A fuel surcharge can sound like a technical line item until it begins adding hundreds or thousands of dollars to freight bills. Effective October 5, 2026, CN’s weekly intermodal fuel schedule puts its U.S. rate at 52.90%, compared with 41.33% for intra-Canada traffic. Both are tied to a U.S. on-highway diesel benchmark of $6.382 per gallon for the basis week ending September 28.
That leaves the U.S. rate 11.57 percentage points above the Canadian rate at a time when fuel and transportation costs remain elevated. The important distinction is that 52.9% is an applicable fuel surcharge, not a claim that every cross-border CN shipment suddenly costs 52.9% more overall. Still, for businesses moving containers through CN’s integrated Canadian and U.S. network, the size of that surcharge has become difficult to ignore.
What the 52.9% Figure Actually Represents
CN calls Tariff 7404 a percentage-based fuel surcharge for intermodal traffic. Unlike a freight rate negotiated to move a container from one terminal to another, the surcharge is designed to adjust the invoice for changes in fuel costs. CN publishes the 7404 schedule weekly, with separate columns for intra-Canada and U.S. traffic. For the week effective October 5, the published rates are 41.33% and 52.90%, respectively. The underlying diesel benchmark is the U.S. Energy Information Administration’s on-highway diesel price, rather than a Canadian retail diesel index.
That distinction is essential when interpreting the headline number. A 52.9% surcharge does not mean the complete price of transporting a container between Canada and the United States has risen by 52.9%. It means an applicable charge governed by the tariff can carry a fuel adjustment at that percentage. Contract terms, routing, the type of service and other charges can all affect the actual invoice. CN also operates several fuel-surcharge mechanisms, so 7404 should not be treated as a universal rate applying identically to every railcar, container or customer shipment on its network.
The U.S.-Canada Gap Has Remained Wide
The October 5 difference is not the result of a single isolated weekly adjustment. CN’s previous 7404 schedule, effective September 28, showed a U.S. rate of 54.10% and an intra-Canada rate of 42.25%. One week earlier, the corresponding rates were 51.70% and 40.41%. The gap therefore measured 11.85 percentage points on September 28, 11.29 points on September 21 and 11.57 points on October 5.
The latest U.S. percentage is roughly 28% higher than the current Canadian percentage when the two surcharge rates are compared directly. Both rates declined from the previous week as diesel eased, but the separation between them barely changed. For logistics managers, that makes the difference more meaningful than a short-lived fuel-price spike. Businesses budgeting freight over several weeks have been dealing with a U.S.-linked surcharge consistently above 50% since at least September 21, while the intra-Canada weekly rate remained around the low-40% range. Even when the underlying diesel benchmark moves lower, a modest weekly decline does not immediately return freight surcharges to anything resembling normal historical fuel conditions.
Diesel Prices Are Driving the Weekly Adjustment
CN’s published methodology ties 7404 directly to the EIA’s average U.S. on-highway diesel price. The railway says the surcharge begins from a 2% base once diesel reaches the applicable threshold of $1.25 per gallon, with the intra-Canada calculation increasing by 0.23 percentage points for each complete three-cent increase in diesel. At the current $6.382 benchmark, that formula produces the published 41.33% intra-Canada rate. CN separately publishes the higher U.S. percentage in the same tariff schedule.
The fuel benchmark itself remains extraordinary compared with a year earlier. EIA data put U.S. on-highway diesel at $6.382 per gallon on September 28, down 14.7 cents from $6.529 the previous week but $2.628 per gallon above the year-earlier level of $3.754. That works out to an increase of roughly 70% from a year earlier. Diesel therefore does not have to keep climbing for the surcharge to remain painful. Prices could continue easing week to week and still sit far above the levels that prevailed before this year’s energy shock, leaving substantial fuel adjustments embedded in transportation bills.
CN Has More Than One Fuel-Surcharge System
One reason freight invoices can be confusing is that the 52.9% figure is only one part of CN’s fuel-pricing structure. Tariff 7404 is a weekly percentage-based intermodal surcharge. CN also publishes Tariff 7405, another percentage-based intermodal mechanism calculated monthly using an earlier monthly diesel average. For October 2026, the 7405 U.S. rate is 43.70%, while the intra-Canada rate is 34.20%, based on an August diesel average of $5.462 per gallon.
The November 7405 schedule has already moved sharply higher. CN lists a 52.10% U.S. rate and 40.64% intra-Canada rate for November, based on September’s $6.291 diesel average. Carload traffic operates differently again. Under Tariff 7403, the fuel charge is calculated on a mileage basis rather than simply appearing as a percentage. In U.S. currency for October, CN lists $0.8250 per mile for U.S. carload traffic, while intra-Canada rates are $0.7620 per mile for other carload commodities and $0.7303 for bulk traffic. Comparing freight quotes therefore requires knowing which tariff actually governs the shipment.
