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Trains Article -- KCS: Mike's Big Railroad

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I think there's been interest in buying KCS since the 1970s -- the CEO's talk to each other constantly, and they're all aware of the possibilities. Just as clearly, KCS has never been seen as a bargain: no one has bought it. The question is whether Haverty has added value to the property or merely increased the purchase price of the property. On a large scale, and that's the only scale left in this business, KCS is a strange fit with everyone else. The north-south spine is really a terminal road that originates traffic delivered to connections and terminates traffic received from connections: it's a very long short line. The alignment over the Ozarks is very poor and thus expensive to operate; when I rode it I looked in vain for any sign of realignments and improvements; as far as I can tell it's the same railroad today (with heavier rail) it was in 1920. The result is that KCS runs right through the heart of petrochemical country between New Orleans and Baton Rouge, and in Beaumont, and gets practically none of the business. KCS just doesn't have the network reach to compete for this traffic. It would help if it went to Chicago, but I don't think purchasing the former Milwaukee Road main line (now IC&E) would have helped much because of its poor condition and expensive entrance to Chicago on other people's railroads. From the chemical and paper business standpoint, the logical merger partner is CN. The east-west line is an entirely different railroad. Very little traffic naturally turns the corner at Shreveport (the Welsh coal move is unnatural). It fits with BNSF or NS or both. So what you really have is an expensive property that no matter who you are you only want half of! It's quite the jigsaw puzzle. Charlie Steen
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