Kansas City Southern , is the parent company of many railroads and railroad related companies. KCS' main subsidiary, Kansas City Southern Railway (KCSR), 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 in the Central and Northeastern States of México.
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. As of first quarter 2008, KCS's CEO is Michael R. Haverty.
Subsidiary Railroads and Other Holdings
Kansas City Southern owns four subsidiary railroads: The Kansas City Southern Railway
, Kansas City Southern de México
, The Texas Mexican Railway Company
, and The Panama Canal Railway Company
- Kansas City Southern Railway (KCSR) operates 3,226 track miles in a ten-state region of the United States, with major hubs including Kansas City, MO, Shreveport, LA, New Orleans, LA, and Dallas, TX. Among the Class I railroads, KCSR has the shortest route between Kansas City, the second largest rail hub in the country, and the Gulf of Mexico.
- Kansas City Southern de México (KCSM), formerly Transportación Ferroviaria Mexicana (TFM), is the name of a company dedicated to freight transportation using rail in the North Eastern part of Mexico. KCSM is indirectly owned and operated by Kansas City Southern Industries via NAFTA Rail, S.A. de C.V.. KCSM owns its own fleet and the rights to operate and maintain a rail system through a concession from the Mexican government. KCSM's rail system consists of 2,645 track miles in a 17 state reigon (including the federal district), which serves northeastern and central Mexico and the port cities of Lázaro Cárdenas and Tampico, among others. KCSM provides KCS with key routes for handling goods imported into North America. It also has a Pacific coast route to the recently developed deepwater container port of Lázaro Cárdenas.
- The Texas Mexican Railway Company (TexMex) is wholly owned by KCS. TexMex consists of a 157-mile railway that connects Corpus Christi, TX to Laredo, TX. TexMex also owns 400 miles of Union Pacific trackage rights that spans from Beaumont, TX to Robstown, TX. Withs it's trackage rights and physical railway, the Texas Mexican Railway connects KCSM and KCSR at Laredo, TX and Beaumont, TX. TexMex also owns the extremely important Texas-Mexican Railway International Bridge. 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 KCSR and KCSM to act as a single company under Kansas City Southern.
- The Panama Canal Railway Company (PCRC) is jointly owned by KCS and Panama Holdings, LLC of Hazelcrest, Illinois. PCRC provides ocean-to-ocean transshipment service between the Atlantic and Pacific oceans. The 47.6 mile railroad serves as an efficient intermodal line for world commerce and complements the existing transportation infrastructure provided by the Canal, the Colón Free Trade Zone and the Pacific and Atlantic ports. PCRC's wholly owned subsidiary, Panarail Tourism, offers luxury passenger service for business commuters, tourists and private charters.
- NAFTA Rail, S.A. de C.V. is the holding company for KCSM because at the time KCS purchased KCSM, the Mexican government would not allow a foreign entente to directly own a Mexican railroad. So, KCS created this Mexican corporation as a holding company for KCS' ownership in KCSM. NAFTA Rail is wholly owned by Caymex Transportation, Inc., which is owned by KCS.
- Gateway Eastern Railway Company (GWER) is a wholly-owned subsidiary of KCS. GWER provides rail service over approximately 17 miles of track in the East St. Louis, Illinois area.
- Meridian Speedway, LLC (MSLLC) is a majority owned, consolidated subsidiary that owns the former KCSR rail line between Meridian, Mississippi and Shreveport, Louisiana, which is a portion of the KCSR rail route between Dallas, Texas and Meridian, known as the “Meridian Speedway”. Norfolk Southern Corporation (NS), through its wholly-owned subsidiary, The Alabama Great Southern Railroad Company, owns a minority interest 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 KCSR and GATX Capital Corporation of San Francisco, California, Southern Capital Corporation has the rail assets that once belonged to Carland and KCSR, as well as the loan portfolio once owned by Southern Leasing Corporation.
- Other Minor Subsidiaries: 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 Company, Port Arthur Bulk Marine Terminal Co. and Veals, Inc..
- Planned Subsidiaries include a long-term plan for support of the Kansas City SmartPort, in which customs officials from Mexico would inspect cargo at the railroad's loading facility at the former Richards-Gebaur Air Force Base and speed them across the border to Mexican ports for transport to Asia. As opposed to having them inspected at the congested Mexican border and again at the coastal port.
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 acquisitions 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
, the 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 . 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 and Janus Capital Group which was know 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.
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. The main reason for the name "speedway" is that it is one of the fastest sections of track in the world; this is because the track is not only extremely straight, but it is also a double track, allowing two trains to move in opposite directions at the same time. 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 State's 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 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 decided to spun of 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. 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). 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 withheld its original name and is a subsidiary of KCS.
Awards and recognition
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 and 2007, Bronze Award in 2003 and 2004 and a Silver Award in 2005.
The following is a list of the executives heading KCS since 1889.