​KEY FINDINGS 

​​Supply chain hotspot: Postal systems / Express Couriers​

Illicit trade by small parcels is growing in significant volumes, in part due to the increase in online shopping, the proliferation of online marketplaces and e-commerce platforms. These may be subject to limited regulations or inadequate monitoring systems, making it easier for offenders to conduct illicit transactions below the radar.

A survey conducted by the Universal Postal Union (UPU), with the support of TRACIT, found a large number of postal operators reporting counterfeit goods as a major problem. In 2018, OECD noted that nearly 63 percent of customs seizures of counterfeit goods were in the form of small parcels.

• While most sectors under review (except for oil, fisheries and beer, which are less susceptible to trafficking in small parcels) have been affected by illicit trade via small parcels, pharmaceuticals, fake Fast Moving Consumer Goods (FMCG) and luxury goods appear to be most impacted. The use of small parcels is particularly well-suited to counterfeit or otherwise falsified pharmaceutical products, as shipments of both raw active ingredients and completed products can be quite small, easily fit in bubble wrap letter packets and small boxes.
  
• Counterfeit FMCG manufactured in China are proliferating through the rest of the world through small parcels. Brand owners report extreme difficulties by law enforcement agencies as counterfeiters use different logistics companies and express carriers to avoid detection and change packing so as not to be discovered by technology systems. Interviewed sources from Middle Eastern countries reported that FMCG are among the top three sectors where postal systems are used for illicit trade.
  
• The significant increase in the use of ecommerce platforms to illegally commercialize all types of goods has escalated the problem of illicit trade through small parcels. This growth has outpaced the development and implementation of relevant legal and regulatory frameworks to effectively monitor and intercept illegal goods at the border.

​Illicit traders exploit the advantages of trading in small parcels, as they often evade detection by overwhelmed law enforcement agencies. Limited manpower and inadequate infrastructure and technologies hinder a thorough examination of the vast number of small parcels entering ports daily. Offenders exploit this oversight and take advantage of the lower risk of detection compared to larger shipments, which may undergo more stringent inspections.

The verification process for small parcels is typically less rigorous than for larger shipments. Criminals can provide false or insufficient information when sending or receiving small parcels, making it easier for them to operate discreetly and avoid detection. 

Illicit goods trafficked through small parcels is a complex problem, which differs between postal carriers and express carriers. 

• Postal carriers: Traffickers exploit vulnerabilities in structural and institutional frameworks, and the weak IT infrastructure that is unable to adapt to the dynamic nature of illicit trade. The lack of electronic advance data (EAD), inaccurate information, and cumbersome processes to manually review consignment data create multiple points for fraudulent packages to enter the channels.
  
• Express carriers: Express carriers have adopted systems that can provide EAD and implement effective track and trace solutions to remove suspicious packages, enabling them to be more effective partners with customs authorities. However, challenges remain in the quality/accuracy of information, expertise to identify certain categories of illicit goods including counterfeits, cooperation with law enforcement.  

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