Kansas City Southern (KCS) is a pure transportation

holding company A holding company is a company whose primary business is holding a controlling interest in the securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own shares of other companies ...

with railroad investments in the United States, Mexico, and Panama. The KCS rail network includes about of track in the U.S. and Mexico.https://www.kcsouthern.com/pdf/community/kcs-sustainability-data-2021.pdf?language_id=1 Kansas City Southern Railway system map

Its primary U.S. holding is the

Kansas City Southern Railway The Kansas City Southern Railway Company is an American Class I railroad. Founded in 1887, it operates in 10 midwestern and southeastern U.S. states: Illinois, Missouri, Kansas, Oklahoma, Arkansas, Tennessee, Alabama, Mississippi, Louisiana and ...

(KCS), a

Class I railroad In the United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, st ...

that operates about in 10 states in the midwestern and southeastern United States. KCS's hubs include Kansas City, Missouri; Shreveport, Louisiana;

New Orleans New Orleans ( , ,New Orleans

;

Dallas Dallas () is the List of municipalities in Texas, third largest city in Texas and the largest city in the Dallas–Fort Worth metroplex, the List of metropolitan statistical areas, fourth-largest metropolitan area in the United States at 7.5 ...

; and

Houston Houston (; ) is the most populous city in Texas, the most populous city in the Southern United States, the fourth-most populous city in the United States, and the sixth-most populous city in North America, with a population of 2,304,580 i ...

. Among Class I railroads, KCS has the shortest route between Kansas City, the second-largest rail hub in the country, and the

Gulf of Mexico The Gulf of Mexico ( es, Golfo de México) is an ocean basin and a marginal sea of the Atlantic Ocean, largely surrounded by the North American continent. It is bounded on the northeast, north and northwest by the Gulf Coast of the United ...

. Its primary international holding is Kansas City Southern de México (KCSM), which operates about in 15 states in northeastern, central, southeast-central and southwest-central Mexico. KCSM reaches the Gulf of Mexico ports of Tampico, Altamira, and Veracruz, and the Pacific Ocean deepwater

container port A container port or container terminal is a facility where cargo containers are transshipped between different transport vehicles, for onward transportation. The transshipment may be between container ships and land vehicles, for example train ...

of Lázaro Cárdenas.The China-Kansas Express
, a June 2006 "

Forbes ''Forbes'' () is an American business magazine owned by Integrated Whale Media Investments and the Forbes family. Published eight times a year, it features articles on finance, industry, investing, and marketing topics. ''Forbes'' also r ...

" article KCS obtained 100% of ownership of KCSM in 2005, making KCS the only Class I Railroad to own track in Mexico. The company also owns half of Panama Canal Railway Company (PCRC), which operates the

Panama Canal Railway The Panama Canal Railway ( es, Ferrocarril de Panamá) is a railway line linking the Atlantic Ocean to the Pacific Ocean in Central America. The route stretches across the Isthmus of Panama from Colón (Atlantic) to Balboa (Pacific, near P ...

, providing ocean-to-ocean

transshipment Transshipment, trans-shipment or transhipment is the shipment of goods or containers to an intermediate destination, then to another destination. One possible reason for transshipment is to change the means of transport during the journey (e.g ...

service between the

Atlantic The Atlantic Ocean is the second-largest of the world's five oceans, with an area of about . It covers approximately 20% of Earth's surface and about 29% of its water surface area. It is known to separate the " Old World" of Africa, Europe an ...

and Pacific oceans. The railroad serves as an intermodal line for world commerce and complements the Canal, the

Colón Free Trade Zone The Colón Free Trade Zone is a free port in Panama dedicated to re-exporting a wide variety of merchandise to Latin America and the Caribbean. It is located on the Caribbean coast, near the Atlantic entrance to the Panama Canal, in the province ...

, 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 A charter is the grant of authority or rights, stating that the granter formally recognizes the prerogative of the recipient to exercise the rights specified. It is implicit that the granter retains superiority (or sovereignty), and that the rec ...

. , Canadian Pacific Railway is attempting to purchase Kansas City Southern. If approved by the US Surface Transportation Board, the combined "Canadian Pacific Kansas City Limited" will form the only railroad serving all of North America (Canada, Mexico and the United States).

History

In 1887, Arthur Edward Stilwell and Edward L. Martin began construction on and incorporated the Kansas City Suburban Belt Railway in suburban Kansas City, Missouri. Beginning operations in 1890, the railroad served the Argentine District in

Kansas City, Kansas Kansas City, abbreviated as "KCK", is the third-largest city in the U.S. state of Kansas, and the county seat of Wyandotte County. It is an inner suburb of the older and more populous Kansas City, Missouri, after which it is named. As of ...

