Kansas City Southern (company)
Headquartered in Kansas City, Missouri, Kansas City Southern (KCS) (NYSE: KSU) is a transportation holding company with railroad investments in the United States, Mexico and Panama.
|Traded as||NYSE: KSU|
S&P 500 Component
|Patrick J. Ottensmeyer|
(CEO & President)
Number of employees
|7,130 Union and Management|
The KCS rail network comprises approximately 6,700 route miles (10,783 km) in the U.S. and Mexico. KCS' North American rail holdings and strategic alliances are the components of a railway network linking the commercial and industrial centers of the U.S., Mexico and Canada and beyond.
KCS' primary U.S. holding, The Kansas City Southern Railway (KCSR), a Class I railroad, was founded in 1887 by Arthur Edward Stilwell, a strategic, forward-thinking entrepreneur, who envisioned a north/south railroad connecting to Mexico. KCSR operates approximately 3,400 route miles (5,472 km), serving a 10-state region of the midwestern and southeastern United States. KCSR's major hubs include Kansas City, Missouri, Shreveport, Louisiana, New Orleans, Dallas and Houston. 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.
KCS' primary international holding is Kansas City Southern de México (KCSM), which provides rail freight transportation service in 15 states in northeastern, central, southeast-central and southwest-central Mexico. KCSM provides access to the Gulf of Mexico ports of Tampico, Altamira and Veracruz, as well as to the Pacific Ocean deepwater container port of Lázaro Cárdenas. KCS obtained 100% of ownership of KCSM in 2005, making KCS the only Class I Railroad to own any track both inside and outside Mexico's boundaries. KCSM operates approximately 3,300 route miles (5,311 km), providing KCS with key routes for handling goods imported into North America.
In addition to KCSM, KCS international holdings include a 50% interest in Panama Canal Railway Company (PCRC), which operates the Panama Canal Railway. providing ocean-to-ocean freight and passenger service along the Panama Canal. PCRC provides ocean-to-ocean transshipment service between the Atlantic and Pacific oceans. The 47.6-mile (76.6 km) 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 passenger service for business commuters, tourists and private charters.
Patrick J. Ottensmeyer was named President in April 2015 and CEO in June 2016, succeeding David Starling. Mr. Ottensmeyer served as Executive Vice President of Sales and Marketing and Chief Financial Officer prior to becoming President and CEO for KCS.
KCS’ origin dates back to 1887, when 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; 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 1900, KCP&G becomes The Kansas City Southern Railway Company (KCSR). In 1939, KCSR acquires the Louisiana and Arkansas Railway (L&A), providing a route extending from Dallas to New Orleans, via Shreveport, Louisiana.
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 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.
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 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. 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 addition to KCSR, 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 17 miles (27 km) 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 and Meridian, and is known as the "Meridian Speedway." Norfolk Southern Corporation (NS), through its wholly owned subsidiary, the Alabama Great Southern Railroad, 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.
- The Texas Mexican Railway Company (TexMex) is wholly owned by KCS. TexMex consists of a 157-mile (253 km) railway that connects Corpus Christi, Texas to Laredo, Texas. TexMex also owns 400 miles (640 km) of Union Pacific trackage rights that spans from Beaumont, Texas to Robstown, Texas. With its trackage rights and physical railway, the Texas Mexican Railway connects KCSM and KCSR at Laredo and Beaumont. TexMex also owns the 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.
- 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.
The country group Turnpike Troubadours features a song titled Kansas City Southern that references the Railway Company entitled "KCS Rail Line".
The following is a list of the executives heading KCS since 1889.
- 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–present)
- Stilwell, Arthur
- DST Systems
- Gateway Eastern Railway
- Janus Capital Group
- Kansas City Southern de México
- Kansas City Southern Railway
- Kansas City Terminal Railway
- List of cities served by Kansas City Southern
- List of United States railroads
- List of U.S. Class I railroads
- Louisiana and Arkansas Railway
- Panama Canal Railway
- Texarkana and Fort Smith Railway
- Texas Mexican Railway
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