He's carrying a parcel tucked under his right arm.
Literal
He [topic-は] parcel [object-を] right armpit [to-に] holding.
小包 (こづつみ, 'small parcel') is the word for a package. 右脇に ('under the right arm/side') uses 脇 ('side, armpit'). 抱えている is the progressive of 抱える ('to hold in one's arms, to carry'). A simple descriptive sentence capturing a physical pose.