With supply chains hanging in the balance, it’s about to turn midnight on a contract covering 22,000 unionized West Coast port workers who are essential to keeping the flow of goods into and out of the United States moving.

Still, U.S. Labor Secretary Marty Walsh sought to allay the concerns of nervous importers and exporters this week and reported that the negotiations on a new contract between the International Longshore and Warehouse Union (ILWU) and Pacific Maritime Association (PMA) are going well and progressing.

“It’s moving forward,” Walsh said of the talks, adding that he checks in weekly with the ILWU and PMA, which represents employers. The organizations “continually tell me that we’re in a good place,” Walsh said.

The contract for ILWU workers expires at midnight on July 1. On June 14, the ILWU and PMA released a joint statement saying they expected that a new contract would not be reached by the deadline.

Even so, the statement emphasized that no work stoppages or slowdowns are expected; neither side is “preparing for a strike or lockout, contrary to speculation and news reports.” Not everyone is buying that, with some analysts saying a strike is unlikely but that preventing slowdowns at the local port level could prove difficult.

Shipping/port industry experts have said that a point of significant contention is the desire of the PMA to introduce more automation in ports – a technology-fueled move that, advocates say, would increase efficiencies and help modernize operations to make them more on par with what’s seen elsewhere in top global ports. The union is leery of greater automation, as leaders believe it will lead to job loss for members.

Walsh tried to play down worries over a rift on automation, saying that “there’s been no issues that I’m aware of that have come up that have made either side concerned.”

Despite the attempts at assurance from Walsh and the negotiating parties, importers and exporters in the promotional products market and other industries are keeping anxious eyes on the talks.

Worried about a strike or slowdown out West, some shippers have been redirecting cargo to ports on the East Coast and Gulf Coast. The upside is that has helped West Coast ports begin to unclog cargo logjams. The downside is the shift has fueled backlog pressure at other ports, such as New York/New Jersey, Houston and Savannah.

If contentiousness in negotiations were to lead to work slowdowns or stoppages, there could be deep-reaching negative repercussions for U.S. supply chains. These include exacerbated port congestion that makes it much harder to get imports stateside, potentially leading to inventory shortages and higher prices for promo products, consumer goods and more.

Top promo executives have said that significant slowdowns or stoppages at West Coast ports would almost certainly prevent the efficient importation of product and thus make it more difficult to restock, which can lead to inventory gaps that would have the potential to deepen the longer a strike/slowdown lasted.

“While we use ports on the West Coast, the Gulf and the East Coast,” said Jeremy Lott, CEO of SanMar (asi/84863), promo’s largest supplier, “the West Coast ports are incredibly important to Trans-Pacific trade and would have a significant impact to our business and the industry in general.”