| Kansas City Southern Railway | |
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A Kansas City Southern EMD SD50 on the point of a train. |
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| Reporting mark | KCS |
| Locale | Midwest United States Gulf of Mexico |
| Dates of operation | 1887–Present |
| Predecessor | Kansas City, Pittsburg and Gulf Railroad |
| Track gauge | 4 ft 8 1⁄2 in (1,435 mm) (standard gauge) |
| Length | 124.5 mi (200.4 km) |
| Headquarters | Kansas City, Missouri |
The Kansas City Southern Railway (reporting mark KCS) (NYSE: KSU), owned by Kansas City Southern Industries, is the smallest and second-oldest Class I railroad company still in operation. KCS was founded in 1887 and is currently operating in a region consisting of ten central U.S. states. KCS also owns and indirectly operates Kansas City Southern de México (KCSM) in the central and northeastern states of México, and is the only Class I Railroad to own any track both inside and outside of Mexico's boundaries. (Ferromex is the only other Class I operating in Mexico). Including all trackage owned by wholly owned subsidiaries, KCS owns a total of approximately 6000 route miles of track.[1]
Kansas City Southern is headquartered in Kansas City, Missouri. Annual revenues as of 2007 were US$1.7 billion with 6,485 employees, and a market cap of roughly US$5 billion.[2] As of first quarter 2008, KCS's CEO is Michael R. Haverty.
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KCSI owns four subsidiary railroads: the Kansas City Southern Railway, Kansas City Southern de México, the Texas Mexican Railway, and the Panama Canal Railway.
Arthur Edward Stilwell began construction on the first line of what would become the Kansas City Southern Railway in 1887, in suburban Kansas City, Missouri. Together with Edward L. Martin, Stilwell built the Kansas City Suburban Belt Railway, which was incorporated in 1887 and began operation in 1890, serving the Argentine District in Kansas City, Kansas; Independence, Missouri; 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 1939, another mainline between Dallas and New Orleans, via Shreveport, Louisiana, was added through the acquisition of the Louisiana and Arkansas Railway (L&A). From 1940 to 1969, Kansas City Southern operated the Southern Belle passenger train between Kansas City and New Orleans, along with regular freight transportation.[6] In 1962, under the name Kansas City Southern Industries, Inc. (KCSI), the company was formally organized as it began to diversify its interests into other industries under the CEO William Deramus III.
The new KCSI focused primarily on the financials industry, along with the rail industry. In 1969, KCSI started the two largest companies that came out of the diversification, DST Systems (NYSE: DST) and Janus Capital Group (NYSE: JNS) which was known as Stilwell Financial at the time.[7][8] DST Systems is a software development firm that specializes in information processing and management, with the goal of improving efficiency, productivity, and customer service.[9] Janus Capital Group is a finance firm that provides growth and risk-managed investment strategies.[10]
The core KCS rail system remained essentially the same until the 1990s, when the purchase of MidSouth Rail extended KCSI's reach eastward from Shreveport and into Mississippi and Alabama. This acquisition, combined with existing KCSI routes, created a key east-west mainline marketed as the Meridian Speedway. An additional acquisition, the Gateway Western Railway, extended KCS's reach from Kansas City to St. Louis, Missouri, and to Springfield, Illinois.
The 1990s also saw KCSI extend its reach into Mexico, with the acquisition of partial interests in the Texas Mexican Railway (TM) and Grupo Transportación Ferroviaria Mexicana (TFM). TFM was created when Kansas City Southern Industries and Transportacion Maritima Mexicana (TMM) purchased a government concession to operate on a rail system in Mexico. It was the most sought after portion of the Mexican railroad concessions, called the Northeast Railroad, that was purchased by KCSI and TMM. The concession was also bid on by many other major companies, including the United States' largest railroad company, 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 19 June 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 capital to improve the Mexican and Panamanian concessions they had purchased, and to continue to make capital expenditures in the future. To build this needed capital, 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 capital to improve them.[11] 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 it had successfully spun off many subsidiary businesses that were not directly related to the railroad business (the largest of which were Janus Capital Group and DST Systems).[12] 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.[12] The Texas Mexican Railway retained its original name and is a subsidiary of KCS.[13]
In June 2009 the Kansas City Southern began operating on new trackage between Victoria and Rosenburg, Texas, known as the Macaroni Line .[14] The line was originally built in 1882 between Victoria and Rosenburg, and was called the Macaroni Line because the main source of food for the workers constructing the line was macaroni. However, it was acquired by Southern Pacific in 1885. Southern Pacific operated the line for a full century of regular service, then in 1985, the last regularly scheduled train ran over the 91 mile line. By the early 1990s, the tracks were mostly torn out. In 2006, the KCS announced that they would rebuild the Macaroni Line through subsidiary Tex Mex, in order to end the need for trackage rights on a circuitous Union Pacific route which took them way out of the way. Construction began on January 2009, and the line was opened for the first trains in over 20 years by June 2009, right on time. The line now operates daily trains and CTC signaling has been installed.[15][16][17]
The E. H. Harriman Award is an award for rail safety. KCSR has been consistently recognized for its employee safety record (in group B: line-haul railroads with between four and 15 million employee hours per year) by the E.H. Harriman Memorial Awards Institute with a Gold Award in 2001, 2002, 2006, 2007 and 2008, Bronze Award in 2003 and 2004 and a Silver Award in 2005[18][19]
Kansas City Southern Railway is currently involved in a lawsuit regarding race-based employment discrimination in "violation of Title VII of the Civil Rights Act and 42 U.S.C. § 1981".[20] The plaintiff alleges he was refused reinstatement based on race and that other employees of similar responsibility and disciplinary history were granted reinstatement despite their record. The case has seen hearings before the Public Law Board, the Federal Railroad Administration, and federal courts. Though the case was initially ruled in favor of KCS by a district court the ruling has been overturned by the United States Fifth Circuit Court of Appeals.
The following is a list of the executives heading KCS since 1889.[21]
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