Had some time this Sunday morning morning to catch back up on some TRAINS; reading that I normally do not get into too deeply. Jim Wrinn’s video peak of what is in the upcoming August issue, and what Fred Frailey has been mulling over lately.
With time to explore, I went back to see what Fred was saying about a couple of my favorite railroads. The KCS and NS. My first thoughts were that these two railroads were an unlikely juxtaposition to pick on. . But reading on Fred Frailey’s comentaries began to make some solid sense.
One thing we seem to have time to do on these Forums around here is to speculate and "What If " with our favorite railroads. The two Bolgs of Fred’s are certainly food for speculations, and a Partner for KCS has been the topic mre than once around these Forums.
Here are the linked Blogs penned by Fred W. Frailey:
FTA:"…Traffic on the KCS network is growing like a weed, with sales poised to expand by almost 50 percent between now and 2016, according to Bloomberg. Moreover, its 3,100-mile network in Mexico is beginning to solidify around a bevy of automotive assembly plants…"
and the Second Blog article:
Dated May 21,2013 “KCS Part II- The minnow can swallow the whale”
It would seem KCS could go the Conrail route and split with the Meridian Raceway and other routes going to an eastern railroad and the KC south line going CP. NS doesn’t need a second route to KC and CP at some point will want a larger footprint.
ED: To one of several points Fred Frailey made in his articles: [From link #1]
FTL:"...But I don’t see much happening between NS and KCS. First, I question whether NS CEO Wick Moorman would want to take this on; he’s got a lot to occupy his energies, trying to deal with the decline of Appalachian coal traffic. Second, KCS is hyper-expensive to buy. As I write this, its shares trade for 28 times estimated 2013 earnings, 23 times 2014 estimates, and 20 times 2015 guesses. The price-earnings ratios of NS are half that…"
I know you’ll appreciate the second piece of information above.
I posted the pair of articles, because they seem to make an interesting point that ratheer than the pursuer NS might actually be in the postition pursued in a deal with KCS_._ As I had indicated it was a topic that might be interesting to a number of posters around here.[2c]
Think about this if KCS was to buy the NS out End to End Merger with 2 Connections with the Speedway and St Louis as KCS took over the Gateway Western under Haverty. Plus NS goes into KC via trackage rights on the Transcon on the BNSF IIRC. So what would the Customers get out of this. 1st a Single line Service from the Midwest and Northeast to Mexico. 2nd UP would have to compete with the Larger KCS for Texas traffic. 3rd possible new markets for East Coast Coal in Mexico for Power plants. Mexico does not have the Enviromental Red tape we do maybe the Mines could offer a sweet deal to the plants down there.
Exactly, my point and more directly to Fred Frailey’s points. The entire dynamics of the railroad world in the U.S. and likely, Canada would be stirred in ways unimagined util it would shake out… That precludes any actions or rulings made at the Federal level by the STB. should this ever get to the real world.