The problem is worse here in Canada. My friend does a significant amount of business with Chinese companies, and he says this is due to a UN treaty which classifies China as a developing country.
He found he could import 300 widgets from China and have them landed in Toronto for a shipping fee of roughly $17. To ship that same set of widgets from Toronto to a store two cities away was going to cost him $349.
In fact for $17, he could send 1 widget within the same city he was in directly to a customer.
It gets even worse if he wants to send that package of widgets to the states for something like Amazon FBA. Once again, it would cost $17 to ship directly from China but would run him $1400 from Toronto to New York.