• UP-KCS From UP Perspective

  • Discussion about the Union Pacific operations past and present. Official site can be found here: UPRR.COM.
Discussion about the Union Pacific operations past and present. Official site can be found here: UPRR.COM.

Moderator: GOLDEN-ARM

  by Gilbert B Norman
Mr. Golden Arm and Col. Perkowski, I hope you will allow discussion regarding speculation of a KCS-UP combination made by one financial pundit, CNBC's Jim Cramer, to move forth here so long as it is from a "what's in it for UP" perspective.

If, and I reiterate if in that, as of this writing, no other financial media source has given this "legs", such moves forth, I believe it would be a "defensive" play by UP. At present, the best route for "Lakes to Gulf" traffic is GT/IC. Being that is CN'S US Subsidiary, they are at advantage to handle the Canadian agriculture products to the Gulf for export. The route is like the song "rolling on down to the sea".

The UP of course has a route, but that comprising of RI-Kan City-MP, or whatever through the "spaghetti bowl" they inherited, is "circuitous".

The KCS is "more or less" direct, but mountainous going through the Ozarks. But then, it's the only game left - and might some Beaver be sharpening his claws to make a grab for it.

Now of concern would be the KCS Mexican properties. In view of that UP owns 49% of Ferromex (Govt. the rest) I believe that divestment of KCS-M could not be discounted. I'm sure if anything moves beyond this pundit, "the eyes of Lou Menk Drive will be upon you".

But I hold Mexico is what gives viability to the KCS; AND should the day of Mexican political stability come to pass, a big BIG Bitcoin Farm will have been born.

All told, we could be looking at a "21st Century Conrail Saga".
  by Shortline614
Gilbert B Norman wrote: Fri Oct 30, 2020 9:53 am All told, we could be looking at a "21st Century Conrail Saga".
A saga that BNSF would easily win. UP may be the richest railroad in terms of earnings, but BNSF is owned by Warren Buffet, who not only has billions to throw around, but also the will to spend those billions to protect his investment. Mr. Buffet could have BNSF buy NS, CN, and KCS with money left to spare.

BNSF also provides much better service then UP. They are also willing to spend the money on capitol investments. Shippers would be less upset over a BNSF-KCS merger then a UP-KCS merger. BNSF and KCS fit like puzzle pieces, while UP serves all the same markets as KCS on parallel lines. Not to mention that UP owning 27% of Ferromex and KCSdeM would result in UP having almost total control over Mexico. The STB would strike such a merger down. It would be SPSF all over again.

A BNSF-KCS merger might get Union Pacific spooked enough that they start growing their business again and become once again become the true "Great Big Rollin' Railroad" they were under Kenefick. Back before the split of Conrail, those at NS would use something called the "CSX Card." Basically: If you don't do this first then CSX will do it later, hurting NS in the long run.

I don't think UP is looking at KCS, but such a prospect is interesting.
  by Gilbert B Norman
Mr. Shortline, thank you for your respectful thoughts. I'll stand corrected that UP's stake in Ferromex is 27% vice 49%.

A BNSF-KCS-M combination would be more palatable to the Surfboard than would be that with UP, and that combination could lead the way to a SOO-KCS-(USA only), giving both Canadian roads equal access to the Gulf for their "Aggie" export traffic.
  by eolesen
Isn't BNSF-KCSdM and CP-KCS what I said on the other thread?.....
  by Backshophoss
The KCS route to Laredo is not that direct but is useful for BNSF,Their only other Mexican RR interchange is via UP's Eagle Pass sub and El Paso