Unionized dockworkers have begun negotiations with shipping operators at West Coast ports on a new contract, and analysts say it is the dockworkers who are in the driver’s seat in this round of negotiations.

The current contract between the International Longshore and Warehouse Union (ILWU)’s more than 22,000 workers at the 30 ports on the West Coast, and the port operators, will run out on July 1st. Negotiations began on May 10th in San Francisco, but nothing this season is guaranteed.

The Pacific Maritime Association (PMA) and ILWU released a joint statement last Tuesday saying they felt they are “are unlikely to reach a deal before the July 1 expiration of the current agreement.”

Analysts watching the situation have predicted there will be an August 1st “drop dead date” for an agreement to be reached, before shipping operations at the port are impacted by slowdowns. They note the dockworkers are negotiating from a particularly strong position in this round of negotiations.

Patrick Penfield, a supply chain management specialist at Syracuse University said, “The ILWU definitely have a position in this negotiation. They have a lot of leverage so they really are in the driver’s seat with this particular negotiation as far as when it will happen.”

He went on,  “Peak season, your shipping season for the ports is mid-August to October. And that’s where we’re getting a lot of inventory in from retailers. So if there isn’t a deal done by then I’d say… you’re probably looking at these work slowdowns.”

Penfield said the unionized dockworkers will be, “looking to push for more wages which they’ll get, no more automation, which they’ll probably get also, but I think they’re probably going to try to claw back some of the stuff that they gave up in their last contract.”

The negotiations are happening at a particularly fortuitous time for the dockworkers because the US is in the throes of unprecedented supply chain disruptions from the pandemic, material shortages, and soaring fuel prices.

PMA President and CEO James McKenna wanted to assure all citizens and parties involved that they will not allow any supply chain disruptions to occur during the negotiations.

In a joint statement released, they said, “This timing is typical, and cargo operations continue beyond the expiration of the contract. Neither party is preparing for a strike or a lockout, contrary to speculation in news reports. The parties remain focused on and committed to reaching an agreement.”

Patrick Penfield says there will not be a strike, however if negotiations drag on, there could certainly be a work slowdown. He went on to say, “History has always shown us that they do negotiate a deal. They really don’t strike and they don’t lock out — that usually doesn’t happen between those two. [However,] what’ll occur is they’ll keep talking and then what will also happen is there’ll be a work slowdown.”

In the past, when negotiations have dragged on, there have been work slowdowns. In 2002, there were slowdowns when negotiations stalled due to the subject of technology integrations that would automate some work. Back then the George W. Bush administration had to implement the  Taft-Hartley Act to reopen the ports. in 2014 and 2015, the Obama administration had to get involved to help end a contract battle that had been going on for a year.

During a press conference with President Biden at the Port of Los Angeles, Port of Los Angeles Executive Director Gene Seroka said he expects the negotiations to pass the deadline, but he minimized any risks to port operations.

He said, “It’s important to know with all this cargo on the way, the rank-and-file dockworkers will be out on the job every day. And the employers know they’ve got to get these products to market. So we’re going to give these people some room. Let them negotiate in their space, and the rest of us are going to work on keeping the cargo and the economy moving.”

Meanwhile retailers are taking the situation in stride. Macy’s Chairman and CEO Jeff Gennette said, “There is still a significant amount of uncertainty with the lockdowns in China and the ongoing labor negotiations in the LA port. Factors like these drive us to continue taking a prudent and disciplined approach with our lead times and forecasting.”

Meanwhile those who track trade note the supply chain disruptions are easing as we get farther from the pandemic. Penfield noted, “The reason why we’re seeing better ocean freight rates and pricing and delivery is because there’s less demand.”