More than 300,000 United Parcel Service Inc. workers are closer to striking after the company failed to reach an agreement with the International Brotherhood of Teamsters, threatening to plunge the U.S. supply chain into disruption if a deal isn’t reached this month.

Weeks of talks between UPS and the Teamsters fell apart early on the morning of July 5 in Washington after stretching through the July 4 holiday, with beleaguered negotiators emerging just after 4 a.m. to say the talks had collapsed.

The two sides quickly traded barbs on who was to blame for the breakdown.

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“This multibillion-dollar corporation has plenty to give American workers — they just don’t want to,” Teamsters president Sean O’Brien said in a statement. “UPS had a choice to make, and they have clearly chosen to go down the wrong road.”

In a statement, UPS spokesman Malcolm Berkley said it was the Teamsters who stopped negotiating despite a generous pay offer from the company.

“We have not walked away, and the union has a responsibility to remain at the table,” Berkley said.

Shares of UPS fell 2.4% to $179.45 as of 9:35 a.m. on July 5 in New York. The stock is up about 3.2% in 2023.

There is still time to reach a deal. The current labor contract — the largest private-sector union agreement in the U.S. with 330,000 workers — expires at the end of July 2023, but labor leaders have said they need a few weeks to educate their members and persuade them to ratify the deal. Union employees will not work beyond July 31, 2023, when the current contract expires, Teamsters spokeswoman Kara Deniz said. No more bargaining sessions are currently scheduled.

The high-stakes negotiations had been teetering for several days, with the Teamsters walking away from the bargaining table, insisting a strike was imminent, only to return. They then struck a deal with UPS to eliminate a two-tier wage system that the union claims underpaid part-time drivers.

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But the two sides ultimately couldn’t agree on larger issues surrounding pay and cost of living increases. Full-time delivery drivers make $95,000 annually, and tractor-trailer drivers typically make six figures, according to UPS. But the Teamsters say wages haven’t kept up with the profits the company raked in during the COVID-19 pandemic — or matched the risk workers faced to deliver packages.

Tough Talk

UPS is confronting difficult headwinds with package demands declining and customers looking to claw back the surcharges and price increases that couriers applied liberally during the pandemic. The market’s weakness compelled one of UPS’s biggest competitors, FedEx Corp., to undertake an effort to slash $4 billion in costs by the 2025 fiscal year and reap another $2 billion of savings by fiscal 2027 from the restructuring of its networks.

On the Teamsters' side, talks were led by O’Brien, who campaigned on taking a tougher stance with UPS than his predecessor, James P. Hoffa. He has lived up to that promise during talks, hurling public insults at the company and essentially daring its leaders to call his bluff.

The possible strike adds to a wave of labor unrest in the transportation sector over the past couple of years, with a backlog at ports leading to a protracted dispute with West Coast longshoremen and Congress intervening in 2022 to prevent a nationwide rail strike.