(Reuters) -Parcel Service said on Monday its new five-year contract covering some 340,000 Teamsters-represented 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.

The new contract expires on July 31, 2028, and 46% of wage and benefit costs from that agreement will hit this year, UPS Chief Financial Officer Brian Newman said in a recorded message.

Contract-related costs in the second half of 2023 are expected to be about $500 million more than UPS expected, Newman said.

(Reporting by Kannaki Deka in Bengaluru and Lisa Baertlein in Los Angeles; Editing by Sriraj Kalluvila and Lisa Shumaker)