Abstract: The invention relates to a package handling and sorting system which sorts small packages according to destination, segregating those with the same destinations for combined shipments. The system depends on a unique combination of conveying equipment automatically controlled by programmed data processing units which utilize data obtained by scanning electronically readable package labels, as well as other information and detection equipment, to examine packages introduced into the system, and to transfer those consigned to the same location to vehicles routed to such locations. The system also generates an electronic trail of package movements, thus providing the capability to trace packages lost in transit.