the Fatwa Department Research Committee - chaired by Sheikh `Abd al-Wahhâb al-Turayrî
Your question entails two separate issues. The first is that of burial in a coffin and the second is that of transporting the body from one city to another.
With respect to burial in a coffin – especially as a regular practice – most scholars are of the opinion that it is disliked to do so unless there is a need for it. One reason for needing a coffin would be exceptionally loose soil conditions.
Hanafî scholars differentiate between men and women in this matter. They hold the view that there is no objection under any circumstances to a woman being buried in a coffin.
However, there can be no doubt that burial without a coffin is the general rule, since it has not been related that the Prophet (peace be upon him) or any of his Companions ever used a coffin to bury anyone.
With respect to moving the body, this is either done before burial or after burial.
Scholars agree that it is permissible to move the body to another location before burial for a valid reason, like burial near one’s relatives, or in a Muslim graveyard when one is not locally available, and the like. This is under the condition that the body will not be prone to rupture during transport and that its sanctity will not be violated.
Some scholars have placed a further condition that the place to which it is being moved is nearby.
If the body has already been buried, then scholars are in disagreement regarding whether it can be relocated. Hanafî, Shâfi`î, and Hanbalî scholars are of the opinion that the body cannot be relocated. The only exception that some of them make is in cases where there is a necessity for doing so, such as fearing that the grave might be opened up by robbers or otherwise defiled.
Mâlikî jurists, however, permit relocating the body after burial for the same reasons and under the same conditions that a body may be relocated before burial.
There are cases related where some of the Companions were relocated from their graves after burial, either out of fear from flooding or from swamping of the soil, or due to waterworks projects for the city of Madinah. These are discussed in detail by Ibn`Abd al-Barr in al-Tamhîd (13/141-143).
And Allah knows best.
Source: Islam Today