United Parcel Service's (UPS.N) new five-year deal with Teamsters-represented workers will cost less than the $30 billion that was outlined by the union, Chief Executive Officer Carol Tome said in a CNBC interview on Monday.
The contract, which covers about 340,000 UPS workers in the United States, would increase wage and benefit costs at a 3.3% compound annual growth rate over the life of the agreement, UPS Chief Financial Officer Brian Newman said earlier.
The new deal expires on July 31, 2028, and 46% of wage and benefit costs from the agreement will be booked this year, Newman said, adding that contract-related costs in the second half of 2023 are expected to be about $500 million more than UPS expected.
Last month, the Atlanta-based company cut its full-year revenue and profitability targets, citing higher-than-expected labor costs as well as business lost during the tumultuous contract talks with Teamsters.
