Commerce Flat Rate Shipping not being added in Paypal Express Checkout
Did you enable shipping service selection in the order confirmation
  checkout pane provided by the PayPal Express Checkout module? – Ryan
  Szrama


Thanks again Ryan for pointing out another not so obvious answer!

To "enable shipping service selection in the order confirmation checkout pane provided by the PayPal Express Checkout module"

Go to:
admin/commerce/config/checkout/form/pane/paypal_ec_review

"Checkout pane configuration
These settings are specific to this checkout pane.
Checkout panes to include on the Express Checkout review and confirm page"

Check this box! - Shipping service

Ralph Manis - Infinitee Web Design