Consider the major metropolitan areas within a 270 mile radius ( half a trucker's night drive ) of Watsonville. Also the major airports. Pretty much all of Central and Northern California and maybe even Reno, too. Now consider the major shippers just in Silicon Valley. This will probably be a major hub center for FedEx, serving many smaller local customer service centers.
FedEx didn't become a major player in several different areas of U.S. freight handling by being stupid. As noted above, land and labor are cheaper in Monterey County than pretty much anywhere else in NorCal. Building permits are probably easier to obtain as well. Tracy and Lathrop are mostly built out for industrial purposes.
Another successful U.S. Company, Walmart, has distribution centers in such seemingly odd places as Hermiston, OR., from where they can cover the entire Pacific Northwest with only a days' drive. I recall Walmart also has a D.C. in Tulare ( ??? ), from which they can cover all of Central and Southern California in a days' drive.