THE CHICAGO GATEWAY
One of the most significant achievements of the Phil Anschutz era was Southern Pacific's arrival in Chicago. It is no surprise that Southern Pacific had to literally claw its way into Chicago and it is emblematic of the creativity of Southern Pacific's decision makers at the time. The other major western railroads were not about to allow Southern Pacific to operate in and out of Chicago and compete for their business that flowed through the Chicago Gateway.
Southern Pacific's initial approach in 1989 was to request the the Burlington Northern for operating rights over its line of railroad between Chicago and Kansas City. Burlington Northern's response was a polite and quick "no."
Shortly after this rejection, Southern Pacific became aware that the Soo Line might be willing to sell its line of railroad between Chicago and Kansas City, Missouri, including two branch lines and its interest in the Davenport, Rock Island and North Western Railway Co., which was jointly owned by Burlington Northern and the Soo Line. After much negotiation and drafting numerous agreements between Southern Pacific and the Soo Line, the Burlington Northern and the Chicago and North Western presented contractual objections to the initiative, which were upheld by the then Interstate Commerce Commission.
In late summer 1989, the Chicago, Missouri and Western was in bankruptcy proceedings and Southern Pacific expressed an interest in purchasing CMW's line of railroad between Joliet and East St. Louis and began negotiations with CMW's trustee and the Gateway Western, which was interested in buying CMW's line of railroad between Kansas City and East St. Louis. Eventually, agreements were reached with the trustee and Gateway Western and approved by the federal bankruptcy judge appointed to the case. Southern Pacific and Gateway Western would jointly own the former CMW trackage between East St. Louis and Godfrey, Illinois.
Once Southern Pacific had finalized all its agreements covering the operation of trains between Chicago and St. Louis, including the assumption of CMW's agreement with the Illinois Central permitting it to operate over Illinois Central's trackage between Chicago and Joliet, it needed to find a place in the greater Chicago area to originate and terminate its trains. That place was the Belt Railway of Chicago. The Belt Railway had the capacity for Southern Pacific's trains and could provide various services for Southern Pacific such as switching, servicing Southern Pacific's locomotives, and providing initial air brake tests, but most importantly, Southern Pacific was able to negotiate very attractive charges for the various services.
Southern Pacific's operations between Chicago and East St. Louis began in early 1990, and it was not long afterwards that Southern Pacific was contacted by Burlington Northern wanting to know if Southern Pacific was interested in acquiring operating rights over its line of railroad between Chicago and Kansas City. The answer was an immediate yes and discussions began soon thereafter. As Southern Pacific was unwinding its purchase agreement with the Soo Line, its talks with the Burlington Northern were kept secret, and were not revealed until after the trackage rights agreement between the two companies had been consummated and Southern Pacific and the Soo Line had terminated their purchase agreement.
Next, Southern Pacific and Norfolk Southern entered into an agreement covering Southern Pacific's use of Norfolk Southern's trackage between Maxwell and Birmingham, Missouri (Burlington Northern and Norfolk Southern had a paired track agreement covering operations between Maxwell and Birmingham and that agreement provided that Southern Pacific had to obtain Norfolk Southern's consent to use the trackage owned by Norfolk Southern).
Soon afterwards, the Interstate Commerce Commission authorized Southern Pacific to operate over Burlington Northern's and Norfolk Southern's trackage between Chicago and Kansas City, Missouri.
In 1995, Southern Pacific would acquire a third route into and out of Chicago. As a result of the Burlington Northern - Santa Fe merger that year, Southern Pacific was granted operating and haulage rights over trackage of the Santa Fe from Chicago to points in Colorado, Illinois, Kansas, Missouri, New Mexico, and Texas.
Southern Pacific never owned more than 2,000 feet of trackage in Chicago. It did, however, have 225 miles of operating rights over the trackage of seven other railroad entities in the Chicago terminal area.
At the time of the Southern Pacific/Union Pacific merger on September 11, 1996, Southern Pacific had entered into more than 50 joint facility and other related agreements with other railroad companies covering Southern Pacific’s operations in the greater Chicago area. Traffic had increased from an average of six trains per day in 1990 to 20 by September 1996. Daily car processing had risen from an average of 438 cars (including intermodal) in 1990, to 754 (including intermodal) cars by September 1996. In 1991, SP generated an average of 211 intermodal lifts per day; by September 1996, an average of 511 lifts were completed per day, and for the year 1996 through August, lift performance consistently averaged 98%.