The union representing about 22,000 West Coast dockworkers and their employers are continuing negotiations for a new labor contract past the July 1 expiration of their previous pact and said the ports — among them the U.S.’s busiest — will keep functioning. 

“While there will be no contract extension, cargo will keep moving, and normal operations will continue at the ports until an agreement can be reached between the Pacific Maritime Association and the International Longshore and Warehouse Union,” the parties said in a joint statement Friday. 

The ILWU and the more than 70 employers represented by the PMA started talks May 10 to work out a new contract for longshoremen across 29 ports in California, Oregon and Washington. The groups had recently said they were unlikely to reach a deal before July, and had reaffirmed neither party was preparing for a strike or lockout. Talks often go past the expiration date.

“Both sides understand the strategic importance of the ports to the local, regional and U.S. economies, and are mindful of the need to finalize a new coast-wide contract as soon as possible to ensure continuing confidence in the West Coast,” the ILWU and PMA said. 

Port of Long Beach Executive Director Mario Cordero said the sides are showing they remain committed to keeping goods passing through the ports, and he projected that a deal over a new contract will be reached “soon.”

“I’m extremely confident that there will be a mutual resolution here within a reasonable time,” Cordero said in an interview with Bloomberg TV. “I can guarantee you the cargo is going to keep moving.”

The ports handle just under half of the containers entering and leaving the U.S. and are the principal gateway for shipments to and from China, the biggest source of American merchandise imports — illustrating the high-stakes nature of the negotiations.

Last November, the ILWU declined an offer by the PMA to extend their contract until July 2023. The pact was originally set to end in 2019, but was lengthened after roughly two-thirds of union members voted to do so in exchange for higher wages and pensions.

This time around, the negotiations are drawing attention because the nation’s largest trade hubs — the ports of Los Angeles and Long Beach — are struggling to clear pandemic-era congestion.

Read more: Busiest U.S. Ports Seek to Avert 2014 Cargo Chaos Amid Wage Talks

The economic stakes are high: July and August are typically busy months for imports from Asia as retailers stock up on back-to-school and holiday goods. The peak has arrived even earlier this year, with companies looking to pre-empt future disruptions by ordering these products even further ahead of time. 

Additional transportation snarls would only add to the inflationary pressures that have helped pull down President Joe Biden’s approval ratings.

They will also test how far a major union will apply its bargaining leverage during an economic slowdown, given the country is facing a moment of unusual clout for its long-declining labor movement. 

Los Angeles and Long Beach had already been struggling to clear two years of pandemic-era congestion and are continuously dealing with landside issues such as clogged warehouses and railroads and unused truck gates.

The White House had been closely watching the talks and Biden himself met with the parties in Los Angeles in June. 

If the president and his team fail to successfully mediate the negotiations, he could be forced to enact the Taft-Hartley Act, a Cold War-era law that allows the government to call for an 80-day cool-down period amid labor impasses. 

Then-President George W. Bush relied on the legislation to reopen the ports in 2002, after the PMA locked out workers for 10 days following a series of work slowdowns, the last time it was enacted. 

Earlier Friday, a coalition of 150 trade groups led by the National Retail Federation said the White House should work with the parties to extend the contract until a final deal is reached, ensure commitments to remain at the negotiating table and not engage in any kind of activity that leads to further disruption at the ports.

As these hubs enter peak shipping season, resulting in stress on the supply chain and increased inflation, “supply chain stakeholders remain concerned about the potential for disruption, especially without a contract or an extension in place.”