Kansas City Southern Chicago Access

[gabe]

Most of the press re: KCS involves the lower portion of the system, and its success with the budding Mid South acquisition. I have always found the action, vel non, on the northern end of the system to be a bit more interesting. Does anyone know if KCS has made any major pushes for Chicago access?

I have always found it strange that KCS has not reached Chicago yet, as there have been so many, at least speciously, viable opportunities for the KCS to reach Chicago.

In its purchase of the Alton section of the Gateway Western, I thought the KCS would make an attempt to acquire the rest of the former Alton when UP bought the SP and the SP's Chicago-St. Louis line became redundant, if not doubly redundant considering CNW. To my surprise, UP still holds onto this line.

Greyhounds once gave a very good rendition of the problems associated with on-line traffic on this route and characterized it as better used as a bridge route--which would probably be ideal for the KCS.

I also thought that the regional (sorry the name escapes me at the moment) going north out of Kansas City that was recently bought by the Dakota Minnesota and Eastern made sense as well--the Minneapolis access also seemed like a good reason for such an investment.

The last I was able to determine, KCS has a haulage agreement on CN's former IC Springfield Illinois - Gillman Illinois - Chicago Illinois line. It just seems to me that with NAFTA and container shipping, reaching Chicago would be very crucial for the KCS.

Moreover, its Gateway Western purchase doesn't make sense unless KCS planned on reaching Chicago.

Any thoughts?

Gabe

[MP173]

good to see you back Gabe. I dont have much to add to this, other than I think the ICE/KSC would offer another alternative route for Texas - Midwest freight. Perhaps not today, but at some point I wouldnt be surprized if KCS doesnt add that line.

ed

[ndbprr]

I have a friend who retired from the IC (CN) about two years ago. At that time KCS was supposed to be on the list CN was actively pursuing. Don't have any current info now.

[gabe]

Ed,

Good to be back, brief though my visit may be. I agree with your commet. As much as I would like to see no further rail mergers, I would like to see ICE + DME + KCS. I think such an entity would have more staying power in the current rail environment and be better able to resist a takeover by one of the current big boys.

ndpr,

The last I heard CN + KCS, although once looked at, is no more.

Thanks for your response though.

Gabe

[Anonymous]

Why would ICE + DME + KCS have to occur for the benefits of such interchange to come to fruition? The old Alphabet Route worked pretty well, and as long as ICE and DME remain under private ownership, KCS has nothing to gain by adding them to it's system as long as they are willing to partner up with KCS.

[jeffhergert]

After the demise of the Rock Island in 1980 the KCS talked about acquiring what would have been the RI's core system for reorganization. This would have basically been the Chicago-CoBluffs/Twin Cities-Kansas City mains plus most of the branchlines, especially the grain lines. I remember them proposing a subsidiary "Kansas City Northern" to own and operate the lines.

How serious they were I don't know, but a printing plant was built at Marengo, Iowa because the KCS said they would soon be providing rail service. For 2 years, they had to truck paper from Iowa City 30 miles to the plant until the Iowa Railroad resumed operation. Now the Iowa Interstate runs here. The plant still operates although it has changed ownership once or twice.

Jeff

[gabe]

QUOTE: Originally posted by futuremodal

Why would ICE + DME + KCS have to occur for the benefits of such interchange to come to fruition? The old Alphabet Route worked pretty well, and as long as ICE and DME remain under private ownership, KCS has nothing to gain by adding them to it's system as long as they are willing to partner up with KCS.

Several reasons.

First, absent a true conglomerated route, I don't think you will see the investment put into the ICE that is necessary for a truely effective Kansas City - Chicago bridge operation to work. You would need the cash from either the KCS or an outside investors to get ICE in that kind of shape, you wont see cash from either without a merger.

Second, there would be economies of scale and elimination of redundancy to make such an operation more efficient. I know you will never admit it, but there are some good things that come out of rail mergers--that is why shippers are merging left and right as well as railroads.

Finally, a larger operation would be more competitive against UP and BNSF.

I do not think your comparison to alphabet operations of years gone by is really applicable or fair. Throw out the fact that alphabet operations of yesteryear were competing against other alphabet operators, and in a regulated environment no less, it is easy to see why the comparision is inaccurate.

Quite frankly FM, I am surprised you are disagreeing with me on this one. Such a merger would not eliminate track, would not create captive shippers, and would give more competition to UP and BNSF--ideals you tend to champion.

More important, one of your few ideals that I happen to share is the avoidance of the "end game" or final round of rail mergers. I agree with your position that such a day will not be a good one for American shippers or American railroads for that matter. Mark my words, acquisition of the KCS is the first step in the "end game." A stronger and larger KCS buttress the forces attempting to withstand such an eventuality.

I realize shippers and a merger are unlikely bed fellows, but I think you would do well to abandon your paradigm in this isntance and recognize that a stronger larger KCS protects the competition you find so sacrosanct.

Gabe

[nanaimo73]

QUOTE: Originally posted by gabe

As much as I would like to see no further rail mergers, I would like to see ICE + DME + KCS. I think such an entity would have more staying power in the current rail environment and be better able to resist a takeover by one of the current big boys.