;

Independence, Missouri Independence is the fifth-largest city in Missouri and the county seat of Jackson County. Independence is a satellite city of Kansas City, Missouri, and is the largest suburb on the Missouri side of the Kansas City metropolitan area. In 2020, ...

; and the riverside commercial and industrial districts of Kansas City. While the Belt Railway was a success, Stilwell had a much bigger dream. Over the ensuing decade, the line grew through construction and acquisition of other roads, such as the Texarkana and Fort Smith Railway, to become a through route between Kansas City and Port Arthur, Texas. With the final spike being driven north of Beaumont, Texas, on September 11, 1897, the Kansas City, Pittsburg and Gulf Railroad Company (KCP&G) was completed. In 1900, KCP&G became The Kansas City Southern Railway Company (KCS). In 1939, KCS acquired the Louisiana and Arkansas Railway (L&A), providing a route extending from

New Orleans New Orleans ( , ,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 Mississippi () is a state in the Southeastern region of the United States, bordered to the north by Tennessee; to the east by Alabama; to the south by the Gulf of Mexico; to the southwest by Louisiana; and to the northwest by Arkansas. Miss ...

and

Alabama (We dare defend our rights) , anthem = "Alabama" , image_map = Alabama in United States.svg , seat = Montgomery , LargestCity = Huntsville , LargestCounty = Baldwin County , LargestMetro = Greater Birmingham , area_total_km2 = 135,765 ...

. Combined with existing KCSI routes, this created an east-west mainline marketed as the

Meridian Speedway The Meridian Speedway is a span of railroad track between Meridian, Mississippi, and Shreveport, Louisiana. An important rail link between the Southeast and Southwest U.S., it is owned by the Meridian Speedway LLC (MSLLC), a joint venture of Kan ...

. 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 Mexico (Spanish: México), officially the United Mexican States, is a country in the southern portion of North America. It is bordered to the north by the United States; to the south and west by the Pacific Ocean; to the southeast by Guatema ...

with the acquisition of partial interests in the

Texas Mexican Railway The Texas Mexican Railway was a railroad that operated as a subsidiary of the Kansas City Southern Railway in Texas. It is often referred to as the Tex-Mex, or TexMex Railway. On January 1, 2005, Kansas City Southern took control of the Texas ...

(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 The Union Pacific Railroad , legally Union Pacific Railroad Company and often called simply Union Pacific, is a freight-hauling railroad that operates 8,300 locomotives over routes in 23 U.S. states west of Chicago and New Orleans. Union Paci ...

. KCSI and TMM bid on, and won, the concession for $1.4 billion

USD The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...

, 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 Railway companies can interact with and control others in many ways. These relationships can be complicated by bankruptcies. Operating Often, when a railroad first opens, it is only a short spur of a main line. The owner of the spur line may ...

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 Panama ( , ; es, link=no, Panamá ), officially the Republic of Panama ( es, República de Panamá), is a transcontinental country spanning the southern part of North America and the northern part of South America. It is bordered by Co ...

turned over control of the

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 Capital expenditure or capital expense (capex or CAPEX) is the money an organization or corporate entity spends to buy, maintain, or improve its fixed assets, such as buildings, vehicles, equipment, or land. It is considered a capital expenditure ...

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. The Texas Mexican Railway retained its original name and is a subsidiary of KCS. In June 2009, the Kansas City Southern began operating on new trackage between

Victoria Victoria most commonly refers to: * Victoria (Australia), a state of the Commonwealth of Australia * Victoria, British Columbia, provincial capital of British Columbia, Canada * Victoria (mythology), Roman goddess of Victory * Victoria, Seychelle ...

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 ''Railway Age'' is an American trade magazine for the rail transport industry. It was founded in 1856 in Chicago (the United States' major railroad hub) and is published monthly by Simmons-Boardman Publishing Corporation. History The magazine's ...

'' for 2020. In September 2020, the company rejected takeover offers from

Global Infrastructure Partners Global Infrastructure Partners (GIP) is an infrastructure investment fund making equity and selected debt investments. GIP's main headquarters are located in New York City and its equity investments are based on infrastructure assets in the energ ...

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 The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The novel virus was first identi ...

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. The transaction is expected to close in early 2022, following which KCS will be held in a previously-approved voting trust pending a review period by the STB expected to conclude by the end of that year; if and when fully approved, the combined company will be named Canadian Pacific Kansas City (CPKC). Kansas City Southern's shareholders voted to approve the merger on December 10, 2021; the combined company will continue to be headquartered in Kansas City.

Subsidiaries

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 East St. Louis is a city in St. Clair County, Illinois. It is directly across the Mississippi River from Downtown St. Louis, Missouri and the Gateway Arch National Park. East St. Louis is in the Metro-East region of Southern Illinois. Once a b ...

