WASHINGTON -- U.S. railroad executives warned Thursday that government efforts to spur competition would worsen customer service, and pressed Congress not to impose restrictions on their business, according to a wire service.

Richard Davidson, chief executive of Union Pacific Corp. (NYSE:UNP - news), told a congressional hearing that artificially induced competition would mean less money for existing infrastructure, slowing service and forcing the industry "to wither and die."

The Senate Appropriations transportation subcommittee, led by Alabama Republican Richard Shelby, is examining ways to encourage competition after a series of rail mergers that have left shippers complaining of few choices and high rates.

Chemical companies, grain shippers and other freight rail customers complain that consolidation has left them at the mercy of terms dictated by the railroads.

"I have no interest in re-regulation, but if the railroads want to be re-regulated they should just keep doing what they're doing now," Shelby said.

What we "need are policies to enhance rail competition as an alternative to rail re-regulation," he said.

The number of Class 1 lines -- those with at least $265 million in operating revenue -- has shrunk to only four from 42 in 1980. In some areas, shippers have access to only one method of transportation to move their crops. In North Dakota, for example, 97 percent of grain elevators rely on one railroad.

Shippers have lobbied regulators to force railroads to share their tracks with other companies, build lines to connect some customers who don't have access, or prohibit rail companies from charging some customers more than others.

Railroads argue that some markets are unable to support more than one railroad. Shippers who open their tracks to other railroads also will have to spend millions of dollars in infrastructure costs, and collect compensation for opening up their line, a rate that will likely be set by the government.

"Government regulations would be damaging to everybody, to the railroad, to our customers," Union Pacific's Davidson said. "It's almost like Alice in Wonderland where everyone lives happily every after because something good will happen when the truth is it will be all bad."

But shippers are dissatisfied with the lack of choice and resent the widespread delays generated by some of the mergers.

The 1996 combination of Union Pacific Corp and Southern Pacific Rail Corp. led to serious bottlenecks and major service problems across the merged company's system in 1997.

And the purchase and division of Conrail Inc. by Norfolk Southern Corp. (NYSE:NSC - news) and CSX Corp. (NYSE:CSX - news) in the East brought widespread delays despite attempts to avoid a repeat of Union Pacific's experience.

The Surface Transportation Board began a moratorium on major rail mergers last year while it develops new guidelines. The STB is scheduled to hear public comments oral arguments next month.

Shippers contend that so much consolidation has taken place that there is little incentive to make railroads focus on their customers.

Lamar Self, a distributor for Mississippi Chemical Corp., said that while all of the company's 32 production and distribution facilities have access to a railroad, none are served by more than one carrier.

"I have yet to see a (rail merger) that has resulted in improved service and lower costs," Self testified.