I'm playing on Pelagos but I think the issue is from here. The waterways are blocking my combat shotgun projectiles, in K2SO. This may be a crossover issue with combat overhaul since it makes projectiles physical objects

This is easy to investigate yourself. Press Control-Shift-E to open the prototype viewer. Go to the Entity list and find Waterway. Expand the "collision mask" entry and write down the later names you see.
Then search for the shotgun projectiles (I think there is a prototype category for projectiles) and do the same thing. If any layers match between the two masks, that will cause them to collide. Then we can figure out what the best solution might be.

I tried this, and all I see in any "Collision" field is a JSON list for rail & object.

Turns out projectiles use the "hit_collision_mask" to determine what blocks them. Combat Mechanics Overhaul adds "object" to this list among other things. Therefore they are blocked by waterways and rails, unless they are the same force as the player and friendly fire is disabled. With just Cargo Ships and CMO installed, rockets fly over waterways owned by the firing player.

Do you have another mod that enables friendly fire? Or are the waterways created by other players on a PvP server? You probably haven't noticed that rails block them too, because the rails can be destroyed. Waterways are invincible. It would be nice to know what Earendel's team thinks of rockets colliding with rails before hacking in something for cargo ships.

I haven't added any PvP mods and it's an offline save.

Well, I can take a look if you share your save file. Don't know if there will be a fix besides uninstalling CMO