, area. * Meridian Speedway, LLC (MSLLC) is a majority-owned, consolidated subsidiary that owns the former KCS rail line between Meridian, Mississippi and Shreveport, Louisiana, which is a portion of the KCS rail route between Dallas and Meridian, and is known as the "

Norfolk Southern Corporation The Norfolk Southern Railway is a Class I freight railroad in the United States formed in 1982 with the merger of Norfolk and Western Railway and Southern Railway. With headquarters in Atlanta, the company operates 19,420 route miles (31, ...

(NS), through its wholly owned subsidiary, the

Alabama Great Southern Railroad The Alabama Great Southern Railroad is a railroad in the U.S. states of Alabama, Georgia, Louisiana, Mississippi, and Tennessee. It is an operating subsidiary of the Norfolk Southern Corporation (NS), running southwest from Chattanooga (where i ...

, owns a

minority interest In accounting, minority interest (or non-controlling interest) is the portion of a subsidiary corporation's stock that is not owned by the parent corporation. The magnitude of the minority interest in the subsidiary company is generally less than 5 ...

in MSLLC. * Southern Capital, Development, and Industrial Services Companies: The Southern Capital company consists of bulk storage facilities complete with ocean terminals (Pabtex) along with a tie and timber plant (Trans-Serve, Inc., also known as Superior Tie and Timber). The Southern Development Company is a holding company that owns various properties. The Southern Capital Corporation, LLC is a leasing company owned jointly by KCS and GATX Capital Corporation of

San Francisco, California San Francisco (; Spanish for " Saint Francis"), officially the City and County of San Francisco, is the commercial, financial, and cultural center of Northern California. The city proper is the fourth most populous in California and 17th ...

, Southern Capital Corporation has the rail assets that once belonged to Carland and KCS, as well as the loan portfolio once owned by Southern Leasing Corporation. * The Texas Mexican Railway Company ( TexMex) is wholly owned by KCS. TexMex consists of a railway that connects Corpus Christi, Texas to

Laredo, Texas Laredo ( ; ) is a city in and the county seat of Webb County, Texas, United States, on the north bank of the Rio Grande in South Texas, across from Nuevo Laredo, Tamaulipas, Mexico. Laredo has the distinction of flying seven flags (the flag of th ...

. TexMex also owns of Union Pacific

that spans from Beaumont, Texas to

Robstown, Texas Robstown is a city in Nueces County, Texas, United States, and a western suburb of Corpus Christi. It was founded about 1906, and was named for Robert Driscoll. The population was 11,487 as of the 2010 census. The Texas State Legislature offi ...

. With its trackage rights and physical railway, the Texas Mexican Railway connects KCSM and KCS at Laredo and Beaumont. TexMex also owns the

Texas Mexican Railway International Bridge The Texas Mexican Railway International Bridge is an international railway bridge across the Rio Grande and U.S.-Mexico border between Laredo, Texas, and Nuevo Laredo, Tamaulipas, the only rail link between these cities. Owned and operated by Te ...

. It is the only rail bridge that connects the United States with Mexico through Laredo, and 40% of all rail traffic that travels to Mexico crosses over this bridge. Without TexMex, it would be nearly impossible for KCS and KCSM to act as a single company under Kansas City Southern. * KCS also owns a handful of non-core businesses. These minor subsidiaries, holding companies or minority investments (investments in which KCS has less than 50 percent ownership), have few employees and serve to support the rail operation. These include Canama Transportation, Caymex Transportation, Inc., Rosenberg Regional LLC, Joplin Union Depot, Kansas City Terminal Railway, Port Arthur Bulk Marine Terminal Co. and Veals, Inc.

Company officers

The following is a list of the executives heading KCS since 1889. * Edward L. Martin (1889–1897) *

Arthur Stilwell Arthur Edward Stilwell (October 21, 1859 – September 26, 1928) was the founder of the Kansas City, Pittsburg and Gulf Railroad, predecessor to the Kansas City Southern Railway. He served as KCPG's president from 1897 to 1900. He was also t ...

(1897–1900) * Samuel W. "Colonel" Fordyce (1900) * Stuart R. Knott (1900–1905) *

Job A. Edson Job A. Edson (February 14, 1854 – July 30, 1928) was twice the president of Kansas City Southern Railway The Kansas City Southern Railway Company is an American Class I railroad. Founded in 1887, it operates in 10 midwestern and southeast ...

(1905–1918) * Leonor F. Loree (1918–1920) *

(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 Thomas Smith Carter Jr. (June 6, 1921 – March 12, 2019) was an American engineer. He served as the thirteenth president of Kansas City Southern Railway, from 1973 to 1986. Carter was born in Dallas, Texas to Thomas Smith and Matilda (née D ...

(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–present)

References

External links

Kansas City Southern Corporate Website
{{Authority control, state=expanded Companies formerly listed on the New York Stock Exchange Companies based in Kansas City, Missouri 2021 mergers and acquisitions