Correct. It appears it has to do with the associated Sales Order. Not 100% sure yet, but something to do with teh Shipping (maybe ship method) on the SO dictates the ItemFulfillment behaviour.

@darrenhillconsulting I do not have access anymore to the account I did a customization for item fulfillment and the different shipping method but you must validate if this field is true 'generateintegratedshipperlabel', it indicates if they are using a shipping method, then validate if they are using fedex, ups of other, you then use 'packageups' or 'packagefedex'. If there is not shipping integration, you are safe to use 'package'

hmm, sounds like something worth smoothing over with a library.