Its interesting how KCS stands out in the Mid-south region. In the 80’s, UP gobbled up MoPac and MKT, but KCS remained standing. [dinner]
Does anyone have any perspective on what made these others more attractive? We KCS redundant to UP after these mergers?
Its great to keeps some independent lines like this, its just odd that UP or BNSF didn’t find a way to gobble KCS up. [%-)]
Thanks,
Stack-
Nothing against the KCS which has survived well into the age of the giants of the railroad industry. I think you need to compare KCS of the time with MoPac and MKT. KCS has a long north south line with few customers struggling to compete with the IC (ICG). The Meridian speedway was long in the future as was the traffic the Midsouth acquisition brought. In short, the KCS had neither the traffic of the MoPac nor the location of the MKT and ranked lower on the list of merger candidates. This is my take on it. Perhaps others more informed can fill in the particulars.
LC
(LC, you posted your reply while I was writing mine, so we pretty much say the same thing.)
One possible answer is that KCS Industries, which owned the railway, always had a very expensive stock because it also owned several highly successful mutual funds. Those have since been split out.
Another possible answer is that UP or KCS was never a strategic move for UP or BN. Consider the pre-MidSouth KCS – a north-south railroad that went to New Orleans and Beaumont, Texas. What did it get you that you didn’t already get by simply interchanging traffic to it? What great traffic source did KCS control, or what new route did would it have created?
A third possible answer is that you know you can’t merge with everything – you haven’t got the cash, and the ICC or STB won’t let you – so which one do you like the most? That’s the one you pick first. It’s hard to see how selecting the MoPac was anything but a good choice – although it wasn’t UP’s first. It’s first choice was the Rock Island. That seems really odd now, but back in the 1960s, given the way the ICC promulgated policy, it was a good choice for UP because it was a weak railroad, and back then the ICC favored strong railroad/weak railroad mergers.
A fourth possible answer is that the KCS didn’t want a merger partner – at least, not unless it gave its stockholders a fat premium. Frisco, for one, desperately needed a merger and sought such with BN, while the BN needed the Frisco for its cash flow and credit.
The interesting thing that KCS has in its possession now – that no one else has – is the MidSouth, which creates a sixth east-west gateway route at Vicksburg (the others are Chicago, Kansas City, St. Louis, Memphis, and New Orleans). It’s a growing lane with good connections at each end. Historically, it never amounted to much, and you will look in vain in railroad strategy analyses to find any mention of Vicksburg or the Yazoo & Mississippi Valley as a future transcontinenal rout
The UP wanted the Gulf coast connections and Mississippi gateways of the MP, plus the TCS computer system. The MP was very much entwined with the MKT, they shared a lot of joint trackages between KC and Houston, so that was a natural match for the merger. The KCS basically paralled the MP only through less populated (less traffic) areas and fewer connections at either end. There just wasn’t any benefit to merging with the KCS that couldn’t be realized on the UP/MP’s existing network.
Dave H.
I don’t in the 80’s they didn’t think the UP it was a stragity connection
Thanks much for the replies folks -
I don’t think KCS was on the market then was it? I remember when they got Mo-Pac…we were really bigger than UP on merger day!!!
UPTRAIN,
LONG LIVE MO-PAC
They havent , yet.
Mark-
Thanks for the additional input. I guess I’m not as well read on this subject as I might be. My reading time has been vastly decreased since becoming an Engineer…LOL…
LC
Hey, that one’s easy, LC … I worked there!
There’s nothing like working for a railroad to make you realize what a life is.
Mark-
No doubt about it. Just glad I have never had to man a “Desk” or I guess on KCS it’s a “Console”. We had a former DS in my LETS class in Conway. BOY did he take a ribbing from the T&E guys from his Division (many of whom knew him well). It was most entertaining to have every example involving a DS have our very own whipping boy…
LC