Techniques are described for automatically and dynamically determining how to handle items being returned from customers while the items are in transit. Various factors may be considered to determine appropriate item return handling, including by assessing current conditions at the time of the determination. In addition, the dynamic item return handling may include selecting one of various potential return destinations for each item being returned and one of various types of return routing for the return. In some situations, the item return handling is performed for an item being returned from a customer while the item is at an intermediate shipping location, such as a selected location to which the customer was directed to send the item. This abstract is provided to comply with rules requiring an abstract, and with the intention that it will not be used to interpret or limit the scope or meaning of the claims.