Welcome back to the Forum Gabe.
Your ability to provoke thought is appreciated.
I really believe KCS has only one method of staying independent. That is to keep its stock value up so that it is too expensive for another railroad to acquire. I really think acquiring ICE and DME would lower their stock value. I believe their current strategy of focusing on the former MidSouth “Meridian Speedway” and the south Texas line make more sense. The project to realign their route in Vicksburg and add 17 miles of CTC from Smiths, Mississippi to Bovey, Louisiana should be completed this year. Putting in CTC all the way from Shreveport to Jackson will be expensive but I think it is worth it.
A KCS train between the old KCS in Beaumont, Texas and the former Texas Mexican at Robstown, Texas must use 370 miles of trackage rights over Union Pacific, right through Houston. A number of these trains have been taking up to 24 hours. KCS purchased an 85 mile ROW of an abandoned SP line from Victoria to Rosenburg and plans on relaying the track, which would shorten the route by 80 miles. An application has been made to the FRA for a loan of $50 million for this project. With most of KCS’s growth expected on the east and the south, spending money on the ICE route does not make sense to me.

QUOTE: The last I heard CN + KCS, although once looked at, is no more.

I would speculate that CN is keeping a very close eye on KCS and is ready to make a move if they could get KCS at the right price. I believe both CN and KCS are happy with their agreement interchanging traffic in Jackson.
.

[zardoz]

For what it's worth, and it may be completely irrelevant to the thread, but in Kenosha, WI there is an old rail yard in the area between 30th and 39th Avenue that used to be the C&NW Farm Yard (located ironically on the Farm Sub). It used to be an 11-track yard that was used to switch cars for the American Motors, American Brass, Ocean Spray, and other various industries in Kenosha. A number of years ago all the tracks except two were torn up, and the land is now vacant.

But what is interesting (at least to me), is that there is a "For Sale" sign on the property (30th Ave side), and on the for sale sign, it says, "For information, contact the KANSAS CITY SOUTHERN RAILROAD!

[Anonymous]

QUOTE: Originally posted by gabe

QUOTE: Originally posted by futuremodal

Why would ICE + DME + KCS have to occur for the benefits of such interchange to come to fruition? The old Alphabet Route worked pretty well, and as long as ICE and DME remain under private ownership, KCS has nothing to gain by adding them to it's system as long as they are willing to partner up with KCS.

Several reasons.

First, absent a true conglomerated route, I don't think you will see the investment put into the ICE that is necessary for a truely effective Kansas City - Chicago bridge operation to work. You would need the cash from either the KCS or an outside investors to get ICE in that kind of shape, you wont see cash from either without a merger.

Second, there would be economies of scale and elimination of redundancy to make such an operation more efficient. I know you will never admit it, but there are some good things that come out of rail mergers--that is why shippers are merging left and right as well as railroads.

Finally, a larger operation would be more competitive against UP and BNSF.

I do not think your comparison to alphabet operations of years gone by is really applicable or fair. Throw out the fact that alphabet operations of yesteryear were competing against other alphabet operators, and in a regulated environment no less, it is easy to see why the comparision is inaccurate.

Quite frankly FM, I am surprised you are disagreeing with me on this one. Such a merger would not eliminate track, would not create captive shippers, and would give more competition to UP and BNSF--ideals you tend to champion.

More important, one of your few ideals that I happen to share is the avoidance of the "end game" or final round of rail mergers. I agree with your position that such a day will not be a good one for American shippers or American railroads for that matter. Mark my words, acquisition of the KCS is the first step in the "end game." A stronger and larger KCS buttress the forces attempting to withstand such an eventuality.

I realize shippers and a merger are unlikely bed fellows, but I think you would do well to abandon your paradigm in this isntance and recognize that a stronger larger KCS protects the competition you find so sacrosanct.

Gabe

All that *other* stuff aside......

I don't disagree that KCS will want to utilize interchange to a high degree with DME and ICE, I just don't think it is in their best interests to embark upon a de facto takeover of those properties. I also don't think the owners of DME/ICE want to limit themselves to interchange with only one Class I that might end up in the hands of CN. DME has divisions that have very profitable interchange with CP, BNSF, and UP in addition to KCS, and if they get hitched to KCS (and eventually CN) those other gateways are compromised for those divisions. Then you end up with a similar erosion of online traffic that has been experienced by the ex-WC divisions. The states through which DME/ICE run are very aware of the problems the State of Wisconsin has gone through when CN took over the WC, and they will do anything to avoid that situation by placating the owners of DME/ICE into staying independent.

[Murphy Siding]

QUOTE: Originally posted by futuremodal

[i] The states through which DME/ICE run are very aware of the problems the State of Wisconsin has gone through when CN took over the WC, and they will do anything to avoid that situation by placating the owners of DME/ICE into staying independent.

At the risk of garnering another "tsk-tsk" or "harumpfff",......Shouldn't this statement be preceded by: " It is my ( futuremodal's ) opinion that...........?[;)]

Thanks to Chris / CopCarSS for my avatar.

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