CN’s U.S. Freight Fuel Surcharge Jumps to 51.7% as Cross-Border Shipping Costs Climb

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Canadian and U.S. companies moving containers across North America are confronting another sharp increase in a cost that can change almost as quickly as fuel prices themselves. CN’s U.S. intermodal fuel surcharge under tariff CN 7404 has climbed to 51.7% for the week effective September 21, 2026, up from 48.5% one week earlier.

The increase follows a rapid rise in the U.S. diesel benchmark CN uses to calculate the weekly surcharge. That benchmark reached $6.285 per gallon for the September 14 basis week. For manufacturers, retailers and logistics operators with freight moving into or through the United States, the change adds another layer of cost at a time when diesel markets are unusually tight. It also shows how quickly an energy-price shock can flow through transportation contracts, particularly on intermodal freight tied directly to weekly fuel indexes.

What the 51.7% Figure Actually Means

The headline number requires an important distinction. CN’s 51.7% rate is the U.S. percentage listed under CN 7404, the railway’s weekly fuel-surcharge program for intermodal traffic. CN describes its fuel surcharge generally as an amount added to the freight invoice above the underlying freight base rate. It should therefore not be interpreted as meaning that the total cost of every CN shipment has suddenly risen by 51.7%.

CN 7404 links the surcharge to the U.S. Energy Information Administration’s average On-Highway Diesel price. Once diesel exceeds the program’s $1.25-per-gallon threshold, the schedule begins with a 2% surcharge and increases by 0.23 percentage point for each additional three-cent rise in the benchmark. For the week beginning September 21, the $6.285 diesel benchmark produces a posted U.S. rate of 51.70%. The applicable dollar cost for an individual customer still depends on the underlying transportation charges and the terms governing that particular shipment.

The Increase Has Happened Remarkably Fast

Only two weeks separate a U.S. CN 7404 rate below 45% from the newly posted 51.7% level. The surcharge was 44.90% for the week effective September 7, increased to 48.50% on September 14 and then reached 51.70% on September 21. That represents an increase of 6.8 percentage points in two weeks, or roughly a 15% increase in the surcharge rate itself.

The Canadian side of the schedule has moved sharply as well. CN’s intra-Canada CN 7404 surcharge rose from 35.12% on September 7 to 38.11% a week later and 40.41% effective September 21. The reason can be seen in the underlying diesel data. The U.S. benchmark used by CN moved from $5.599 per gallon for the August 31 basis week to $6.285 by September 14—an increase of nearly 69 cents per gallon in two weeks. For companies budgeting freight months in advance, that speed matters almost as much as the absolute level.

U.S. Diesel Has Reached an Extraordinary Level

The $6.285-per-gallon figure is not simply a number inside CN’s tariff calculation. The U.S. Energy Information Administration reported that nationwide retail diesel averaged approximately $6.29 per gallon on September 14. EIA said that was the highest nominal price recorded since its national diesel series began in 1994. After adjusting for inflation, the agency said the latest level was the highest since 2022.

The week-to-week move was also substantial. The national diesel average increased from $5.967 on September 7 to $6.285 on September 14, a jump of 31.8 cents in a single week. Diesel is particularly important to freight markets because its price feeds directly into trucking expenses and can also affect rail transportation costs. For a shipper, the practical consequence is that higher diesel prices can appear in more than one part of a supply chain—during rail movement, drayage, distribution or the truck journey to the final customer.

Tight Distillate Supplies Are Driving the Pressure

EIA attributes the recent diesel surge to more than ordinary seasonal volatility. The agency says tight global supplies of distillate fuels, combined with elevated crude-oil prices and high refining margins, have pushed retail diesel upward. Reduced refining activity in Russia, China and parts of the Middle East has constrained global distillate production, increasing international prices and strengthening demand for U.S. exports.

American refineries have been running hard in response. EIA reported refinery utilization near 97% for the week ending September 11, while U.S. distillate production from January through August averaged about 5.1 million barrels per day, the highest level since 2019. Yet inventories remained strained because exports were also elevated. U.S. distillate inventories for the week ending September 11 stood 15.8 million barrels, or 13%, below the five-year seasonal average. That combination—strong refinery output but unusually tight inventories—helps explain why diesel prices and fuel-linked freight surcharges have remained under intense upward pressure.

