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Other than the obvious of being harder to find and engage when raiding convoys what are the exact differences between these options?

If I want to interdict supplies coming into a port and don't care whether I am engaged, is fleet formation more effective? Perhaps raider formation gets some passive spotting bonus against transports?

The manual does not seem to discuss this topic at all. In fact, the manual still says that surface fleets can attack subs if they are adjacent.

Raiders don't engage in interception. They effect convoys the same as fleet mode

Fleet mode: I want a fight!

Raider mode: I don't want to fight!