I don't agree with that. The benefit of puppets might be more, but the cost is no more than building a city yourself, which, if you wanted a coastal city, you would presumably have done if you had the option.
Well the discussion is about lack of navies and there many reasons for it.
For the AI, they don't unpuppet cities which means you have to chance that they settled on a coastal city early on.
For the human player, it's about incentives. There is only the most passing incentive to settle near the coast if you
1) start near one
2) there are nice resources
Otherwise, the only port cities you may have are acquired.
The point is that there are active disincentives to unpuppet that extra coastal city or on the same token settle on the coast with a fresh city. The 'opportunity cost' -- extra culture required to progress through the SP trees compounded for the rest of the game; delay in national wonder availability; and extra cost of said wonders -- are relevant.
One can argue the costs are 'little' or 'extreme' but that's not something I want to dwell on. Just as governments use taxation to incentivize or disincentivize behaviour, you can see the game mechanics as a disincentive to building ships.
I had proposed the option of allowing puppet cities to build ships, or to alternatively allow landlocked cities build ships and move them over-land to the port cities. This would not be historically unrealistic.
But my 2 core issues are
1) AI needs to unpuppet cities
2) we need to find a way for everyone to field a navy, regardless of starting position. And forcing people to unpuppet a conquered city or settle a city, essentially city+1 is not an ideal answer.
Edit: I should probably clarify the problem I am describing is most pronounced in Pangea large maps for obvious reasons. It probably isn't a problem at all in smaller continents maps.