U.S. and Canadian Customers Face Different Posted Rates

CN’s September 21 schedule highlights a significant geographic difference. The posted U.S. CN 7404 surcharge is 51.70%, compared with 40.41% for intra-Canada traffic. That is a gap of 11.29 percentage points even though both figures use the same $6.285 U.S. diesel benchmark as their basis. Customers therefore need to distinguish between the geography and tariff structure governing their particular moves rather than assuming one headline percentage applies throughout CN’s network.

CN also maintains CN 7405, a separate percentage-based intermodal fuel-surcharge schedule calculated monthly rather than weekly. For September 2026, its posted U.S. monthly rate is 38.50%, while October is scheduled at 43.70%, based on an August diesel average of $5.462 per gallon. The two schedules should not be treated as interchangeable quotations for a specific shipment, but the comparison demonstrates the importance of timing. A weekly mechanism such as CN 7404 reacts much faster to a sudden fuel spike than a monthly program based on an earlier averaging period.

Cross-Border Traffic Is a Major Part of CN’s Business

The increase matters because cross-border transportation is not a small corner of CN’s network. In its 2025 reporting, CN said transborder traffic represented 29% of freight revenue, while another 16% came from U.S. domestic traffic. Intermodal was the company’s largest individual revenue group, accounting for 22% of total revenue. CN reported approximately $3.89 billion in intermodal revenue during 2025.

The railway’s physical network helps explain that exposure. CN operates a rail system of roughly 20,000 route-miles connecting Canada’s eastern and western coasts with the U.S. Midwest and Gulf Coast, alongside a network of intermodal terminals. That means a container beginning its journey in Toronto, Montreal or another Canadian logistics hub can become part of a much broader North American supply chain. When the U.S. portion of the fuel-surcharge schedule moves several percentage points in a matter of weeks, companies involved in those corridors can feel the effect even when the goods themselves were produced in Canada.

A Few Percentage Points Can Quickly Become Real Money

The difference between 48.5% and 51.7% may look modest when expressed only as a surcharge percentage, but even a 3.2-percentage-point weekly increase can produce a noticeable dollar change on repeated freight movements. A simplified example illustrates the scale. If a charge subject to the 51.7% rate had a $3,000 applicable base, the fuel component would equal $1,551. At the previous week’s 48.5% rate, the same calculation would equal $1,455.

That is a $96 difference on the hypothetical movement from the surcharge change alone, before considering any other transportation, terminal, drayage, customs or service costs that might apply. Across dozens or hundreds of containers, relatively small weekly changes can accumulate quickly. The example is illustrative rather than a CN quotation because actual invoices depend on the customer’s contract, routing, tariff and eligible charges. Still, it shows why procurement and logistics teams closely monitor surcharge indexes instead of focusing only on negotiated base freight rates.

Higher Freight Expenses Can Travel Beyond the Shipping Department

Rising transportation costs do not necessarily stop with the carrier or shipper. EIA specifically notes that elevated diesel prices can contribute to higher road and rail freight costs for goods moving through the economy. Businesses must then decide whether to absorb those expenses through lower margins, offset them elsewhere in their supply chains or eventually incorporate some of them into customer pricing.

Research on freight costs more broadly supports the idea that transportation shocks can work their way through the economy, although the size and timing vary considerably. An International Monetary Fund study examining global shipping costs found that large freight-price increases were followed by higher import prices, producer prices and consumer inflation. That research focused heavily on international maritime freight, so its numerical findings should not be directly applied to one CN rail surcharge. The broader mechanism, however, is relevant: when transporting goods becomes materially more expensive, those costs can eventually influence prices farther along the supply chain rather than remaining isolated inside transportation budgets.

The Next Diesel Reading Could Move the Equation Again

Attention now shifts to the next U.S. diesel release. EIA’s next Gasoline and Diesel Fuel Update is scheduled for September 22, 2026. Because CN 7404 is published weekly and tied to the EIA On-Highway Diesel benchmark, continued movement in diesel prices can feed relatively quickly into subsequent surcharge schedules under CN’s published formula.

There is little evidence yet that the underlying fuel market has fully normalized. EIA’s September Short-Term Energy Outlook expects global distillate production to remain constrained in the coming months and says U.S. inventories could remain unusually low, conditions that support elevated diesel prices. That is an energy-market forecast rather than a prediction of CN’s future surcharge, which will depend on the actual benchmark readings used by the tariff. For cross-border shippers, the key point is more immediate: fuel has become a rapidly moving component of freight costs again, and a rate that was below 45% two weeks ago has already moved beyond 50%.

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