The Dollar Impact Can Add Up Quickly
The easiest way to understand a percentage this large is to translate it into an illustrative freight bill. Suppose an applicable charge has a $2,000 surcharge base and is subject to the current 52.9% U.S. rate. The fuel component alone would add $1,058, bringing that portion of the bill to $3,058 before considering any other applicable fees. At the 41.33% intra-Canada percentage, the same $2,000 base would generate $826.60 in fuel surcharge. The difference between the two examples is $231.40 on one movement.
Scale that hypothetical surcharge base to $5,000 and the gap becomes $578.50: $2,645 under the U.S. percentage versus $2,066.50 under the Canadian rate. Those calculations are illustrations rather than actual CN quotations because real invoices depend on tariff applicability, negotiated rates, routing, accessorial services and customer agreements. They nevertheless show why a seemingly technical percentage matters to freight buyers. For a manufacturer, retailer or importer moving multiple containers every week, even an 11- or 12-percentage-point difference in the applicable fuel adjustment can become a meaningful logistics expense surprisingly quickly.
CN’s Cross-Border Exposure Makes the Difference Important
CN is unusually exposed to movements connecting Canadian, American and overseas supply chains. The railway says its network spans nearly 20,000 route miles, connecting Canada’s eastern and western coasts with the U.S. Midwest and Gulf Coast. It transports more than 300 million tons of natural resources, manufactured products and finished goods annually. That scale means changes to fuel pricing are relevant well beyond the railway itself, particularly for businesses using intermodal transportation to connect factories, distribution centres, ports and consumer markets.
CN’s 2025 reporting also shows why the cross-border angle matters. Transborder traffic represented 29% of revenue, compared with 18% from Canadian domestic traffic and 16% from U.S. domestic traffic. Overseas traffic represented another 37%. Intermodal was CN’s largest individual commodity group by revenue, accounting for 22% of total 2025 revenue. Those categories should not be treated as interchangeable—the 52.9% tariff does not automatically apply to every dollar of transborder or intermodal revenue—but they demonstrate how deeply CN’s business is tied to international freight flows. A persistent difference between Canadian and U.S.-linked fuel charges therefore reaches a substantial portion of the railway’s commercial ecosystem.
Canadian Rail Prices Are Already Showing Broader Pressure
CN’s surcharge is only one measure of freight costs, but Statistics Canada’s latest industry data point in the same direction: rail transportation became more expensive in September. The national Freight Rail Services Price Index rose 3.2% month over month in September 2026, reaching 144.7 on a 2018=100 basis. The intermodal component climbed from 149.1 in August to 154.8 in September, an increase of about 3.8%. The Statistics Canada index covers Canada’s mainline freight rail industry and should not be confused with CN’s U.S. fuel tariff, but it provides useful context for the cost environment shippers are facing.
The broader economic significance depends on who ultimately absorbs those costs. The Bank of Canada has repeatedly identified fuel, freight and transportation expenses as important input pressures during 2026. Some companies may absorb part of an increase through narrower margins, particularly when customer demand is weak. Others may eventually pass part of the additional cost to buyers. That does not mean a 52.9% CN fuel surcharge translates into anything close to a 52.9% increase in consumer prices. Transportation is only one component of a product’s cost. But persistent freight increases can work through supply chains gradually, especially for businesses moving heavy, low-margin or frequently replenished goods.
The Next Diesel Reading Could Shift the Weekly Rate Again
There is already evidence that the immediate pressure has eased slightly. The EIA diesel benchmark fell from $6.529 to $6.382 per gallon in the latest available week, and CN’s U.S. 7404 surcharge fell with it, from 54.10% to 52.90%. The intra-Canada percentage declined from 42.25% to 41.33%. That relationship illustrates why weekly fuel data have become especially important for businesses exposed to CN’s 7404 schedule. A meaningful fall in diesel can provide relief, while another upward move can reverse it quickly.
The next EIA diesel release is scheduled for October 6, one day after CN’s latest weekly surcharge took effect. CN’s published tables show the 7404 rate operating with a lag between its diesel basis week and its effective week, making upcoming fuel readings a useful indicator of where subsequent surcharges may be headed. At the same time, CN’s already-published November 7405 rates offer a reminder that the pressure has not disappeared: the monthly U.S. intermodal surcharge is scheduled at 52.10% versus 40.64% intra-Canada. For shippers, one lower diesel reading is welcome, but sustained declines would be needed before these fuel adjustments begin looking materially less burdensome.
