The Kankakee, Beaverville & Southern began operations December 1, 1977, on 25 miles of former Conrail trackage between Kankakee, IL, and Sheldon, IL. Faced with abandonment by Conrail, Beaverville, IL, businessman Fey Orr, bought the line initially to serve his company, Beaverville Grain and Lumber and other local industries. Operations were based at Beaverville and a small open-air locomotive shop was built there. This former Conrail line was built in the early 1870's by the Cincinnati, Lafayette and Chicago Railroad which built from a connection with the Lafayette, Muncie & Bloomington Railroad at Templeton, IN northwest through Kankakee, IL, eventually reaching the Rock Island at Seneca, IL. By 1889 the CL&C became part of the "Big Four", the Cleveland, Cincinnati, Chicago and St. Louis Railroad. In 1922 the New York Central gained controlling interest of the CCC&StL and eventually leased the entire railroad in 1930. The line was an important segment of the NYC's Cincinnati - Chicago traffic and even hosted as many as eight daily passenger trains, including the James Whitcomb Riley. Penn Central, formed by the merger of the New York Central and Pennsylvania Railroad, on February 1, 1968, downgraded the line to secondary status. The only thing keeping the line intact was seasonal grain traffic, the Riley, and later, Amtrak's Floridian. By 1973, all passenger service had left the line completely. On April 1, 1976, Conrail was created to rescue several northeastern railroads from total collapse. In their reconciliation of the northeast's railroad infrastructure, most of the Kankakee-Indianapolis line was abandoned or sold. A portion of the line between Swanington, IN and Templeton, IN, was purchased by grain shipper Demeter Inc. in 1987 to preserve rail service to its facility. Conrail continued service on the Sheldon-Swanington segment via its Danville Secondary at Sheff, IN. When the KB&S initially leased the Kankakee-Sheldon segment, it was planned to rely heavily on interchange with the Illinois Central Gulf at Kankakee. Connections with Missouri Pacific at St. Anne, IL, the Santa Fe subsidiary Toledo, Peoria & Western, and Conrail at Sheldon were also possible. Unfortunately just prior to the lease agreement, Conrail decided to retain the tracks just north of the TP&W at Sheldon and removed the diamond, there by eliminating any connection with the TP&W (initially) and Conrail.
In August of 1980 the KB&S acquired 60 miles of the Milwaukee Road's "Southeastern Line" between North Hooper and Danville, IL. A connection was built between the Kankakee - Sheldon segment and named Iroquois Jct. A small two-track engine house and company offices were then built there as well. This line was originally built by the Chicago Southern Railroad in 1904. In 1910 the line was purchased by the Chicago, Terre Haute and Southeastern Railroad. In 1921 the Milwaukee Road leased the CTH&SE to tap into coal-rich southeastern Indiana. It finally bought the line in 1948. On September 17, 1979 Milwaukee Road's Chicago - Louisville traffic was rerouted over to the parallel Conrail Danville Branch. The dormant line appealed to the KB&S since it could make new connections with Conrail, L&N and N&W at Danville. The KB&S acquired the line in 1981.
In 1989 the Norfolk Southern ceased operations on its Lafayette-Gibson City portion of its former Nickle Plate Frankfort, IN-Peoria, IL line. This line was incorporated by the Lafayette, Bloomington & Mississippi Railway in 1867 connecting at the Illinois-Indiana state line with the Lafayette, Muncie & Bloomington Railroad, which was incorporated in 1869. Upon it's completion in 1872, the lined was leased for 999 years by the Wabash, which terminated the lease after four years. In October 1876 both lines merged with the Muncie & State Line Railroad becoming the Lafayette, Bloomington & Muncie Railway. In December 1879, the Lake Erie & Western Railway purchased the line and finished construction of the line to Peoria in 1888. By 1900 the LE&W became part of the Lake Shore and Michigan Southern, and the line was then sold to the New York, Chicago & St. Louis (aka The Nickel Plate) in 1922. The Nickel Plate was later merged into the Norfolk & Western in 1964, and the N&W merged with the Southern Railroad in 1982 to form Norfolk Southern. The NS rerouted Peoria-bound traffic from this line to the former Wabash route from Lafayette to Gibson City, IL. With only seasonal grain traffic NS wished to abandon the line. The KB&S expressed interest in the line as it would give them access to connections with the NS and CSX at Lafayette via it's "Southeastern" line at Cheneyville. They leased the line from Cheneyville to Lafayette for two years on December 15, 1989 and purchased the line outright in 1991.
Demeter Inc., which owned the CC&StL line from Templeton to Swanignton, realized that the KB&S would provide more reliable service to their elevator at Swanington, IL, than Conrail did. In 1989 it sold its 6 miles of line to the KB&S. Conrail, now left with the Swanington-Sheldon portion of the CCC&StL and basically no traffic, sold the line to KB&S in 1990. The diamond over the TP&W was replaced and a direct Kankakee-Lafayette route was re-established.
Conrail further retrenched from the area in the mid-1990's by abandoning its Danville Secondary in 1995. Two sections were purchased by online customers. The first, Wattland Farms, immediately resold their line from Sheff to Free, IN, to the KB&S. The second, Stewart Grain, retained ownership in the 10 mile segment from Handy to Stewart, IN. Named the Bee Line Railroad, they contracted with the KB&S to provide rail service.
On July 16, 1997, the company's founder, Fey Orr, died at the age of 85. At the time of his death, Mr. Orr was very much involved with his railroad, while others took care of his Beaverville Grain & Lumber. Then Vice-President Kevin Stroo took over as President of the KB&S and remains at that post today.