Prioritize location relative to your customer base and transport hubs, SLA performance (pick accuracy, lead times), warehouse technology (WMS, EDI/API), scalability for seasonal peaks, and returns handling capability. Also evaluate pricing transparency, inventory visibility, and contract terms for service-level credits and chargebacks.

Labor availability and wage rates drive pick/pack cost per order; regions with stable labor pools reduce turnover and training time. Evaluate automation options (conveyors, pick-to-light, sortation) to lower variable costs and increase throughput; automation is a trade-off with capital and minimum volume requirements.

Proximity to major highways, rail connectors, and port/airport gateways reduces handling and drayage costs. Dense carrier presence supports competitive parcel and LTL rates and provides multiple last-mile options. Cross-dock capability and consolidated routing further improve transit times for regional distribution.

Negotiate clear KPIs: order accuracy, on-time shipping, inventory reconciliation cadence, and SLA remedies. Define billing transparency (storage, handling, value-added services), minimum volume clauses, inbound appointment terms, and margin protections for peak season surcharges to avoid unexpected cost escalations.