Stop Calling It a Black Swan

I have sat through more freight budget reviews than I can count, on both sides of the table, and over the years, "extraordinary events" have come to occupy an increasingly large share of the discussion and explanations. Here is how a freight budget deviation is supposed to be explained. First purely by volume against budget: for example, we may simply have shipped more or less than we planned, in aggregate. This may come with all kinds of good reasons. We may have been forced to ship large batches in connection with a product launch or a product line refresh; or one of those events fell short of expectations; or there may be reasons tied to currency fluctuations or tariff developments that have forced different commercial decisions than we had planned for.

Second by "mix": we shipped the budgeted volume, or more, or less, but the shipping activities deviated from the plan. We may have shipped more of one product and less of another, and the products differ in size, so there is a container count change; or we may have used a more expensive port (out and/or in), or a costlier routing.

Third by currency. Some charges are in local currency, but we are accounting for spend in US dollars. Hence, even if everything else were equal (which it never is), there will be deviations from plan caused purely by this mechanism.

Fourth by commercial circumstances in the shipping market, the rate movements and forced spot purchases and mode shifts that follow from how the market actually behaved.

And fifth, by extraordinary circumstances: canal closures, strikes, natural disasters, a fire in a warehouse or factory, a failed supplier, product- or component quality issues, maritime incidents, war or the threat of one, et cetera.

That fifth bucket exists for a good reason. Genuinely unforeseeable things happen in this industry, and they deserve their own line. But somewhere along the way, the extraordinary items bucket became a get-out-of-jail card. It even has a name that I have seen far too often: Black Swan Events.

That label does a lot of work. In a perma-poly-crisis environment like the one logisticians operate in across the world today, the explanation is accepted. It works for reporting purposes, and it works on (some of) the analysts the CFO has to face on the quarterly call, because a black swan is nobody's fault by definition.

The problem is that most of these events are not black swans.

A black swan, as originally defined, is not merely an unpredicted event. It must be so unpredictable as to be considered virtually impossible.

These days, war, tariffs, piracy, cyberattacks, heat waves, capacity crunch, and mid-contract rate increases no longer qualify.

Maritime disasters, industrial calamities, natural disasters, strikes, El Niño, La Niña and other recurring weather phenomena, labor action, low water, high water, and fog never did.

These are all contingencies and scenarios which there is no excuse not to plan for. Not anymore. Can they all be "planned away"? No. But they are not black swans. They are foreseeable, and these days even highly likely scenarios.

They have moved from a box that had to be ticked, to the top of the boardroom agenda, and the news cycle.

A lot of what lands in the extraordinary bucket of a freight variance report can be met with an efficient response. Market data offers the equivalent of the famous "canary in the coal mine": capacity data moves before rates move. Order books are published years in advance. Blank sailings are announced in advance, and often follow a highly predictable seasonal pattern. The spread between spot and contracted rates widens weeks before contracts come under pressure, and when spot runs hot above contract for a sustained period, the rolled cargo and forced spot buys that follow are about as surprising as rain from clouds.

Even the major disruptions of recent years, the ones most often described as unforeseeable, announced themselves in the market data long before they announced themselves in anyone's P&L. The rates moved first. The surcharges followed. The invoices came last. Anyone watching the market saw the cost coming; the only people surprised were the ones who had stopped watching between budget cycles.

So the honest test is simple. If a neutral market benchmark saw it coming, it was not a black swan. It was a market movement, and market movements belong in the fourth bucket, where they can be measured, evidenced, reacted to, and learned from.

I understand why teams reach for the fifth bucket instead. The fourth bucket feels dangerous. Admitting "the market moved and it cost us" sounds like admitting you failed to understand it. But this gets the logic exactly backwards, and it is the reason I think the black swan habit quietly damages the teams it appears to protect.

When every overrun is filed under "Unexpected Surprise", leadership learns one lesson: freight costs are random and unmanageable, and the freight team is a passenger. That lesson gets remembered at budget time, at headcount time, and at investment time. A function that cannot explain its costs does not get trusted with more of them.

Whereas a market bucket backed by independent data tells the opposite story. It says: we saw the movement, here is the benchmark showing it hit the whole market and not just us, here is the size of the impact, and here is what we did about it. That is not an admission of failure. That is the most credible thing a logistics team can put in front of a finance audience, because it is verifiable. The variance stops being a confession and becomes evidence that the team knows exactly what is happening in its market, is planning for it, and has set itself up to react to it.

It also has a useful side effect: the extraordinary bucket shrinks back to its proper size. When market movements are captured where they belong, what remains in the fifth bucket really is extraordinary, the warehouse fire, the unexpected earthquake (some are more predictable than others), the genuinely unknowable. Those items regain their credibility precisely because they are no longer sharing a bucket with things the market data flagged six weeks earlier.

Budget season for 2027 is starting now, which means the variance reports of next year are being designed today. My suggestion is straightforward. Build the market bucket on an independent benchmark from day one, agree with your Controller what evidence it will carry, and reserve the extraordinary bucket for events that would genuinely have surprised anyone. You will lose your get-out-of-jail card. In exchange, you will get something more useful: a budget you can defend without needing one.

Your freight budget will be challenged. Make it defensible. 

Xeneta's freight forecasting and budget planning tools give you the benchmark your variance report needs and the scenario outlooks your budget deserves: your own volumes priced at today's market, with 3 and 6 month forecasts for where contracted rates go next. 

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