Yahoo Finance

United Parcel Service (UPS) heads back to the negotiating table Tuesday to resolve a high-stakes dispute with the union that represents its 340,000 delivery and warehouse workers.

There is not much time for the package giant to reach a deal. The company's labor contract with the International Brotherhood of Teamsters expires Aug. 1, and the Teamsters union has already threatened a strike if there is no pact by that day.

If 340,000 workers walk off the job, it would be the largest strike against a single business in US history.

Here is a look at the potential costs, how the two sides got to this point, and their remaining points of disagreement:

A $7 billion hit

A walkout of 340,000 workers could upend the US supply chain, add to inflationary pressures, and possibly push loyal UPS customers to competitors such as FedEx (FDX), Amazon (AMZN), and the United States Postal Service.

UPS currently handles 22 million domestic packages a day. It was responsible for delivering 24.5% of all US parcels in 2022, according to Pitney Bowes. Only the Postal Service handled more.

The company said its daily deliveries account for roughly 5-6% of US gross domestic product (GDP). Teamsters Union president Sean O’Brien said at a rally Saturday that the deliveries represented 7% of GDP.

"If the strike does happen, it's a big one, a really big one," Stanford University political science professor Margaret Levi told Yahoo Finance last week.

"This affects our logistics chain, our supply chain, how we get our packages," she added. "We're all incredibly dependent on that these days."

The last UPS strike was in 1997, when roughly 185,000 workers walked out. At the time UPS handled fewer packages per day but was responsible for more total industry traffic.

That work stoppage lasted for 15 days and cost UPS hundreds of millions of dollars. The company eventually made concessions on pay, pensions, and part-time workers.

This time around, a 10-day strike could result in economic losses of $7 billion, according to estimates from the Anderson Economic Group. In addition to earnings losses for UPS, that includes lost wages of $1.1 billion for workers and $4 billion in losses for UPS customers.

Only "a fraction" of deliveries impacted by such a strike would be filled by FedEx, the Postal Service, or other carriers, according to Anderson.

A US Postal Service spokesperson said "the Postal Service has a strong network, and we have the capacity to deliver what is tendered to us."

Points of disagreement

When the two sides were last at the negotiating table during the first week of July, they were unable to reach an agreement on pay rates for UPS’s part–time union workers.