Firing on all cylinders: Kansas City Southern delivers on Tex-Mex purchase, sets stage for trans-border NAFTA Rail network.(Rail & Intermodal)(Free Trade Agreement, 1992, United States-Canada-Mexico)

Kansas City Southern's $32.7 million purchase of a controlling stake in the Texas Mexican Railway is the most visible sign yet that the nation's smallest Class 1 railroad is outperforming its much larger competitors.

While giants Like Union Pacific Railroad, CSX and Canadian Pacific Railway have been straining to shake loose rail networks overburdened by too much freight and too little capacity, KCS has been quietly making big strides in its service performance over the last year.

"Our success has been a combination of several things," said KCS Chairman, President and CEO Mike Haverty. "Part of it is that last year was not a good performance year, so it's a …