocean-to-ocean transshipment service between the Atlantic and Pacific oceans. The railroad served as an intermodal line for world commerce and complemented the Canal, the Colón Free Trade Zone, and the Pacific and Atlantic ports. As of 2009, PCRC's wholly owned subsidiary, Panarail Tourism, offered passenger service for business commuters, tourists, and private charters. In 1939, KCS acquired the Louisiana and Arkansas Railway (L&A), providing a route extending from Dallas to New Orleans, via Shreveport, Louisiana.

In 1962, KCS reorganized as a holding company, Kansas City Southern Industries, Inc. (KCSI), as it began to diversify its interests into other industries under the CEO William Deramus III. The new KCSI focused primarily on the financial industry, along with the rail industry. In 1969, KCSI started the two largest companies that came out of the diversification: DST Systems and Janus Capital Group, which was known as Stilwell Financial at the time. DST Systems is a software development firm that specializes in information processing and management, with the goal of improving efficiency, productivity, and customer service. Janus Capital Group is a finance firm that provides growth and risk-managed investment strategies.

Expansion in the 1990s

The core KCSI rail system changed little until the 1990s, when the purchase of MidSouth Rail extended KCSI's reach east from Shreveport into Mississippi and Alabama. Combined with existing KCSI routes, this created an east-west mainline marketed as the Meridian Speedway. Another acquisition, the Gateway Western Railway, extended KCS's reach from Kansas City to St. Louis, Missouri, and Springfield, Illinois.

The 1990s also saw KCSI expand into Mexico with the acquisition of partial interests in the Texas Mexican Railway (TM) and Grupo Transportación Ferroviaria Mexicana (TFM). TFM was created when KCSI and Transportacion Maritima Mexicana (TMM) purchased a government concession to operate a rail system in Mexico. The concession was also bid on by many other major companies, including the United States' largest railroad, Union Pacific Railroad. KCSI and TMM bid on, and won, the concession for $1.4 billion USD, paying 49% and 51%, respectively. TMM already partially owned the Texas Mexican Railway through a previous concession from the Mexican government. TM was particularly important to KCSI because they held the link from KCSI tracks to TFM tracks via trackage rights over the Union Pacific line.

Shortly after acquiring the Mexican government's concession, KCSI entered into another joint venture to purchase a government concession. On June 19, 1998, the government of Panama turned over control of the Panama Canal Railway to Kansas City Southern Railroad and the privately held Lanigan Holdings, LLC. This created the Panama Canal Railway Company (PCRC).

After these large capital outputs, KCSI needed new money to improve the Mexican and Panamanian concessions they had purchased, and to continue to make capital expenditures in the future. To fund these efforts, KCSI spun off all assets that were not essential to the rail businesses. Doing this essentially paid off the purchase of their two existing concessions and freed up money to improve them. The first major improvement that took place was in 2000 and 2001 when the PCRC upgraded the railway to handle large, intermodal shipping containers, along with passenger transport.

In 2002, the Kansas City Southern Industries formally changed its name to Kansas City Southern (KCS) after spinning off many subsidiary businesses that were not directly related to the railroad business (the largest of which were Janus Capital Group and DST Systems). In 2005, Kansas City Southern purchased TMM's share in TFM and TM, giving them full ownership of the companies. TFM was officially renamed Kansas City Southern de México, S.A. de C.V.

In June 2009, the Kansas City Southern began operating on new trackage between Victoria and Rosenberg, Texas, known as the Macaroni Line.

Patrick J. Ottensmeyer was named President in April 2015 and CEO in June 2016, succeeding David Starling. Ottensmeyer had served as Executive Vice President of Sales and Marketing and Chief Financial Officer. He was named Railroader of the Year by Railway Age for 2020.

In September 2020, the company rejected takeover offers from Global Infrastructure Partners that ranged up to $23 billion; the final offer valued the company at a 17% premium over its share high in February 2020 despite the COVID-19 pandemic.

Merger with Canadian Pacific Railway

In March 2021, Calgary-based Canadian Pacific Railway offered over $25 billion to purchase KCS. The purchase would allow the Canadian company to create the first rail network connecting the United States, Mexico and Canada. However, in May 2021, Canadian National Railway announced a superior bid to CP's, which KCS management later agreed to support. In August 2021, CP announced an increased bid that, while still less than CN's bid, was claimed by CP to have a greater chance of regulatory approval. While KCS's board agreed to CN's bid, shareholder and regulatory approvals were still required; on August 31, the US Surface Transportation Board (STB) denied a voting trust between CN and KCS.

With the decision by the STB, KCS re-engaged with CP on CP's original offer. On September 15, KCS confirmed that it had terminated its agreement with CN and would support CP's revised offer. Kansas City Southern's shareholders voted to approve the merger on December 10, 2021. The transaction closed in early 2022, following which KCS was held in a previously approved voting trust pending approval by the STB; the combined company was to be named Canadian Pacific Kansas City (CPKC). The combined "Canadian Pacific Kansas City Limited" would form the first railroad serving all of the countries in the North American trade zone (Canada, Mexico and the United States).

Subsidiaries

thumb|A [[Panama Canal Railway locomotive sits in a station at Colón, Panama]]

In addition to KCS, KCSM and PCRC, Kansas City Southern’s subsidiaries include:

Gateway Eastern Railway Company (GWWE) is a wholly owned subsidiary of KCS. GWWE provides rail service over about of track in the East St. Louis, Illinois, area.

Edward L. Martin (1889–1897)
Arthur Stilwell (1897–1900)
Samuel W. "Colonel" Fordyce (1900)
Stuart R. Knott (1900–1905)
Job A. Edson (1905–1918)
Leonor F. Loree (1918–1920)
Job A. Edson (1920–1927)
Charles E. Johnston (1928–1938)
Harvey C. Couch (1939)
C.P. "Pete" Couch (1939–1941)
William N. Deramus, Jr. (1941–1961)
William N. Deramus III (1961–1973)
Thomas S. Carter (1973–1986)
William N. Deramus IV (1986–1990)
Landon H. Rowland (1990–1991)
George W. Edwards (1991–1995)
Michael R. Haverty (1995–2010)
Arthur Shoener (2005-2008)
David L. Starling (2008–2016)
Patrick J Ottensmeyer (2015–2023)

References

External links

Kansas City Southern Corporate Website

Expansion in the 1990s

Merger with Canadian Pacific Railway

Subsidiaries

See also

References

External links