Rail fuel surcharges on U.S. grain shipments have climbed to an all-time high, with the Class I railroad average reaching 76 cents per mile in November after diesel prices rose sharply beginning in March.
The U.S. Department of Agriculture's Agricultural Marketing Service (AMS) reported the figure in the feature article of its Nov. 5 Grain Transportation Report. The November average, weighted by each railroad's grain carloads in the prior year, is 231% above the April 2026 level and tops the previous peak of 58 cents per mile set in August 2022.
The surcharge sits on top of the tariff rate, the base price of moving grain by rail. Tariff rates typically change once a year. Fuel surcharges change monthly and are generally based on diesel prices from two months earlier, so a spike at the pump shows up on a shipper's freight bill weeks later.
How the charge is set
Every Class I railroad ties its program to the Department of Energy's on-highway diesel fuel price, which the Energy Information Administration (EIA) publishes weekly in its Gasoline and Diesel Fuel Update. The levels still vary widely. Each railroad picks its own strike price, the diesel price at which the surcharge starts, and its own step function, which sets how fast the charge rises above that price.
November surcharges per mile, according to AMS:
- Canadian National Railway (CN): $1.04, with a $2.30-per-gallon strike price for U.S. shipments.
- Legacy Kansas City Southern, part of Canadian Pacific Kansas City (CPKC): $1.04, with a $2.30 strike price.
- Legacy Canadian Pacific, also part of CPKC: 84.5 cents for Nov. 1-15 and 84 cents for Nov. 16-30. It is the only program that resets twice a month, using diesel prices from about a month earlier, with a $2.25 strike price.
- Norfolk Southern: 95 cents, with a $2.50 strike price. The railroad added a fuel surcharge to its grain tariffs in July 2025.
- Union Pacific: 84 cents, with a $2.30 strike price.
- CSX: 64 cents, with a $3.75 strike price. CSX paused surcharges on common carrier tariff shipments from Jan. 1, 2022, until restoring them June 4, 2026.
- BNSF Railway: 61 cents, with a $3.25 strike price. BNSF's charge now rises 1 cent per mile for every 5-cent increase in diesel, compared with every 4 cents before July 2025.
Mileage changes shift the math
A lower per-mile charge does not always mean a lower bill. AMS pointed to the wheat lane from Salina, Kansas, to Houston export terminals, which both BNSF and Union Pacific serve. BNSF's total surcharge on that route was $9 per car cheaper than Union Pacific's in October. In November it is $50 per car more expensive.
The reason is distance. BNSF has revised many of its tariff mileages during the past year to reflect actual operating routes rather than the shortest-distance assumptions other railroads generally use. Its Salina-Houston distance is 1,136 miles, compared with 765 miles on Union Pacific. At September's diesel price of $6.29 per gallon, per-mile charges are high enough that the extra miles outweigh BNSF's lower rate.
Of 44 BNSF lanes AMS tracks, 42 had mileage increases in 2025-26. The route from Mitchell, South Dakota, to Pacific Northwest export terminals rose from 1,624 miles to 1,861 miles in June 2025 and to 2,014 miles in February 2026, then fell back to 1,871 miles in June 2026.
A long-running regulatory debate
Fuel surcharges first appeared on Class I railroads in the early 2000s, when they were figured as a percentage of the tariff rate. Shippers objected that the method charged captive shippers, those without a competing railroad or another mode, more for the same fuel use. They also objected to railroads recovering fuel costs twice, through a fuel-indexed rate increase and a separate surcharge.
The Surface Transportation Board (STB) addressed both complaints in a 2007 decision that required surcharges to be tied to factors such as mileage. It named the on-highway diesel price as a "safe harbor" benchmark. In a 2013 ruling on a complaint brought by Cargill, the board sided with BNSF. It also acknowledged that BNSF's surcharge revenue exceeded its incremental fuel costs by $181 million from 2006 through 2010 when measured against the railroad's internal fuel costs.
The board proposed in 2014 to revisit the safe harbor. Unable to reach a majority, it closed the proceeding in 2019 without changes. STB has said concerns about what shippers ultimately pay belong in a rate-reasonableness complaint, which weighs the tariff and surcharge together, rather than in a challenge to the surcharge alone.
Relief expected in 2027
December surcharges should dip slightly from November because the October diesel price eased to $6.25 per gallon. EIA's October Short-Term Energy Outlook projects retail diesel will average $4.50 per gallon in 2027, citing softer crude oil prices and a modest recovery in distillate inventories.
EIA expects those inventories to stay below recent historical norms, keeping diesel above $4 per gallon through 2027. AMS said that implies surcharges lower than in recent months but still above pre-March 2026 levels.
