CN will be introducing a new fuel surcharge program applicable to all new carload and bulk traffic effective April 1, 2005. The new CN fuel surcharge, contained in tariff 7401, will reduce customers' fuel surcharge expense. Tariff 7401 will apply to all intermodal traffic renewed after March 31, 2006.

Generally, tariff 7401 is different from 7400 as follows:

· The new surcharge will be calculated monthly as opposed to quarterly. The calculation will be based on the monthly average price for West Texas Intermediate (WTI) crude oil of the second calendar month prior to the month in which the surcharge is applied.  For example, the surcharge in April will be calculated on the average WTI crude oil price for the month of February.

· Applying the surcharge monthly will allow a more timely response to changes in the price of WTI crude oil.

· The fuel price range will be decreased from the current $5 increments to $1 increments, allowing it to track more closely with fluctuations in WTI crude oil price.

· A twenty-day advance notice will be provided, as the surcharge will be based on the second calendar month prior to which the surcharge is applied.

The attached graph provides a comparison of CN fuel surcharge tariff 7400 to the new tariff 7401.

Contractual arrangements and line haul rate publications subject to the current CN fuel surcharge tariff 7400 will remain in effect until those agreements expire or are changed by mutual agreement. Please remember that renegotiation of contracts are subject to the concurrence of interline partners.

The new tariff is posted on our web site at www.cn.ca/fuelsurcharge .  We encourage you to register for our automatic monthly email notice.

Your account manager has been fully briefed on this new program and can address your concerns.

James M. Foote       
Executive Vice–President   
Sales and Marketing