Jim,
I believe the K&IT would handle the freight via their tracks from Youngtown that paralleled the canal. These tracks still exist today. The small nearby yard was called Panama Yard, apparently a play on words since it was next to the canal. There was access to the freight house (and the B&O freight house) from these tracks independent of the PRR.
There is a nice map of this area in Trackside Around Louisville East on page 107.
Update - I found a photocopy of an advertisement for K&IT from the Louisville Courier Journal dated October 25, 1939. "Monon Freight House" is listed as an industry. I will scan this and upload it when I get a chance.
Bob